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Next week, the eyes of the broadcast world shift to Nashville, where the National Association of Broadcasters is holding this year’s Radio Show. Pillsbury will again be kicking off the Show with its annual broadcast finance session at 8:30am on Wednesday, September 21.

This year’s event is titled Pillsbury’s Broadcast Finance Forecast – 2016 Leadership Breakfast, and will feature the expanded format we used for last year’s 25th anniversary broadcast finance session.  It will start with a visual analysis of the 2016 financial performance of the radio industry and its major players by Davis Hebert of Wells Fargo. An advance peek at some of the slides from his presentation drew attention in the radio trade press a few weeks ago, and he has many more where those came from.  The Wells Fargo analysis is always packed with information and economic insight and, having seen the slide deck, I can tell you that this year will be no exception.

Davis’s “State of the Industry” presentation will be followed by our six-member “broadcasters and bankers” panel discussing a wide variety of issues impacting the radio industry and its financing. These include the uptick in radio M&A activity represented by Beasley’s recently-announced acquisition of the Greater Media stations, the obstacles in obtaining financing for radio acquisitions and debt restructuring, and the competitive and other challenges facing radio stations as they seek to ride the economic wave generated by the end of the Great Recession.

We have a particularly well-qualified panel to tackle these tough topics, including Caroline Beasley of Beasley Broadcast Group and Larry Wilson of Alpha Media, representing two of the most active players in radio station acquisitions the past few years, Bill Hendrich of Cox Media, who has a long history of radio operations, and Garret Komjathy (U.S. Bank) and Ray Shu (Capital One), two of the most experienced lenders in the radio world.

I’ll be moderating the panel (no event is perfect), and Media Services Group is again providing the breakfast, ensuring that when the session is over, attendees will leave with not just full minds, but full stomachs.

My partner, Lew Paper, started this event many years ago (26, to be exact), and a lot of people, both at Pillsbury and NAB, work hard to put it together every year. When Lew handed the reins to me a few years ago, I think only he knew how hard it is pull together all the pieces and make it look as easy as he did (turns out he’s sneaky that way).  Fortunately, with this year’s panel, my job has been made easy.  For those that will be in Nashville, we hope to see you there.

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Just before the Labor Day weekend, the FCC issued its Report and Order launching the annual regulatory fee payment process for Fiscal Year 2016.  The FCC has also opened the “Fee Filer” system that must be used to pay regulatory fees.  More information and FAQs about the FY 2016 regulatory fees can be found here.

Payment in full of regulatory fees must be made by 11:59 p.m. Eastern Time on September 27, 2016. Late payment of regulatory fees will result in a 25% penalty and “red light” status, which restricts the FCC’s processing of a late payer’s applications until payment of the fees and penalties has been made.  The FCC specifically reminded participants in the ongoing TV broadcast Incentive Auction that they must pay regulatory fees for FY 2016 if they held a license or construction permit as of October 1, 2015 (and will be liable for next year’s fees if they hold a license or CP as of October 1, 2016).  The FCC also noted that payment of regulatory fees is required before Incentive Auction participants can receive any proceeds resulting from the auction, although given the pace at which the auction is proceeding, that seems unlikely to be an issue until well into next year.

As expected, regulatory fees for broadcast stations generally increased over last year, and the total fees assessed rose from $339,844,000 in FY 2015 to $384,012,497 in FY 2016.  Although the fees assessed for “operational expenses” remained the same as last year, the FCC (in a move which some might find ironic) assessed an additional $44,168,497 to offset FCC “facilities reduction costs.”  According to the FCC, those costs reflect the one-time expense of reducing the FCC’s office footprint and/or moving the FCC to a new location, and are required by Congress to be collected.

Despite the increase in total fees, middle market TV stations caught a break, with fees for stations in markets 51-100 falling from $16,275 last year to $15,200 this year. Fees for TV stations in markets 1-10, on the other hand, took the biggest jump — going from $46,825 to $60,675.

As for radio, rates increased over last year for most, but not all, stations.  In light of comments asserting that the regulatory fees proposed by the FCC last May were too burdensome for small independent radio stations, the FCC reduced the fees in the two lowest population tiers for AM and FM broadcasters.  Stations located in markets with populations of more than 3 million, previously the highest of the radio fee tiers, have been split into two groups by the FCC: (1) markets of 3,000,000-6,000,000, and (2) markets over 6,000,000.  Charts showing the regulatory fees for the various TV and radio groups are below:

Broadcast Television and TV/FM Translators and Boosters

Markets 1-10 $60,675
Markets 11-25 $45,675
Markets 26-50 $30,525
Markets 51-100 $15,200
Remaining Markets $5,000
Construction Permits $5,000
Satellite TV Stations (all markets) $1,750
Low Power TV, Class A TV, TV/FM Translators & Boosters $455

 

Broadcast Radio (AM and Full Power FM)

Population AM Class A AM Class B AM Class C AM Class D FM Classes A, B1 & C3 FM Classes B, C, C0, C1 & C2
25,000 or fewer $990 $715 $620 $685 $1,075 $1,250
25,001-75,000 $1,475 $1,075 $925 $1,025 $1,625 $1,850
75,001-150,000 $2,200 $1,600 $1,375 $1,525 $2,400 $2,750
150,001-500,000 $3,300 $2,375 $2,075 $2,275 $3,600 $4,125
500,001-1,200,000 $5,500 $3,975 $3,450 $3,800 $6,000 $6,875
1,200,001-3,000,000 $8,250 $5,950 $5,175 $5,700 $9,000 $10,300
3,000,001-6,000,000 $11,000 $7,950 $6,900 $7,600 $12,000 $13,750
Greater than 6,000,000 $13,750 $9,950 $8,625 $9,500 $15,000 $17,175

In addition, initial AM Construction Permits were assessed a $620 regulatory fee per station for FY 2016, with initial FM Construction Permits drawing a regulatory fee of $1,075 per station.

Finally, the FCC rejected a proposal by the Puerto Rico Broadcasters Association to reduce regulatory fees for stations located in Puerto Rico by 30% to reflect the economic hardships being experienced there.  The FCC responded that individual stations in Puerto Rico may request waivers of regulatory fees if they believe their conditions warrant such relief, but the Commission was unwilling to reduce the fees on a blanket basis.

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Perhaps indicating that the rapid conclusion of Stage 1 of the Incentive Auction was not a surprise to the FCC, the Commission moved with lightning speed to announce that Stage 2 of the auction will commence on September 13 with a spectrum clearing target of 114 MHz.  In a Public Notice released less than 24 hours after Stage 1 concluded, the FCC effectively indicated that it was staying the course, and reducing the spectrum clearing target by only 12 MHz for the next stage.  In light of the lackluster results of Stage 1 that we discussed yesterday, many wondered if the FCC would, or legally could, make a more significant adjustment in the spectrum clearing target to expedite the conclusion of the auction.  It now looks like auction participants will indeed be in for a long slow march to the point where spectrum supply meets demand.

However, the quick release of today’s Public Notice at least minimizes the administrative delay in the process.  In fact, the Public Notice also announced that “[b]idding in the clock phase of Stage 2 of the forward auction will begin on the next business day after the close of bidding in Stage 2 of the reverse auction.”  That will eliminate the downtime between the reverse auction and forward auction that slowed Stage 1, and will require forward auction participants to be extremely alert for the end of the reverse auction, lest they miss their opportunity to bid in the forward auction.

Also indicating that the FCC was well-prepared for the move to Stage 2, the Public Notice announced that the FCC will make an online tutorial available for Stage 2 participants tomorrow, September 1.  The tutorial will be found on the Auction 1001 website in the “Education” section, and the FCC is encouraging all broadcasters still eligible to participate in the reverse auction to review the tutorial.  Stations that exited the auction in Stage 1, whether due to withdrawing from the bid process or because the station was not needed in the auction, will not be able to return for Stage 2.  In addition, stations that did not exit in Stage 1, but which are not needed in Stage 2 due to the lower spectrum clearing target, will not be allowed to bid in Stage 2.  However, regardless of whether they are eligible to participate in Stage 2, all full power and Class A TV stations remain subject to the rule against discussing bids or bidding strategies.  Indeed, the Public Notice indicated that “communicating that a party ‘is not bidding’ in or has ‘exited’ the reverse auction could constitute an apparent violation that needs to be reported.”

Given that the auction process has begun to drag out, and may drag out further, the FCC also reminded participants to keep their auction applications (Form 177 for broadcasters, Form 175 for forward auction bidders) up to date, filing any necessary amendments to those applications within five days of a “significant occurrence”.

After being told for the last several years that mobile broadband was a more valuable use of their spectrum, broadcasters might be disappointed in the economic results of Stage 1, but were not truly surprised.  They have been arguing for years that their point-to-multipoint business model is a far more efficient use of spectrum, and that if spectrum is worth less in their hands than in the hands of cell phone companies, it is only because broadcast spectrum is burdened by excessive regulation—regulation that the FCC ironically reaffirmed as essential to the public interest less than a week ago in its Quadrennial Ownership Review.  While the auction may not turn out to be the economic windfall broadcasters had been promised, there may still be some value to it, if only to prove that broadcast spectrum is already being put to its “highest and best” use.

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You can almost hear Agent Maxwell Smart’s trademark “Missed it by that much!”  The FCC quietly announced just after C.O.B. today that “[b]idding in the forward auction has concluded for Stage 1 without meeting the final stage rule and without meeting the conditions to trigger an extended round. The incentive auction will continue with Stage 2 at a lower clearing target.”

When the FCC wrote in its 2014 Spectrum Auction Report and Order that “[w]e are designing the forward auction for speed, so that reverse auction participants need not await its outcome for week or months,” it wasn’t kidding.  The forward auction took just two weeks to conclude, but only because it yielded a highly disappointing $23.1 billion (netting $22.5 billion after auction discounts), a mere quarter of the $88.4 billion the FCC was targeting.  The result is surely disappointing for those intent upon repurposing a big chunk of TV broadcast spectrum for what we were told was an insatiable appetite for mobile broadband spectrum, but even more so for broadcasters that had been told by the FCC that their spectrum was far more valuable for purposes other than broadcasting.

So what’s next? The FCC’s Public Reporting System states that a public notice is on the way, which will announce “details about the next stage, including the clearing target for Stage 2, and the time and date at which bidding in Stage 2 of the reverse auction will begin.”  Given the large mismatch between the amount of spectrum sought by the FCC in Stage 1, and the rather paltry demand revealed by Stage 1, the FCC will have some thinking to do about how many stages of the auction it is willing to endure to achieve equilibrium between spectrum supply and demand.

In the meantime, broadcasters remain subject to the FCC’s rules prohibiting certain communications (a/k/a the “quiet period”) until the FCC releases a public notice announcing the successful completion of the auction.  It looks like that may be a while.

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Pillsbury’s communications lawyers have published FCC Enforcement Monitor monthly since 1999 to inform our clients of notable FCC enforcement actions against FCC license holders and others. This month’s issue includes:

Headlines:

  • Spoofed Calls Lead to Multiple $25,000 Fines and Ongoing Criminal Case
  • Amateur Radio Licensee Fined $25,000 for Intentional Interference
  • Failure to Timely Request STA Results in $5,000 Fine and Shortened License Term

Spoofing’s No Joke: Two Men Face $25,000 Fine Each for Harassing Phone Call Scheme

The FCC proposed to fine two New York men for apparently using false caller ID numbers – a practice commonly known as “spoofing” – to place harassing phone calls to the ex-wife of one of the men.

The Truth in Caller ID Act of 2009, as codified in Section 227(e) of the Communications Act and Section 64.1604 of the FCC’s Rules, prohibits any person, in connection with any telecommunications service or IP-enabled voice service, to knowingly cause, directly or indirectly, any caller ID service to transmit or display misleading or inaccurate caller ID information with the intent to defraud, cause harm, or wrongfully obtain anything of value.

In September 2015, the National Network to End Domestic Violence contacted the FCC on behalf of one of their clients and explained that someone was using spoofing services to stalk and harass her. The FCC subsequently opened an investigation into the matter.

Using information and call logs provided by the woman, the investigation found that between May 2015 and September 2015, 31 harassing phone calls were made. It found that the callers used a spoofing service provider to make the woman believe she was answering calls from sources such as local jails and prisons, the school district where her child attends school, and her parents’ home. In addition, it found that the callers used a voice modulation feature of the spoofing service to disguise their voices, and conveyed threatening and bizarre messages. For example, calls that spoofed the caller ID information of Sing Sing correctional facility threatened “we are waiting for you.” Other calls referenced personal information specific to the woman and her minor child.

FCC staff subpoenaed call records for the cell phone of a friend of the woman’s ex-husband after the woman told staff that she believed her ex-husband – against whom she had a restraining order during the time period in question – and his close friend were behind the calls. The woman explained to FCC staff that for some of the calls she had used a third-party “unmasking” service to reveal that the true caller ID was that of her ex-husband’s friend, with whom she had no independent relationship. The call records showed that each time the friend called the spoofing service, the woman received a spoofed call. The parent company of the spoofing service confirmed that the friend used its service to make spoofed calls to the woman.

The FCC also found that the ex-husband was directly involved in at least some of the calls. For example, the FCC found that the friend made a spoofed call moments after he was called by the ex-husband, and while he was still on the phone with the ex-husband. The FCC explained that the fact that the ex-husband “did not dial the spoofed calls himself does not absolve him of liability for the harassment and stalking of his ex-wife.”

The Communications Act and the FCC’s Rules authorize a fine of up to $10,000 for each spoofing violation, or three times that amount for each day of a continuing violation, up to a statutory maximum of $1,025,000. The FCC may adjust a fine upward or downward depending on the circumstances of the violation. Citing the “egregious” nature of the violation, the FCC proposed to fine the ex-husband and the friend $25,000 each. The friend was also arrested and charged with stalking and aggravated harassment after the woman filed a complaint with local police.

Haters Gonna Hate: Amateur Radio Licensee Fined $25,000 for Racial Slur-Filled Interference

A California amateur radio licensee received a $25,000 fine from the FCC for intentionally interfering with the transmissions of other amateurs radio operators and transmitting prohibited communications, including music.

Section 333 of the Communications Act states that “[n]o person shall willfully or maliciously interfere with or cause interference to any radio communications of any stations licensed or authorized by or under the Act or operated by the United States Government.” Similarly, Section 97.101(d) of the FCC’s Rules states that “[n]o amateur operator shall willfully or maliciously interfere with or cause interference to any radio communication or signal.” In addition, Section 97.113(a)(4) of the Rules states that “[n]o amateur station shall transmit . . . [m]usic using a phone emission except as specifically provided elsewhere in this section.”

After receiving multiple complaints of interference, primarily from the Western Amateur Radio Friendship Association (“WARFA”), FCC field agents, with assistance from the FCC’s High Frequency Direction Finding (“HFDF”) Center, conducted investigations to find the source of the interference. On August 25 and 27, 2015, between 7:45 p.m. and 9:45 p.m., the agents observed at least 12 instances of the licensee intentionally transmitting on top of, and interrupting, WARFA amateurs. The interruptions lasted from 30 seconds to at least 4 minutes, and included noises, recordings, music, and talking over WARFA users. The transmissions included racial, ethnic, and sexual slurs. The licensee ended his transmissions each night when WARFA members ended their transmissions.

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Those trying to keep up with the news surrounding the upcoming nationwide test of the Emergency Alert System (“EAS”) know that a lot has been happening in a short period of time.  Below, we pull together the many recent FCC actions regarding EAS in one place for ease of reference.

Let’s start with the basics.  The FCC announced that the nationwide test will take place on Wednesday, September 28, 2016, at 2:20 pm Eastern Time, and that, if necessary, the secondary test date will be October 5, 2016.  The test will start when FEMA sends the alert message, which will be in both English and Spanish.  As we wrote last year, the alert will use a new nationwide test event code, NPT, and a new nationwide geographic zone code, 000000.  As of July 30, 2016, all EAS Participants were required to have equipment in place capable of receiving and passing these codes.  Irritated viewers and listeners will be pleased to know that the test will last less than a minute.

Next, all EAS participants must submit three forms to the FCC regarding the test.  Unlike the last nationwide test, which took place in November 2011, participants must make these filings online through the EAS Test Reporting System (ETRS), and do not have the option of filing paper copies.  Note that FM Translators, FM Boosters, LPTVs that operate as translators, satellite stations that rebroadcast all of a main station’s programming, and international stations do not have to file.

The first form, aptly named Form One, is a registration form that identifies the participant, and must be filed by August 26, 2016.  Participants then have until September 26, 2016, to “update or correct any errors” in the Form One.  This does NOT mean that you can wait until September 26th to complete and file the Form One.  According to senior FCC staff, participants that do not register by August 26th will be deemed out of compliance—the purpose of the extra month is only to allow for cleaning up minor errors.

Information regarding the registration process can be found in this June 27, 2016 Public Notice, and more detailed instructions with screenshots on how to fill out all three forms can be found in this April 18, 2016 Public Notice.  You can also contact the FCC for assistance at ETRS@fcc.gov.

But there are a few things to be aware of when you register, as ETRS has caused aggravation among many using the system.  First, the “Geographic Zone of Service” field will not necessarily prepopulate with a correct list of geographic zones unless other participants have already added those to the system.  Participants will need to consult their state EAS plan to find the correct geographic zone to list, and may have to choose the “add” option to add that zone to the system if it does not appear as an option in the drop-down list.  While this step tripped up a lot of early registrants, who then just made up the area they felt they served (e.g., listing the “tri-state area” rather than “EAS Zone 10”), a number of the state broadcasters associations have been working with the FCC to prepopulate the system with the correct EAS zones for their state.

Second, if you filled out the registration form between June 27, 2016, when ETRS became operational, and July 8, 2016, you should go back and double check that your coordinates are correct in the “Latitude” and “Longitude” fields.  Some of the coordinates are prepopulated by the system, and for a time the system was relying on incorrect location data.  So if you get an error message about your coordinates being wrong, that might be the source of your problem.

Third, don’t sweat the “Tasks” feature too much.  It probably seemed like a neat feature to have when the system was being designed, but the execution leaves something to be desired.  It tends to be more confusing than helpful, generating a new “to do” item every time you sign in.  As a result, it is not uncommon to have four duplicates of the exact same task listed, such as “File Your Form One.”

Once September 28, 2016 rolls around and the test has (hopefully) occurred, participants have only a few hours to file Form Two, Day of Test Reporting, which is comprised of “day of test” information, and is due before 11:59 pm Eastern Time on the same day as the test itself.  This gives participants less than 10 hours after the test to file Form Two, which has raised some eyebrows.  The relevant FCC rule says that participants must file “within 24 hours . . . or as otherwise directed” by the FCC.  No explanation has been provided as to why participants were given significantly less than 24 hours to file, but one must imagine that the FCC is confident that filing Form Two will be a snap, and that ETRS can handle the load of all participants using the system at the same time.

Form Three, Detailed Test Reporting, which is comprised of more detailed post-test questions, must be filed on or before November 14, 2016 using the ETRS.

In addition to the nationwide test, there continue to be other developments which EAS participants need to know about.  At the request of the National Weather Service, the FCC last month added three new EAS event codes and slightly revised the territorial boundaries for two of its location codes.  EAS uses three-character event codes to describe the nature of the alert (e.g. “TOR” for tornado), and six-digit location codes to identify the geographic area(s) to which an alert applies.

The three new codes are designed to alert the public to extreme wind and storm surge conditions in the days and hours ahead of a hurricane making landfall, when appropriate preparations can be made and loss of life is most preventable.   The first of the three new event codes is “Extreme Wind Warning” (EWW), which the National Weather Service has used for years but which was not an official EAS code.  As a result, other warning codes have been used in high wind scenarios, causing incorrect risk avoidance advice to be disseminated.  The remaining two codes relate to storm surge.  “Storm Surge Watch” (SSA) is to be used 48 hours in advance of a storm surge  and “Storm Surge Warning” (SSW) is to be used 36 hours in advance.  The two location code modifications apply to location codes 75 and 77, which correspond to offshore marine areas in the Atlantic and the Gulf of Mexico.  The modifications move the end points for both zones from Bonita Beach, Florida to Ocean Reef, Florida and are considered important to the efficiency and safety of marine operations.  More information about these changes can be found in a July 11, 2016 FCC Order.

EAS equipment manufacturers are required to integrate the new event codes and location codes into equipment yet to be made or sold, and to offer software upgrades for existing equipment, no later than six months from the effective date of the rule amendments.  The effective date of those new rules will be 30 days after publication of the rule amendments in the Federal Register, which has not yet occurred.

While use of these new codes is voluntary, EAS participants in coastal areas will be highly motivated to install upgrades to their existing equipment once those are made available by equipment manufacturers.  The manufacturers indicated to the FCC that in many cases the upgrade can be accomplished easily through a software update the manufacturers will release.  EAS participants have the option of electing precisely when to implement those upgrades.  However, beginning one year after the effective date of the new rules, any EAS participant that replaces its equipment must do so with equipment that is capable of complying with the new codes (i.e., no purchasing used equipment that does not comply).  Given the pace of EAS changes and fixes such as these, broadcasters and other EAS participants should remain alert for notifications from their equipment manufacturers reflecting when software updates or equipment upgrades become available.

While August is often a slow time for many, the increasing number of terrorist attacks around the globe has put the federal government on a fast track for ensuring the functionality of EAS in an emergency.  That urgency is now being relayed to broadcasters and other EAS participants who are at the front lines of the effort to quickly notify the public of emergency information.  For those charged with maintaining and operating EAS equipment, the next two months will be busy ones.

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Pillsbury’s communications lawyers have published FCC Enforcement Monitor monthly since 1999 to inform our clients of notable FCC enforcement actions against FCC license holders and others. This month’s issue includes:

Headlines:

  • FCC Cancels $3,000 Proposed Fine After Discovering TV Licensee Overwrote Children’s Programming Reports
  • Educational FM Licensee Agrees to Pay Reduced Fine of $2,250 for Multiple Violations
  • Failure to Understand FCC’s Filing System Nets $1,500 Fine

Licensee’s Discovery Leads FCC to Cancel $3,000 Proposed Fine

The FCC cancelled a $3,000 proposed fine against a New York TV station after the licensee discovered that it inadvertently overwrote three Children’s Television Programming Reports. The FCC had previously proposed to fine the licensee for the untimely filing of the three Reports.

Section 73.3256 of the FCC’s Rules requires each commercial broadcast station to maintain a public inspection file containing specific information related to station operations. Subsection 73.3526(e)(11)(iii) of the rule requires licensees to prepare and place in their public inspection files a Children’s Television Programming Report for each calendar quarter showing, among other things, the efforts made during that three-month period to serve the educational and informational needs of children.

On January 30, 2015, the licensee filed a license renewal application in which it admitted that it failed to file in a timely manner Children’s Television Programming Reports for three quarters between 2012 and 2013. The licensee argued that it was unable to timely upload the Reports because of problems with the FCC’s website and computer servers.

The FCC rejected the licensee’s claim that FCC server problems prevented timely filing, and issued a Notice of Apparent Liability for Forfeiture (“NAL”) proposing a $3,000 fine for the late filings. The FCC explained that it was unaware of any server problems that would have prevented timely filing during the quarters at issue, and the licensee failed to provide any evidence to support its claim.

In its response to the NAL, the licensee asserted that after looking into the matter further, it found that it had in fact timely filed the Children’s Television Programming Reports. The licensee included with its response a declaration signed by the employee in charge of filing such reports. The employee stated that the three reports in question were timely filed, but inadvertently overwritten later. Upon discovering that the reports had been overwritten, the station refiled the reports, causing them to appear as though they were filed late. The licensee noted that it had since implemented safeguards to prevent reports from being overwritten in the future.

Based on the new information, the FCC was persuaded that the reports had been timely filed, and therefore rescinded the NAL and cancelled the proposed $3,000 fine.

FCC Reduces $18,000 Fine to $2,250 in Consent Decree With Educational FM Station

The FCC entered a Consent Decree with a North Carolina noncommercial educational (“NCE”) FM licensee, terminating the investigation of the licensee’s multiple alleged violations. The alleged violations included: (1) failure to notify the FCC that the station had gone silent for ten or more days and failure to seek special temporary authority (“STA”) when four of those periods of silence lasted more than 30 days; (2) failure to retain all required documentation in the station’s public inspection file; and (3) failure to file biennial ownership reports. Under the terms of the Consent Decree, the licensee agreed to pay a $2,250 fine and abide by a compliance plan.

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TV broadcasters know that every July 31st, they need to file with the Copyright Royalty Board (CRB) to claim a share of the royalty fund for out-of-market carriage of their programming by cable and satellite TV systems.  The details can be found in the Pillsbury Advisory we published earlier this month, which also noted that since July 31st is a Sunday this year, the filings may be made until 5pm (EDT) on August 1.

Under the Copyright Act, cable systems and satellite operators must pay license royalties to carry distant TV signals on their systems.  The CRB divides the royalties among those copyright owners who claim shares of the royalty fund.  Stations that do not file claims by the deadline will not be able to collect royalties for carriage of their signals during 2015.

However, a lot of filers wait until the last minute to file, and cross their fingers that the system won’t crash or become overwhelmed by the rush of last minute filings.  The risk of such an approach went up markedly this afternoon, when the CRB released the following notice:

ATTENTION CABLE AND SATELLITE ROYALTY CLAIMS FILERS: ONLINE CLAIMS FILING TO BE TEMPORARILY UNAVAILABLE TO ACCOMMODATE SCHEDULED MAINTENANCE

The Architect of the Capitol will be conducting scheduled maintenance on the Capitol Hill campus from Friday, July 29, through Sunday, July 31, resulting in power outages that will cause an interruption in the online claims filing service. The CRB website, www.loc.gov/crb, will be unavailable from 5 p.m., Eastern Daylight Time, on July 29 through midnight, Eastern Daylight Time, July 31. The CRB website is scheduled to be available again on August 1. The deadline for filing 2015 cable and satellite claims is August 1 this year because July 31 falls on a nonbusiness day. Filers who planned to file this weekend may want to consider completing a paper claim following the instructions on the fillable PDF form on the CRB website. For more details, go to http://www.loc.gov/crb/claims/ before 5 p.m. on July 29.

In other words, if your don’t have your claim on file by 5pm EDT tomorrow, Friday, July 29th, your only window to file electronically runs from midnight Sunday night until 5pm EDT on Monday—a period of just seventeen hours.  Worse, a lot of filers who didn’t learn of this announcement and find themselves unable to file this weekend will also be rushing to get on file on Monday.

Providing a little added drama is the phrase “scheduled to be available again on August 1,” which those of us used to dealing with federal filing systems know is not at all the same as “will be available again on August 1.”  Should there be a delay in getting the filing system up and running, that seventeen-hour filing window will shrink further.  As a result, TV broadcasters would do well to complete their filings before 5pm EDT tomorrow.  Failing that, they should be prepared to take the CRB’s advice and file a paper claim rather than risk missing the August 1 deadline.  The deadline is statutory, so it can’t be waived by the CRB.

Some may find copyright law to be a dull subject, but the CRB has certainly found a way to inject some real excitement into an otherwise mundane process.  Ladies and gentlemen, start your engines…

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There is an old vaudeville routine I’ve found more useful for understanding lawmaking in Washington than any textbook.  It goes something like this:

(Scene: a nighttime street corner illuminated by a single streetlight; a short man (Joe) is frantically searching for something near the base of the streetlight when a tall man (Bill) enters from stage left.)

Bill:  Hi Joe.  Did you lose something?

Joe:  I was buying a hot dog at the cart down the street, and when he was giving me my change, I dropped a quarter.

Bill:  Well if you dropped it down the street, why are you looking here?

Joe:  Cause the light’s better here.

When constituents are unhappy, no matter the cause, they make sure their representatives in Congress know it.  In turn, a good politician knows that the worst possible response is to say there really isn’t anything government can do to fix the problem.  So the legislator promises to take immediate action to remedy the constituent’s complaint.  Often, however, the constituent’s issue lacks a governmental solution, or the only solution would create yet worse problems.

As a result, the desire to demonstrate responsiveness leads to legislation that does nothing to actually solve the constituent’s problem, and sometimes makes matters worse.  However, as long as the legislation relates in some way to the subject matter of the complaint, the legislator can claim to have addressed the needs of his or her constituents.  Rather than face the difficult task of explaining the complexities of the issue to constituents, and why the system is working as intended (or at least better than any of the available alternatives), legislators will search for an irrelevant solution where “the light’s better.”

I was reminded of this last week by an exception that proves the rule.  Chairman Wheeler announced the FCC would terminate without further action its congressionally-mandated review of the Commission’s rule requiring that parties to retransmission consent negotiations negotiate in good faith.  Congress had urged the review in response to heavy lobbying from the cable and satellite TV industries for changes to the retransmission consent regime, as well as in response to complaints from viewers frustrated by their pay TV provider’s programming disruptions.  Specifically, Congress directed the FCC to “commence a rulemaking to review its totality of the circumstances test for good faith negotiations under clauses (ii) and (iii) of section 325(b)(3)(C) of the Communications Act of 1934.”

To understand this mandate requires going back to 1999, when Congress passed the Satellite Home Viewer Improvement Act (“SHVIA”).  SHVIA changed copyright law to allow satellite TV systems to retransmit local TV stations, putting satellite TV on an equal competitive footing with cable TV for the first time.  Cable operators had been retransmitting local TV stations for decades, but the lack of a broad compulsory copyright license for satellite providers meant that most subscribers were ineligible to receive broadcast programming via satellite.

Given the monopolistic power of most local cable systems at the time, there was a concern that cable operators would apply pressure on local stations to withhold retransmission rights from satellite providers to preserve cable TV’s continued stranglehold on the programming most desired by pay TV subscribers.  To address this fear, Congress included in SHVIA a provision that would “prohibit a television broadcast station that provides retransmission consent from . . . failing to negotiate in good faith ….”  That the purpose of this requirement was not managing the negotiations themselves, but ensuring that all new entrants, including satellite TV, had an opportunity to negotiate for broadcast programming, was made clear by three associated facts.

First is that good faith negotiation was strangely required of only the broadcaster; the pay TV provider had no such obligation.  This imbalance of rights would have been unthinkable had the purpose of the good faith obligation been to ensure fair negotiations, but it made sense where broadcast programming was in such high demand that requiring pay TV providers to engage in negotiations with local TV stations seemed entirely unnecessary. Continue reading →

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As we previously reported, the FCC last year adopted a number of changes to its rules and policies aimed at revitalizing the AM radio service, which for many years has lived in the shadow of the more robust FM service.  One of these changes was to expand the ability of AM broadcasters to use FM translators to rebroadcast their AM signals, thereby improving coverage, particularly at night.  To accomplish this, the FCC gave each AM station the right to file one, and only one, application to move an FM translator up to 250 miles and change the translator’s frequency, provided that it is used to rebroadcast the designated AM station for the next four years.  If that application does not make it through the FCC process for any reason, the broadcaster is barred from filing another.

The FCC gave smaller Class C and D AM stations first crack at its new policy by opening a window on January 29, 2016, during which Class C and D licensees could file modification applications on a first-come, first-served basis.  In other words, if you filed your application on January 29, you trumped anyone who filed a conflicting application after that date.  If parties file mutually exclusive applications on the same day, the applicants need to resolve the mutual exclusivity through settlement negotiations and/or technical amendments (e.g., one or both parties move to a different frequency).

The first window, limited to Class C and D AM stations, closes on July 28, 2016.  On the next day, July 29, a second window opens during which Class A and B AM stations (as well as Class C and D stations that did not file in the first window) may file modification applications to relocate FM translators to be used for AM station rebroadcasts.

AM stations that have not yet filed should keep in mind that:

  1. If you have a Class A or B AM station and plan to relocate an FM translator for AM rebroadcast purposes, you should get your modification application filed on July 29 in order to give yourself the maximum protection against being bumped by an earlier-filed mutually exclusive application.  If you are planning to buy a translator but haven’t actually acquired it yet, there are still ways to get the modification application on file before closing the acquisition.
  2. If you have a Class C or D AM station and plan to relocate an FM translator for rebroadcasts (and haven’t filed a modification application yet), file by July 28.  While Class C and D stations will not be precluded from filing in the second window, July 29 is sure to bring a wave of new modification applications that will change the translator landscape significantly.

But even having these deadlines circled on your calendar won’t help if your modification application is dismissed.  When it comes to modification applications filed in either of these windows, the FCC has made clear that its policy is one and done.  A dismissed application means that you not only lose your place in the processing line, but cannot file again in the windows.  Such a dismissal could occur due not only to deficiencies in the application itself, but also if your deal to acquire the translator falls through.  AM broadcasters buying a translator are therefore well advised to pay careful attention to the due diligence process, the closing conditions in the acquisition agreement, the compliance of the proposed move with FCC technical rules, and their financing for the acquisition.  If a deal falls through, the reason is irrelevant.  You’ll be sitting out the filing window watching your competitors get their FM translators.