Articles Posted in Television

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April 2010
Recent FCC enforcement actions reported in this month’s Enforcement Monitor include:

  • FCC Issues $30,000 and $12,000 Fines to Three Co-owned Commercial Television Stations and Three Co-owned Class A Television Stations for Failure to Publicize the Existence and Location of Their Quarterly Children’s Television Programming Reports
  • FCC Fines Nonresponsive Texas Cable Operator $38,000 for Emergency Alert System and Antenna Structure Violations
  • FCC Fines Broadcasters $7,000 for Failure to Timely File License Renewal Applications and for Unauthorized Operation
  • Idaho Station Fined $4,000 for Failure to Fully Disclose All Material Terms of a Contest

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4/29/2010
Several members of Congress led by Senator Schumer and Congressman Van Hollen introduced today the “Democracy Is Strengthened by Casting Light On Spending in Elections” Act–the DISCLOSE Act. The House and Senate versions differ, with the Senate version vastly expanding eligibility for Lowest Unit Charge, reducing the Lowest Unit Charge, prohibiting preemption of political ads, and requiring the FCC to perform political audits of broadcasters, cable, and satellite operators.

The DISCLOSE Act is primarily aimed at reversing, to a large degree, the recent 5-4 decision of the Supreme Court in Citizens United v. Federal Election Commission, in which the Court held that corporations, and by implication unions, have a constitutional right to make independent expenditures for advertising supporting or opposing the election of political candidates. As we reported in a Client Alert in January of this year, the decision opened the way for increased political advertising by invalidating limits on corporate political ad spending. The decision allows, among other things, corporations (and unions) to purchase airtime at any time to directly advocate for or against candidates for federal elective office. While the decision invalidated limits on corporate spending on political advertisements, it did retain certain disclosure and disclaimer requirements found in the Bipartisan Campaign Reform Act.

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Last week, we listened to FCC Chairman Julius Genachowski speak at the National Association of Broadcasters convention in Las Vegas. One topic he made a point to discuss was the recent Petition filed by cable and satellite companies arguing that the retransmission consent process is unfair, and asking the government to intervene in private contractual disputes to decide how broadcasters can and cannot negotiate carriage deals, including mandating arbitration of disputes and requiring stations to permit “interim carriage” of their programming while negotiations are ongoing. However, the issue is not stations “yanking” their signals from cable and satellite operators while negotiations drag on, but the failure of operators to secure the right to retransmit the programming when their current retransmission agreement expires, as the Communications Act requires. Indeed, it is the same basic contractual process that cable and satellite operators go through when seeking to extend carriage of non-broadcast networks, except that non-broadcast networks wield nationwide control over access to their programming, whereas broadcasters wield such control only in individual markets.

While the Chairman did say in his speech that the marketplace is the “preferred method” for resolving disputes that come up during negotiations, he also referenced the Petition’s claim that broadcasters were to blame for a rise in cable fees, stating: “Some ask: Is free TV really free when cable rates go up because of retransmission fees?”
However, that rhetorical question is just that — rhetorical. Free TV can only survive as free TV if it is financially able to produce/compete for the programming also sought by non-broadcast networks. The only way that is possible in a 500-channel world is for broadcast stations to have the dual revenue stream (advertising and retransmission fees) enjoyed by their non-broadcast competitors. Only by being financially viable can broadcast stations remain as a free alternative for those wishing to “cut the cable” or “dump the dish.” In fact, as digital multicasting allows stations to deliver multiple free programming streams, free TV becomes a more attractive option and a more effective check on rising cable rates.

Unlike a cable network, a broadcaster can never “yank its signal” from the public when retransmission negotiations falter and what often seems to be missing from the debate is that the public does not “lose” a TV station’s signal when it is dropped by a cable system during a retransmission consent dispute because the signal is available to viewers for free over the air. The law merely prohibits a cable or satellite operator from reselling broadcast programming to viewers if the operator itself is unwilling to pay the going rate for it. In that regard, it is no different than any other business transaction, except that the public can always choose to “avoid the middleman” and obtain the programming directly from the television station (for free) by using an antenna. In this context, and particularly in light of the extreme rarity of program disruptions occurring during retransmission negotiations, cable and satellite operators have a difficult challenge making the case that carriage negotiations with broadcast stations are significantly different than carriage negotiations with cable networks.

The fundamental difference between these negotiations is mostly one of degree — broadcast programming tends to regularly be among the most popular programming, making it more valuable to those wishing to resell it to their subscribers. However, broadcast programming will only remain popular if broadcasters continue to earn the revenues necessary to produce and purchase such programming. A cynical observer might therefore conclude that the desire to prevent broadcasters from receiving a share of subscription revenues commensurate with audience ratings is only partially about reducing cable and satellite systems’ operating costs, and just as much about keeping those revenues out of the hands of those who compete with cable and satellite for ad sales and audience. Systems overpaying for fringe cable networks while underpaying for far more popular broadcast programming harms free local TV without any countervailing benefit (unless you are the owner of a fringe cable network).

Also, the problem with forcing interim carriage during negotiations (aside from the fact that its a violation of the Communications Act) is that the continued availability of a station’s programming for retransmission is not, as cable/satellite operators frequently claim, an unfair “bargaining chip” used by broadcasters in retransmission negotiations — it is the entire point of the negotiation. Requiring that broadcast programming continue to be made available at last year’s rate during negotiations, as the Petition urges, provides cable operators with an obvious incentive to drag out the negotiations as long as possible rather than bring them to a rapid conclusion and begin paying the current rate. Imposing an interim carriage requirement would actually destabilize retransmission negotiations, as broadcasters would be forced to declare the negotiations terminated in order to end the interim carriage and hopefully force the cable/satellite operator back to a serious negotiation. Encouraging cable/satellite operators to delay negotiations long past the expiration of their existing retransmission agreements, and then forcing broadcasters to declare an official end to the negotiations as the only way of ending lower cost interim carriage and forcing a serious offer from the cable/satellite operator, is inherently more likely to result in carriage disruptions than the current process.

Like homeowners in a buyer’s market, cable and satellite operators are no doubt unhappy that market conditions are currently less in their favor compared to the “good old days”, but that hardly makes the market “broken” or “unfair.” Trying to fix something that isn’t broken is a surefire way to break it badly, and it is the public that would be forced to pick up the pieces.

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Death, taxes … and FCC annual regulatory fees. Its that time of year again and the FCC has issued its latest annual Notice of Proposed Rulemaking containing regulatory fee proposals for Fiscal Year 2010. Those who wish to file comments on the FCC’s proposed fees must do so by May 4, 2010 with reply comments due by May 11, 2010.
For one of the few times in recent history, the annual fee amount the FCC is proposing to collect is actually less than the amount from a previous year. Consistent with this, and with a few exceptions, most of this year’s fees are the same or less than last year’s fees for all AM, FM, and television stations, as are the fee amounts for LPTV, Class A, translator, booster, and broadcast auxiliary licenses.

One big change in this year’s fee proposals is the elimination of the exemption for digital stations to pay fees now that the DTV transition has ended. Going forward, all digital full-service television stations will be required to pay a full license fee, including those stations that were operating pursuant to digital Special Temporary Authority as of October 1, 2009. It is also important to point out that the Commission is proposing to charge only a single fee for each low power or Class A facility simulcasting in both digital and analog.

The Communications Section will shortly be publishing a full Advisory on the proposed Reg Fees, including fee tables and charts for you to use to calculate your payments that will be due later this year.

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This week saw generally positive news for television broadcasters on the broadband front. First, the U.S. Court of Appeals for the D.C. Circuit ruled that the FCC does not currently have authority to regulate the network management policies of Internet providers. Aside from the fact that the Court’s ruling challenged the FCC’s ability to require Internet providers to treat all network traffic equally, i.e., to apply “net neutrality,” the decision also calls into question key aspects of the FCC’s ambitious National Broadband Plan, many of which assumed the FCC had broad authority to regulate the Internet. Because the Court struck at the very heart of the National Broadband Plan, the Court’s decision may undermine other aspects of the plan, including its controversial proposal to reclaim 120 MHz of spectrum from television broadcasters that we discussed in a previous post.

Another shifting wind came in the form of Verizon CEO Ivan Seidenberg, who publicly stated he does not believe there is going to be as great a spectrum shortage as the FCC predicts, and that “confiscating [TV] spectrum and repurposing it for other things, I’m not sure I buy into the idea that that’s a good thing to do,” and adding “I think the market’s going to settle this. So in the long term, if we can’t show that we have applications and services to utilize that spectrum better than the broadcasters, then the broadcasters will keep the spectrum.”

It is unclear whether the Commission will appeal the Court’s decision, and broadcasters still have a long way to go before they can breathe easier about their spectrum being repurposed for auction to wireless companies. Still, after being forced headfirst into a gale force national debate over the “best use” of their spectrum, any calming of those winds is certainly welcome.

While all this is good news for broadcasters, the FCC certainly isn’t giving up and going home. Just today, the FCC released its “Broadband Action Agenda” setting the timing for more than 60 rulemakings and other notice-and-comment proceedings, including a rulemaking involving broadcast spectrum reclamation scheduled for the Third Quarter of 2010. While the FCC’s authority over the Internet may be up in the air, it continues to exercise vast authority over broadcasters. One dark scenario (for everyone) is that the FCC rushes forward and reclaims broadcast spectrum, only to have its National Broadband Plan collapse before being implemented. In that situation, the damage to the public’s broadcast service would be done, the spectrum would still be auctioned, but likely with reduced demand (and excessive supply) driving down auction revenues for the government, and the public ending up no closer to the broadband nirvana envisioned by the FCC’s proposal.

Stay tuned, as this is a story that will be unfolding for quite a while.

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Death, taxes, and ownership reports: all three are unavoidable, but broadcasters had a brief respite from the last one. That respite has now come to an end.

One of the joys of being a broadcast licensee is filing biennial ownership reports detailing the extended ownership structure of each station. These reports used to be called Annual Ownership Reports and were filed, appropriately enough, annually. In an effort to reduce the amount of paperwork flowing between licensees and the FCC, the requirement changed in 1999 from an annual to a biennial one. That created endless confusion, as any particular station’s filing deadline was generally dictated by where it was located. Radio stations in one state would file by April 1 of odd-numbered years, while radio stations in a different state would be required to file by June 1 of even-numbered years. In fact, even TV and radio stations in the same state were required to file in different years.

Because of exceptions to the general rule on filing deadlines (too boring to discuss here), even the FCC had difficulty determining whether a station had been properly filing its ownership reports on time. As a result, the FCC adopted new filing rules in May 2009 establishing November 1 of odd-numbered years as the national ownership report filing date for all commercial broadcast stations. It also introduced a new form requiring more detailed information than in the past, required formerly exempt entities to file reports, and required that the information be entered electronically and repeatedly into the FCC’s filing system for each attributable owner in the ownership chain.

Previously, licensees with complex ownership structures would create a single exhibit describing the complete ownership structure and other media ownership interests, which was then attached to the ownership report for every entity in the chain of ownership. Because the new electronic ownership report form would not allow such attachments, stations (well, let’s be honest; station’s lawyers) were required to reenter the data for each and every ownership report. The reports for even midsize station groups could take months to complete. Initially, the FCC postponed the filing deadline (twice!) to give licensees time to fill out the voluminous reports, but as the FCC’s electronic filing system started to whimper from the volume of data being entered, the FCC postponed the deadline until the form could be reworked to solve the worst of the problems. For those interested, you can read our advisories and alerts from the time here, here, here, here, here, and here (you begin to appreciate the scope of the problem!).

A few hours ago, the FCC announced that a revamped ownership report form is now available which resolves the repetitive data entry issue by incorporating a spreadsheet that, once filled out, can be copied into multiple ownership reports. With the availability of the new form, the FCC also announced that all commercial broadcast stations, including Class A and LPTV stations, must file their reports on the new form by July 8, 2010. For those interested in the details of the new Form 323 and spreadsheet, you can read our Client Alert on the new form, and ponder whether a similar eight month postponement of death or taxes might also be possible.

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4/8/2010
The FCC’s Media Bureau has announced that a new version of the Biennial Ownership Report Form for commercial broadcast stations, FCC Form 323, will be available on its website as of April 9, 2010. All commercial broadcast station owners must file their biennial ownership reports using the new form by July 8, 2010. However, the data used to complete the form must be accurate as of November 1, 2009.

The FCC originally announced its intent to implement a new version of the Form 323 in an Order released in May 2009 as part of its Promoting Diversification in the Broadcasting Services proceeding. The revision required, among other things, that each holder of a direct or indirect attributable interest in a licensee secure an FCC-issued Federal Registration Number (“FRN”). The revision also mandated that information regarding attributable interest holders and their other broadcast interests be reported repeatedly and in a precisely structured manner. As a result, the number of reports and the time to complete each report increased dramatically for many broadcasters with the ultimate result that the FCC’s electronic filing system ground to a near halt and did not reliably save information entered into it. Based on these technical difficulties, the FCC stayed the filing obligation until it could improve the functioning of the form to account for these difficulties.

The FCC sent its revisions to the form to the Office of Management and Budget (“OMB”) for approval on March 25, and OMB approved the modified form on March 26. The revised form uses a new XML Spreadsheet template that will allow information to be entered into the spreadsheet and then uploaded to the form, thereby reducing the time and effort needed to enter the data. The spreadsheet must be downloaded from the FCC form and comes with detailed instructions regarding the proper use of the XML Spreadsheet. Of particular note are the following:

  • The XML Spreadsheet comes with 25 empty rows for data entry that contain embedded validation codes necessary for the proper functioning of the form. Any licensee needing more than 25 lines must copy and paste the original 25 lines as many times as necessary and not create new lines.
  • The XML Spreadsheet must be saved with an .xml extension, not the .xls or .xlsx extensions that the Excel program will assign by default.
  • Licensees must not change or delete any data in Cell B1.
  • Information must be entered in all capital letters.

The new version of the form also retains the requirement that each attributable interest holder secure an FRN. The instructions state that where, after a good faith effort, a licensee is unable to secure an interest holder’s social security number, which is needed to complete the FRN registration process, a button on the form will allow the licensee to secure a Special Use FRN. The instructions to the form state that the Special Use FRN can only be used for the Biennial Ownership Report filing, and not for any other filing, such as a post-consummation Ownership Report filing.

The Commission’s May 2009 Order also adopted November 1 as a new uniform reporting date for all commercial stations nationwide, regardless of the station’s license renewal filing anniversary (the deadline previously used by the FCC). Because the original November 1, 2009 filing requirement was stayed while the form was revised, the reports filed by the new July 8, 2010 deadline must still reflect the ownership data as it existed November 1, 2009.

The substantial difference in time between the new filing deadline and the time for which ownership information is being reported leads to some interesting questions. For example, where a station has been sold since November 2009, should the report be filed under the name of the new licensee or the prior licensee. If it is to be filed by the new licensee, how will the FCC deal with the fact that the new licensee may not have any personal knowledge of the prior licensee’s November 2009 ownership structure? These questions may be answered by a follow up public notice from the FCC, but if not, we will be pursuing them with the FCC’s staff.

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In the latest chapter of what seems like a never ending saga of the Commission’s effort to adopt new ownership rules, the U.S. Court of Appeals for the Third Circuit recently lifted its stay of the FCC’s revised cross-ownership rules adopted in 2007, which immediately allows the FCC to presume that common ownership of a daily newspaper and a broadcast station in the Top 20 television markets is in the public interest. The Court’s decision, for the first time since 1975, effectively allows the common ownership of a full-power broadcast station and a daily newspaper in the same geographic market.
In 2003, the Chairman Powell-led Commission undertook what was ultimately a highly controversial review of all of its broadcast ownership rules. With respect to newspaper/broadcast cross-ownership rule, the Commission concluded that newspapers and broadcast stations do not compete in the same economic market and that continuation of the cross-ownership ban made no sense except in the smallest markets. Before the re-write of the broadcast rules took effect, it was challenged by various parties in the Third Circuit. The Court, in the well-known Prometheus Radio Project decision, stayed the effectiveness of the re-written rules. Despite the stay, the Court actually agreed with the Commission that a blanket ban on broadcast/newspaper cross-ownership was no longer warranted, so the Court remanded the FCC’s ownership limits back to the agency for further justification.
In response to the Court’s order, the Commission in 2007, this time led by Chairman Martin, once again decided that a complete newspaper/broadcast cross ownership ban did not make sense. It fashioned a rule that presumed that waiver of the ban is waived in the public interest in certain limited circumstances. The FCC said that it would review combinations involving a daily newspaper and either one radio station or one television station in the Top 20 markets on a case-by-case basis, and presume that they were in the public interest, so long as, in the case of television/newspaper combinations, the television station was not a Top-4 ranked station, and at least 8 independent “major media voices” would remain in the market. Combinations in markets outside of the Top 20 would be presumed to not be in the public interest, unless a showing could be made that overcame the presumption.

Again, before that rule could take effect, it was appealed and the Third Circuit continued to stay it. When the leadership of the FCC changed again in 2009, the new Chairman Genachowski-led Commission told the Court that relaxation of the newspaper/broadcast cross-ownership ban adopted by the previous Martin-led Commission does not necessarily reflect the view of a majority of the current Commission. The leadership also asked the Court to continue to hold off ruling on the Martin Commission’s version of the rule until this Commission could complete its Congressionally-mandated review of the broadcast ownership rules in 2010. Despite that request, the Court lifted its stay and ordered that initial briefs in connection with the Martin Commission revisions to its ownership rules be filed by May 17, 2010.

As a result, the FCC’s relaxed newspaper/broadcast cross-ownership rule adopted in 2007 is now in effect. Broadcast/newspaper combinations can now be reviewed and granted on a case-by-case basis in accordance with the standard described above. However, before trying to enter into a new cross-ownership combination, interested parties should keep in mind that the current Commission is on record as being wary of the Martin-era version of the rule, so any hope that the current Commission is in a hurry to review any proposed combos might be misplaced. They should also realize that the Martin-era rule is subject to the Third Circuit’s review, and that it is unclear precisely how, and when (if ever), this rule’s more than thirty-five year saga will end.

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3/22/2010
Businesses dependent on spectrum should be alert to FCC trend toward greater frequency sharing and incumbent dislocation.

Introduction
The FCC’s staff has released its long-awaited National Broadband Plan (“NBP”). As expected, the NBP includes controversial proposals to reclaim 120 MHz of spectrum from television broadcasters. Another spectrum reallocation, involving microwave spectrum that would impact broadcasters in their use of Broadcast Auxiliary Service spectrum, has received less attention. So too has the NBP’s overall approach to spectrum reallocations, which represents a sea change in the way the FCC manages spectrum. This new approach focuses on unlicensed and flexible uses of spectrum, placing all spectrum allocations on a three-year cycle for scrutiny and possible reallocation to “more valuable” uses.

The NBP, then, serves as a roadmap for future reallocations. Careful review of the mechanics of the specific reallocations the NBP proposes for the immediate future reveal the extent to which its authors seek to change long-established service rules for each spectrum band in order to free spectrum for other uses. This Advisory provides that review so that spectrum users, both those who are immediately affected by the NBP and those whose spectrum has not yet been surveyed by the FCC, can better understand the likely impact of such changes.

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March 2010
This Broadcast Station EEO Advisory is directed to radio and television stations licensed to communities in: Delaware, Indiana, Kentucky, Pennsylvania, Tennessee and Texas, and highlights the upcoming deadlines for compliance with the FCC’s EEO Rule.

Introduction
April 1, 2010 is the deadline for broadcast stations licensed to communities in the States/Territories referenced above to place their Annual EEO Public File Report in their public inspection files and post the report on their website, if they have one. In addition, certain of these stations, as detailed below, must electronically file their EEO Mid-term Report on FCC Form 397 by April 1, 2010.

Under the FCC’s EEO rule, all radio and television station employment units (“SEUs”), regardless of staff size, must afford equal employment opportunity to all qualified persons and practice nondiscrimination in employment.

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