As we wrote last month, the agenda for the FCC’s September open meeting included consideration of its proposal to modernize the 40-year-old broadcast contest rule. Today, after more than three and a half years of (unopposed) anticipation, the FCC adopted rules that “allow broadcasters to disclose contest rules online as an alternative to broadcasting them over the air.”
As we reported here, the FCC released its proposals regarding 2015 regulatory fees last May. As August turned into September, licensees were getting anxious as to when the FCC would get around to issuing an order setting the fees and opening the “Fee Filer” online payment system. That happened today with the release of this Public Notice and this Report and Order and Further Notice of Proposed Rulemaking (note that for the reasons discussed below, these FCC website links will not function correctly until the FCC’s website resumes normal operation on September 8th).
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:
The FCC today released a tentative meeting agenda for its September 17, 2015 Open Commission Meeting. The agenda includes consideration of a Report and Order granting broadcasters greater flexibility in making rule disclosures required by the FCC for station-conducted contests.
As we posted here and here, the Commission previously adopted a Notice of Proposed Rulemaking looking to “modernize” its nearly 40-year-old station-conducted contest rule. The current rule requires broadcasters conducting a contest to “fully and accurately disclose the material terms of the contest” by airing them a “reasonable” number of times. As readers of our Enforcement Monitor know, differing opinions on what is “material” and “reasonable” have led to numerous FCC enforcement actions, typically resulting in $4,000 fines.
The NPRM proposed to alleviate some of that confusion by allowing broadcasters to post contest rules on any publicly accessible website and then announce the web address on-air in lieu of broadcasting the rules themselves. In addition to easing the burden on broadcasters, who must often resort to speed reading contest rules on-air to cover all material terms while putting their audiences to sleep in the process, the proposed rule will give audience members the opportunity to review the contest rules at a more leisurely pace and at their convenience on the Internet.
The key question that remains is what the Commission’s Report and Order will say regarding how often a station must air the web address for the contest rules. The NPRM originally proposed including the contest rule web address with every mention of the contest, which could clutter the airwaves even more than the current rule’s requirement to air all of the material terms a reasonable number of times. Commenters in the proceeding pushed back, suggesting less frequent website mentions, and asking the FCC to modify its NPRM proposal that each mention include “the complete and direct website address” to instead allow use of a shorter web address (e.g., the station’s main website) where a link to the contest rules can be found.
The Report and Order under consideration has been a long time coming. The original petition for rulemaking was filed in January of 2012 and encountered no opposition, with all parties seeing the benefit of maximizing the respective strengths of broadcasting and the Internet in conducting a contest. With the ability to easily post the full contest rules online, station licensees will no longer need to stress over which contest rules are “material”, and audience members will no longer have to be speed readers (or speed listeners) to participate in a station-conducted contest.
FCC Chairman Wheeler released a blog post today discussing a number of changes and proposed changes to rules impacting TV and radio broadcasters. While his blog contained good news for the radio industry, TV broadcasters are likely to be less pleased.
On the TV side there are two major initiatives. First, the Chairman is proposing to his fellow Commissioners that the FCC adopt an order eliminating what he termed “outdated exclusivity rules”–the FCC’s network non-duplication and syndicated exclusivity rules. These “non-dup” and “syndex” rules, as they are more commonly known, essentially provide a process by which TV broadcasters can efficiently implement the geographic exclusivity they negotiated in their programming agreements without the need for expensive court actions. The purpose of these rules is to prevent multi-channel video program distributors (MVPDs) from violating that exclusivity by importing the exclusive programming from out-of-market TV stations.
These rules are of particular importance during retransmission negotiations, since without such rules, MVPDs could import, for example, a distant affiliate of the same network (one which obviously did a poor job of negotiating its own retransmission agreement) to violate the local station’s exclusivity. With the rule change proposed by the Chairman, the local station could no longer quickly and efficiently resolve the problem by filing a complaint at the FCC. Instead, it would need to initiate a long and costly court battle that would inevitably pull in (1) the distant affiliate, and (2) the network whose contract the distant affiliate breached by entering into a retransmission agreement exceeding that affiliate’s geographic right to the network’s programming.
It’s not hard to understand why an MVPD would like blocking the importation of exclusive programming to be a complex, time-consuming, and expensive proposition for a local TV station, but it’s less clear why the federal government would want to create a less efficient process that further clogs up the courts with multi-party litigation. The obvious answer is that it is not merely a procedural change, but one meant to alter the balance of substantive rights that existed when Congress created the retransmission consent process.
The second major TV-related item is the Chairman’s circulation among his colleagues of a Notice of Proposed Rulemaking (NPRM) to review the process used to determine whether broadcasters and MVPDs are negotiating retransmission consent rights in “good faith”. The purpose of the good faith regulations is to determine whether a party is negotiating with an intent other than that of reaching a deal (e.g., stalling for time). To implement this requirement, the FCC created a list of bad faith tactics that are prohibited (for example, refusing to show up for negotiations), as well as a “totality of the circumstances” test which seeks to determine whether a party’s conduct as a whole indicates that the party has not made “good faith” efforts to reach a deal.
While only cable systems have been found to have engaged in bad faith negotiations by the FCC, the MVPD industry has long sought to alter the traditional meaning of “good faith” in an effort to limit certain negotiating tactics that have nothing to do with whether a party is intent upon reaching a deal. Indeed, the focus has been on limiting the negotiation options available to broadcasters, even where, perversely, the result would be longer MVPD program blackouts.
The NPRM proposed by Chairman Wheeler, responding to a congressional directive to examine the matter, will apparently seek to alter the FCC’s approach to determining whether parties are engaging in good faith retransmission consent negotiations. Networks, local TV stations, and MVPDs all will no doubt eagerly await release of this NPRM to determine how the FCC’s proposals are likely to affect negotiating leverage and fees in the retransmission consent world–an odd result given that Chairman Wheeler’s blog post said the reason for eliminating the network non-dup and syndex rules is to “take [the FCC’s] thumb off the scales” in retransmission negotiations.
Call us cynics, but we’ll be surprised if “importing a station into a market where that station has no program rights” joins the list of bad faith negotiating tactics, even though it is the epitome of seeking a way around entering into an agreement with the local broadcaster.
From the broadcast industry’s “glass is half full” perspective, the Chairman’s blog post also indicated that the FCC will soon conclude a nearly four-year effort to update the FCC’s station contest rule. That rule requires broadcasters to regularly describe the material terms of station contests on-air. After long consideration, it appears the FCC will allow contest rules to be posted online as an alternative to speed-reading contest rules on-air. We earlier wrote about this proceeding at various stages in FCC Proposes to Clear Airwaves of Boring Contest Rules, But State Law Issues Remain and Bringing the FCC’s Contest Rule Up to Date. This rule change has had broad support, and while applicable to both TV and radio, is of greater practical importance to the radio industry, which tends to run more station contests and doesn’t have the option of airing written rules onscreen.
Finally, following up on his promise before the NAB Show in April, Chairman Wheeler indicated that he will also recommend to his colleagues that the FCC move forward with adopting several proposals in the 2013 AM Revitalization NPRM. This was a hot topic at the NAB Show in Las Vegas earlier this year when the Chairman signaled that the establishment of a window specifically for AM stations to apply for FM translators was essentially off the table, as Scott Flick wrote last April. Most considered an AM-only filing window to be the most practical and effective path to AM revitalization, particularly for AM daytime-only stations. In fact, the outcry in response to the Chairman’s dismissal of that option appeared to have stalled the AM Revitalization proceeding. While it looks like AM radio broadcasters can expect some relief from the FCC soon, most will be watching to see if an FM translator window for AM stations is part of that relief. Regardless, today is one of those days where you’d rather be a radio station than a TV station.
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:
“Repeat” Offender: Children’s Programming Reports Violations Cost Licensee $90,000
A licensee of several full power and Class A TV stations in Florida and South Carolina paid $90,000 to resolve an FCC investigation into violations of the Children’s Television Act (CTA) threatening to hold up its stations’ license renewal grants.
The CTA, as implemented by Section 73.671 of the FCC’s Rules, requires full power TV licensees to provide sufficient programming designed to serve the educational and informational needs of children, known as “Core programming”, and Section 73.6026 extends this requirement to Class A licensees. The FCC’s license renewal application processing guideline directs Media Bureau staff to approve the CTA portion of any license renewal application where the licensee shows that it has aired an average of 3 hours per week of Core programming. Staff can also approve the CTA portion of a license renewal application where the licensee demonstrates that it has aired a package of different types of educational and informational programming, that, even if less than 3 hours of Core programming per week, shows a level of commitment to educating and informing children equivalent to airing 3 hours per week of Core programming. Applications that do not satisfy the processing guidelines are referred to the full Commission, where the licensee will have a chance to prove its compliance with the CTA.
Among the seven criteria the FCC has established for evaluating whether a program qualifies as Core programming is the requirement that the program be a regularly scheduled program. The FCC has explained that regularly scheduled programming reinforces lessons from episode to episode and “can develop a theme which enhances the impact of the educational and informational message.” With this goal in mind, the FCC has stressed that the CTA intends for regularly scheduled programming to be comprised of different episodes of the same program, not repeats of a single-episode special.
Applying this criteria to each of the licensee’s 2012 and 2013 license renewal applications, the FCC staff questioned whether certain programming listed in the Children’s Television Programming Reports for the stations complied with the episodic program requirement. In particular, the staff looked at single-episode specials that the licensee counted repeatedly for the purpose of demonstrating the number of Core programs aired during each quarter—for example, the licensee listed one single-episode special as being aired 39 times in one quarter. After determining that it could not clear the renewal applications under the FCC’s processing guidelines, the staff referred the matter to the full Commission for review.
The FCC and the licensee subsequently negotiated the terms of a consent decree to resolve the CTA issues raised by the Media Bureau. Under the terms of the consent decree, the licensee agreed to make a $90,000 voluntary contribution to the U.S. Treasury. The licensee also agreed to enact a plan to ensure future compliance with the CTA, to be reflected in each station’s Quarterly Children’s Television Programming Reports. In light of the consent decree and after reviewing the record, the FCC concluded that the licensee had the basic qualifications to be an FCC licensee and ultimately granted each station’s license renewal application.
FCC Clarifies “Red Light” Policy Is a Barrier to Grants, Not a Road Block to Filing Requests
An Indiana radio licensee faces a $15,000 fine for failing to retain all required documentation in its station’s public inspection file and for suspending operation of the station without receiving special temporary authority (STA) to do so.
We’ve all heard the warning: once you put something on the Internet, it will be there forever. But an Oregon TV station learned the hard way that records in the FCC’s online public inspection file are easier to delete than you might like—and backdating restored files is not an option.
As detailed in our May Enforcement Monitor, the FCC hit the licensee with a proposed $9,000 fine for failing to timely upload Quarterly Issues/Programs Lists to the station’s online public inspection file—$3,000 for failing to post newly-created documents to the online file after the online file rule went into effect on August 2, 2012, $3,000 for failing to meet the February 4, 2013 deadline to populate the online public file with documents created before August 2012, and yet another $3,000 for failing to disclose these apparent violations in the station’s license renewal application.
But in its response to the FCC’s Notice of Apparent Violation (NAL), the licensee asserted that it had in fact timely posted its issues/programs lists to the online public file. The licensee claimed that when it was notified that the license renewal of a co-owned LPTV station was granted, a station employee deleted all issues/programs lists for the preceding license term from the online public file of the licensee’s full power TV station, apparently confused about which station’s license renewal had been granted (both stations had the same four-letter call sign). Recognizing the error, station employees promptly re-uploaded the lists to the public file less than 24 hours later. The February 13, 2015 upload date, however, created the appearance that the licensee had missed the original due dates by more than two years.
As proof of the mishap, the licensee provided (i) a signed declaration under penalty of perjury from a station employee, and (ii) internal correspondence showing that the lists were inadvertently deleted following the LPTV station’s license renewal grant. Satisfied with this evidence, the FCC rescinded the NAL and canceled the $9,000 fine.
So let this be a teachable moment—particularly as the FCC ponders expanding its online public file requirement to radio stations.
First, when intentionally deleting documents as no longer relevant, make sure you are in the right public file. Second, where a public file document is accidentally deleted, repost it as soon as the error is spotted. Third, when you do repost it, attach a brief explanation alerting the FCC (and any potential license renewal petitioners) of the original filing date and the reason for the subsequent “late” filing. Finally, maintain contemporaneous records to document the mistake, providing evidence that will back up the station’s explanation when the FCC comes knocking.
Oh, and one last thing the FCC didn’t mention in its decision: don’t delete those public file documents until grant of the station’s license renewal becomes a final, unappealable order. If the FCC rescinds a station’s license renewal as having been granted in error, the station will need to have those documents in its public file, and the FCC isn’t going to bother looking for them in the Google cache.
Interns are a perennial part of the media landscape, and you have probably heard a lot over the last few years on the subject of unpaid interns. Specifically, that unless they qualify as genuine interns under a six-part Department of Labor (DOL) test, businesses are required to treat them (and therefore pay them) as employees.
The resurgence in interest in the subject came in early 2010 when the Department of Labor began stepping up enforcement against for-profit businesses illegally using unpaid interns. In April of 2010, the DOL’s Wage and Hour Division released a Fact Sheet providing guidance on when an individual can be classified as a trainee or intern exempt from the Fair Labor Standard Act’s requirement that employees be paid at least the federal minimum wage and receive overtime pay. The Fact Sheet dutifully laid out the six-part test that the DOL adopted in the 1960s, noting that “[i]nternships in the ‘for-profit’ private sector will most often be viewed as employment” unless all six of the criteria are met. The six criteria are:
From the DOL’s perspective, if an employer can’t demonstrate that all six factors are met, that intern is an employee, and the employer is liable for unpaid wages.
However, if you operate in New York, Connecticut, or Vermont, the rules have now changed, and if you operate in one of the other 47 states, change may be on the way. In a case launched by unpaid interns that worked on the film Black Swan, the influential U.S. Court of Appeals for the Second Circuit last week rejected the DOL’s test as too rigid. In doing so, the Second Circuit overturned a lower court’s certification of class actions on behalf of the unpaid interns, finding that the question of employment status is a “highly individualized inquiry” poorly suited to a class or collective action.
As discussed in much more detail in a Pillsbury Client Alert from our own Julia Judish and Osama Hamdy, the Second Circuit chose instead to adopt a “Primary Beneficiary” test, which “focuses on what the intern receives in exchange for his work” and “also accords courts the flexibility to examine the economic reality as it exists between the intern and the employer.” Simple, right?
Business owners might justifiably complain that the court replaced a complicated six-part subjective test with a simpler but even more subjective test. However, the Pillsbury Client Alert lays out a number of considerations suggested by the court for determining whether an intern is the primary beneficiary of the relationship with the employer, including an increased focus on the connection between the internship and the intern’s academic course of study. The court wrote that
[b]y focusing on the educational aspects of the internship, our approach better reflects the role of internships in today’s economy than the DOL factors, which were derived from a 68‐year old Supreme Court decision that dealt with a single training course offered to prospective railroad brakemen.
While a number of the considerations suggested by the Second Circuit are similar to those in the DOL test, the difference is that the court’s test provides the flexibility to look at other factors that might be relevant to answering the question, and unlike the DOL test, does not consider the absence of any one factor to be determinative of an intern’s status under the Fair Labor Standards Act.
Rather than listing the court’s suggestions for factors that might (in addition to others) be considered, let me suggest you take a look at the Client Alert. It not only outlines those factors, but suggests a number of steps businesses can take to clarify their relationship with unpaid interns, whether they are subject to the DOL or the Second Circuit criteria.
The good news for employers is that the Second Circuit’s test (which for the moment only applies in the Second Circuit’s jurisdiction of NY, CT, and VT) allows a business to present any information relevant to demonstrating that the unpaid intern is not an employee. The bad news is that the unpaid intern has that same flexibility in seeking to prove he or she is really an employee that needs to be paid. In addition, employers in these states face an increased risk of misclassification claims for internships not connected with an academic program. Making sure your business has done all it can to end up on the right side of that analysis is your next challenge.
The FCC’s Office of Engineering and Technology (OET) today released the final version of its TVStudy software, which calculates TV station coverage areas for use in the spectrum auction and repacking. The software can be accessed here.
In addition, pursuant to an earlier order of the FCC directing the OET to “release a detailed summary of baseline coverage area and population served by each television station to be protected in the repacking process,” the OET today released a 65 page table laying out its coverage area calculations for TV stations across the country using the final version of the TVStudy software.
The table includes baseline data for each station’s noise-limited, terrain-limited, and interference-free coverage areas and population served. In an accompanying Public Notice, the OET indicated that the “noise-limited data reflects the coverage area within the station’s contour that will be replicated and the interference-free population data reflects the population served by the station that will be protected from interference” in the repacking.
The Public Notice cautions “that the list of stations included in the baseline data released today is not the final list of stations eligible for repacking protection” (which was addressed in an earlier Public Notice), and that “the baseline data released today reflects the current information in the Commission’s databases and is subject to update based on licensees’ Pre-Auction Technical Certifications,” which are due on July 9, 2015.
The FCC is therefore requesting comments on the baseline data, and has set a July 30, 2015 deadline for those comments. Once it has had an opportunity to consider them, “OET will release the final baseline data to be used for purposes of the incentive auction and the repacking process well in advance of the auction. The final baseline data will contain the final list of eligible stations based on corrections from any ‘Petition for Eligible Entity Status’ and any corrected data from the Pre-Auction Technical Certifications.”
In addition to making sure they get their Pre-Auction Technical Certifications on file with the FCC by the July 9th deadline, stations should examine today’s baseline data for any surprises or anomalies that they will want to address in their comments. As the FCC’s auction and repacking plans firm up, TV broadcasters will want to make sure to catch any mistakes in their stations’ data before those errors become ingrained in the Commission’s auction and repacking planning.
June 2015
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:
Continued Unauthorized Operation Leads to $8,000 Fine
A New York noncommercial educational radio station received an $8,000 fine after repeatedly failing to operate its station in accordance with its authorization. Section 301 of the Communications Act prohibits the use or operation of any apparatus for the transmission of communications or signals by radio, except in accordance with the Act and with a license granted by the FCC. In addition, Section 73.1350(a) of the FCC’s Rules requires a licensee to maintain and operate its broadcast station in accordance with the terms of the station authorization.
In response to a complaint, an FCC agent discovered in October of 2012 that the licensee was operating the station from a transmitter site in Buffalo, New York, a location about 36 miles from the authorized site. The FCC made repeated attempts to contact the licensee. Ultimately, the president of the licensee confirmed the unauthorized operation and agreed to cease operating from Buffalo. The FCC then issued a Notice of Unlicensed Operation to the licensee, warning it that future unauthorized operations could result in monetary penalties.
After receiving another complaint, the FCC determined that the licensee had resumed unauthorized operation in November of 2012. In response, the FCC’s Enforcement Bureau issued a Notice of Apparent Liability (NAL) proposing an $8,000 fine. The FCC explained in the NAL that although the base fine for operating at an unauthorized location is $4,000, the egregiousness of the licensee’s violation warranted an upward adjustment of an additional $4,000. The FCC based this decision on the fact that the licensee had moved the location of its transmitter to a significantly more populous area more than 30 miles from its authorized location in an effort to increase the station’s audience while potentially causing economic or competitive harm to radio stations licensed to that community.
Following the NAL, the licensee sought a reduction or cancellation of the fine, claiming that it made good faith efforts to remedy the violation, had a history of compliance with the FCC’s Rules, and was unable to pay the fine. The FCC concluded that the licensee took no remedial actions until after it was notified of the violation, and found that the licensee’s continued operation from the unauthorized location after receiving a Notice of Unlicensed Operation demonstrated a deliberate disregard for the FCC’s Rules. Finally, the licensee failed to provide any documentation supporting its inability to pay claim. Accordingly, the FCC rejected the licensee’s arguments and declined to cancel or reduce the $8,000 fine.
In Rare Decision, FCC Cancels Fine Based on Station’s Operating Losses
In October of 2014, the FCC’s Video Division proposed a $16,000 fine against the licensee of a Class A TV station for violating (i) Section 73.3539(a) of the FCC’s Rules by failing to timely file its license renewal application, (ii) Section 73.3526(11)(iii) for failing to timely file its Children’s Television Programming Reports for eight quarters, (iii) Section 73.3514(a) for failing to report those late filings in its license renewal application, and (iv) Section 73.3615(a) for failing to timely file its 2011 biennial ownership report. The FCC also noted a violation of Section 301 of the Communications Act because the station continued operating after its authorization expired. Continue reading →
