FCC Hits TV Station With Maximum Fine for Fleeting Nudity in Newscast

The Federal Communications Commission has fined a television station $325,000 for allegedly broadcasting “extremely graphic and explicit sexual material”, i.e., indecent material.  The amount of the fine, underlying facts and the Commission’s reasoning for issuing the fine raise serious concerns:

On July 12, 2012, WDBJ(DT) in Roanoke, Virginia broadcast a 6:00 pm news story about whether the local rescue squad would let a volunteer, who was an ex-porn star, continue volunteering after an initial six month trial period.  The Roanoke Fire Chief sought legal advice from the County Attorney on the matter.  The story ran 3 minutes and 20 seconds.  The introduction to the story included video of the former adult film star from an adult video distributor’s web site.  The majority of the three-second video was of the former adult film star sucking her finger.  Along the border on the right side of the same video were several smaller images, one including a hand stroking an erect penis.  

This is the first instance where the FCC has issued the maximum fine to a broadcaster since Janet Jackson and the Super Bowl more than a decade ago.  The fine raises several concerns. First, the Commission discounts (indeed ignores) the newsworthiness of the story and the fact that it ran during the station’s 6:00 p.m. news.  Second, the Commission argues that the graphic nature of the allegedly indecent material outweighs the fleeting nature of the video.

In the decision, the FCC takes the position that imposing fines for fleeting expletives/videos remains constitutional.   The Commission cites as support a concurring opinion from a Supreme Court case in 2012 that focused on fleeting expletives.  That case however overturned a Commission decision imposing administrative sanctions for the broadcast of fleeting expletives.  The Supreme Court concluded that the Commission failed to issue the appropriate Public Notice in 2004 informing the public of the Commission’s policy change to start imposing fines for fleeting expletives.  It was because of the FCC’s lack of public notice that an appellate court dismissed the FCC’s fine of $550,000 in the Janet Jackson case. The Supreme Court declined to hear the FCC’s appeal of that decision.

The fleeting expletive case has reached the Supreme Court twice in the past several years, most recently in 2012.  The Supreme Court decisions in both instances ruled narrowly, basing their decision on the administrative issues facing the court and not whether fleeting expletives were constitutional.  A careful reading of the two Supreme Court cases and the oral arguments suggests that a majority of the court is more likely than not to rule that fining broadcasters for fleeting expletives is unconstitutional.

The Commission decision yesterday was 5-0.  Regrettably, “cleaning up the airwaves” has a good ring to the public, whether the Commissioner is Republican or Democrat.

As a result of yesterday’s action, the Commission’s fleeting expletive policy remains in full force and effect.  Further, the Commission appears unwilling to conduct the proper rule making proceeding to evaluate the fleeting expletive policy in light of the Commission.  Instead, the Commission’s position appears to be “business as usual” on fleeting expletives.

WDBJ(DT) intends to appeal the Commission’s decision.  It will take several years, but perhaps this case (or another like it) will eventually make its way to the Supreme Court and perhaps this time the Supreme Court will rule on the constitutionality of fleeting expletives.

In the interim, broadcasters must remain vigilant.  Until there is a change in the law (or in the Commission’s policy), all it takes is one oversight and three seconds of “indecent material” for the Commission to impose a maximum forfeiture.

Lessons from Aereo: Laws, Litigation and Loopholes

In a case with far-reaching implications for the television business, for cloud computing and for new technologies, the U.S. Supreme Court found that Aereo’s online video service infringed copyrights held by television producers, broadcasters, marketers and distributors in broadcast television programming.  In a 6-3 decision, the Court decided in American Broadcasting Cos., Inc. et al. v. Aereo, Inc., FKA Bamboom Labs, Inc. that Aereo “publicly performs” a copyrighted work within the meaning of the Transmit Clause of the U.S. Copyright Act and thereby infringed exclusive rights of the copyright holders because Aereo did not license the content.  

Aereo’s service allows subscribers, for a monthly fee, “to watch television programs over the Internet at about the same time as the programs are broadcast over the air.” According to Aereo, the system consists of thousands of small antennas in centralized location that receive over-the-air broadcast programming. The company uses special equipment to allow subscribers to stream the programming. The petitioners in this case were copyright holders who sought a preliminary injunction against Aereo, alleging copyright infringement. The Court did not rule on other claims of copyright infringement raised in the lower courts.

Justice Stephen Breyer, writing for the majority, wrote that Congress amended the Copyright Act in 1976 in part to overrule two U.S. Supreme Court decisions (Fortnightly Corp. v. United Artists Television, Inc. and Teleprompter Corp. v. Columbia Broadcasting System, Inc.) that held that cable systems’ retransmissions of over-the-air broadcasts were not public performances under the Copyright Act. He concluded that

having considered the details of Aereo’s practices, we find them highly similar to those of the CATV systems in Fortnightly and Teleprompter. And those are activities that the 1976 amendments sought to bring within the scope of the Copyright Act. Insofar as there are differ­ences, those differences concern not the nature of the service that Aereo provides so much as the technological manner in which it provides the service. We conclude that those differences are not adequate to place Aereo’s activi­ties outside the scope of the Act.

The majority found, in essence, that Aereo’s system was the modern equivalent of these early CATV, or community antenna television, systems, which used centralized antennas on hilltops or other sites to receive off-air broadcast signals and retransmit those signals via coaxial cable to subscriber homes.  Justice Antonin Scalia, writing the dissent, rejected the majority’s conclusion about Aereo’s resemblance to cable TV services, finding that sufficient technological distinctions existed for purposes of the public performance right and that the majority’s ruling was an “ad hoc rule for cable system lookalikes.” He also argued that Aereo could not be held directly liable for copyright infringement on public performance grounds because “it does not make the choice of content” and therefore does not “perform.” That said, the dissent makes clear that other legal grounds for potential copyright liability were not before the Court, stating that the Networks’ “request for a preliminary injunction – the only issue before this Court – is based exclusively on the direct-liability portion of the public-performance claim (and further limited to Aereo’s ‘watch’ function, as opposed to its ‘record’ function).”

The majority described its decision as a “limited holding” and that Congress “did not intend to discourage or to control the emergence or use of different kinds of technologies.” Justice Breyer wrote:

We cannot now answer more precisely how the Transmit Clause or other provisions of the Copyright Act will apply to technologies not before us. We agree with the Solicitor General that '[q]uestions involving cloud computing,[remote storage] DVRs, and other novel issues not before the Court, as to which ‘Congress has not plainly marked [the] course,’ should await a case in which they are squarely presented.” … And we note that, to the extent commercial actors or other interested entities may be concerned with the relationship between the development and use of such technologies and the Copyright Act, they are of course free to seek action from Congress…

The majority did not address the legal effect of Cartoon Network LP, LLLP v. CCS Holdings, Inc., a 2008 decision by a panel of the U.S. Court of Appeals for Second Circuit. In ruling for Aereo in 2013, a three-judge panel of the same Court cited the Cartoon Network case for the proposition that Aereo’s transmissions were not “to the public” for purposes of the Transmit Clause.  Cartoon Network involved whether transmissions using remote storage DVR services were public performances for purposes of the Copyright Act. While the precise legal issue in Aereo involved near-real-time streaming rather than content storage, the omission is noteworthy because Aereo reportedly relied on the Cartoon Network precedent in designing its system. 

Some Implications of the Court's Decision

There is much ambiguity in the Court’s decision, and its application to new technologies will be a source of much analysis and debate. Even if Aereo had prevailed on the public performance claim at the preliminary injunction stage, other theories of copyright liability would have been considered in further proceedings on remand. In addition, the Court’s decision on public performance grounds meant that the Court did not need to determine whether Aereo would have qualified as a “cable system” that was eligible to obtain statutory copyright licenses for the broadcast programming. Similarly, the Court did not look beyond copyright law to communications law and the rules for broadcast retransmission consent. Moreover, the “record” function was not at issue in the case, so the decision’s application to cloud storage services is undetermined at the U.S. Supreme Court. In short, Aereo represents only a portion of the larger legal picture.

I’ve said before that disruption does not occur in a vacuum. The multi-billion-dollar marketplace for video programming services is shaped heavily by regulatory forces. Franchising, copyright, retransmission consent and other legal issues play a role in defining the industry’s buyers and sellers, as well as the terms and conditions of the availability of programming. New providers must manage a variety of legal and regulatory risks to enter and to succeed in this marketplace.

Aereo’s legal approach challenged the existing business model in an effort to bypass licensing negotiations to determine compensation for copyright holders. Chief Justice John Roberts told Aereo’s counsel at oral argument that “your technological model is based solely on circumventing legal prohibitions that you don’t want to comply with, which is fine.” The majority’s reasoning ties Aereo’s practices to precedent from decades ago, despite the technological differences between today's cloud/DVR/Internet services and the community antennas of that era.  Justice Scalia in dissent stated that “I share the Court’s evident feeling that what Aereo is doing (or enabling to be done) to the Networks’ copyrighted programming ought not to be allowed. But perhaps we need not distort the Copyright Act to forbid it.” A major point of contention between the majority and the dissent is whether the case showed that Copyright Act had a “loophole” that should be addressed by the Court or by Congress.

It is noteworthy that the result in Aereo turned less on nuanced technological distinctions and more on broader legal policy:

In other cases involving different kinds of service or technology providers, a user’s involvement in the opera­tion of the provider’s equipment and selection of the con­tent transmitted may well bear on whether the provider performs within the meaning of the [Copyright] Act. But the many similarities between Aereo and cable companies, consid­ered in light of Congress’ basic purposes in amending the Copyright Act, convince us that this difference is not critical here.

This language also illustrates the challenges in applying to new technologies the longstanding legal principle of stare decisis, which means judicial adherence to settled precedent from prior decisions.  The majority endeavored to use legislative history and “Congress’ basic purposes in amending the Copyright Act” to fit Aereo’s business practices into legal precedent. Whether made by lawmakers, judges or regulators, legal rules have a difficult time keeping up with technological change. Rules that are too specifically tailored run the risk of being rendered obsolete, while broader rules can be more vague and difficult to apply as a matter of stare decisis.

The majority stressed that its holding was “narrow” in terms of the intended impact on new technologies. For now, expect the ruling to result in more payments to producers, broadcasters and copyright holders when program distributors seek to license retransmissions of broadcast programming. In any case, as new providers seek to become video programming distributors and existing providers evaluate their options, Aereo will be an important legal touchstone for assessing new business models and technologies for the delivery of broadcast programming.


The FCC has eliminated the Zapple Doctrine, bringing to a close the last vestige of the Fairness Doctrine.  The Zapple Doctrine required that when a broadcaster provided time to a spokesperson or supporter of one candidate to discuss the candidates or campaigns in a particular race, that the station provide comparable time to a spokesperson or supporter of the candidate’s opponent.

The Fairness Doctrine was established in 1949 as part of the FCC’s efforts to require broadcasters to adequately cover, and to air conflicting viewpoints on, issues of public importance.  The Fairness Doctrine expanded over time to include ballot propositions, personal attack and political editorial rules and the Zapple Doctrine.

The Fairness Doctrine survived a constitutional challenge in 1969 in Red Lion Broadcasting v. FCC but could not survive the rigors of time.  In 1987, the FCC decided to stop enforcing the Fairness Doctrine, concluding that the doctrine did not serve the public interest.  In 1992, the U.S. Court of Appeals for the D.C. Circuit held that the personal attack and political editorial rules and ballot propositions were unenforceable and repealed these rules. This left the Zapple Doctrine as the only surviving remnant of the Fairness Doctrine.

Until now. In two recent decisions the Media Bureau granted the license renewal applications of two AM radio stations in Milwaukee, Wisconsin over the objection of a public interest group.  The group claimed the licensees refused to provide air time to supporters of one candidate to respond to statements aired on the stations by supporters of the opposing candidate.  The public interest group claimed the refusal violated the Zapple Doctrine.  The Media Bureau rejected these arguments, noting that the opposition to the license renewal was based on the programming choices by the stations.  The Media Bureau reaffirmed the well-established legal principle that the Commission cannot exercise the power of censorship over stations with regard to content-based programming decisions.  The licensee has broad discretion to choose the programming it believes serves the needs and interests of the members of its audience.  The Commission will intervene only if the licensee abuses that discretion or directed by federal statute.

The Media Bureau held that it had no basis to enforce the Zapple Doctrine, because this doctrine was based on an interpretation of the Fairness Doctrine that was no longer in effect.  The Media Bureau pointed out that the FCC abrogated the Fairness Doctrine in 1987 and in 2011 deleted rules enforcing the doctrine as defunct, obsolete and without current effect.  The Media Bureau concluded that the Zapple Doctrine similarly has no legal effect.

This does not mean that broadcasters have carte blanche to broadcast whatever content they desire.  The Commission’s political advertising rules regarding equal opportunities and lowest unit charge and the Commission’s policy regarding indecency, including fleeting expletives, remain in effect.  Federal statute makes the broadcasting of indecent, obscene and profane material a crime.

When it comes to editorial content, however, broadcasters now can breathe easier.

FCC Reopens; Issues Guidance on Revised Filing Deadlines

Now that this month's Federal Government shutdown is over, and after a 16-day suspension in normal operations, the Federal Communications Commission has issued a Public Notice announcing revised deadlines for submitting certain FCC filings. The changes were needed because many of the agency's regular electronic filing systems and web pages were inaccessible during the shutdown. As a result, licensees, applicants, participants in rulemaking proceedings and other interested parties will want to carefully review the Public Notice to help ensure that their FCC filings are made in a timely manner. 

U.S. Supreme Court Sides with Broadcasters in Indecency Cases

Today, the Federal Communications Commission’s broadcast indecency policy received, at most, a glancing blow from the U.S. Supreme Court. 

In a sharply limited decision, the Court, by an 8-0 vote (with Justice Sotomayor not participating) and for the second time since 2009, avoided difficult First Amendment questions about the FCC’s authority to restrict coarse language and nudity on broadcast television. In 2009, the Court held that the FCC’s adoption of the so-called “fleeting expletives” policy for broadcast indecency was neither arbitrary nor capricious in violation of the Administrative Procedure Act. This time, in  Federal Communications Commission, et al. v. Fox Television Stations, Inc., et al, the Court found that this policy, as applied to Fox and ABC, was impermissibly vague in violation of these broadcasters’ due process rights. The Court did not reach the First Amendment issues, choosing instead to vacate and remand the decisions of the 2nd Circuit that struck the FCC’s broadcast indecency policies on First Amendment grounds.

The Fox and ABC cases, which I’ve written about previously, involved challenges brought by broadcasters to the FCC’s broadcast indecency regulations. The broadcasters argued, among other things, that the Court should overturn its precedent in FCC v. Pacifica Foundation granting the FCC limited authority under the First Amendment to regulate broadcast indecency. While the Court today left the First Amendment issues open, Justice Kennedy, writing for the Court, found instead that the FCC “failed to give Fox or ABC fair notice prior to the broadcasts in question that fleeting expletives and momentary nudity could be found actionably indecent.” As a result, according to the Court, the FCC’s policy was impermissibly vague with respect to the broadcasts at issue here. In a brief concurring opinion, Justice Ginsburg wrote that “[t]ime, technological advances, and the Commission’s untenable rulings in the cases now before the court show why Pacifica bears reconsideration.”

Some initial observations:

1)      The FCC’s “Fleeting Expletive” Policy Still Exists. The decision explicitly does not address the constitutionality of the FCC’s current indecency policy “as expressed in the Golden Globes Order [issued March 18, 2004] and subsequent adjudications.” This Order adopted the “fleeting expletives” policy and apparently remains in force. The Court found that the FCC remains “free to modify its current indecency policy in light of its determination of the public interest and applicable legal requirements.”

2)      Timing of the Alleged Violation Is Critical.  The Fox and ABC broadcasts occurred prior to March 18, 2004. According to the Court, “the Commission policy in place at the time of the broadcasts gave no notice to Fox or ABC that a fleeting expletive or a brief shot of nudity could be actionably indecent; yet Fox and ABC were found to be in violation.” As a result, timing of a disputed broadcast is critical for purposes of determining the precedential effect of this decision on other cases.

3)      The decision is limited in scope on indecency. The Court treated “fleeting expletives and fleeting nudity” as part of the same FCC policy articulated in the 2004 Golden Globes Order. This determination enabled the Court to dispose of both cases via the same vagueness rationale, thus avoiding the First Amendment issues.

4)      The Court’s decision gives clues on how it could rule on the Janet Jackson case. The opinion does not address the FCC’s pending Petition for a Writ of Certiorari from the U.S. Supreme Court in connection with the Janet Jackson “wardrobe malfunction” case. The FCC is seeking review of a decision by the U.S. Court of Appeals for the 3rd Circuit, which found that the Commission acted arbitrarily and capriciously, in violation of the Administrative Procedure Act, when it fined CBS stations for violating the indecency policy. The FCC requested that its petition “should be held for [the Fox case] and then disposed of as appropriate in light of the Court’s decision.” In this regard, like the broadcasts for ABC and Fox in today’s decision, the Janet Jackson broadcast occurred prior to the March 18, 2004 release of the 2004 Golden Globes Order. As a result, “fair notice” is again at issue, particularly now that the Court has explicitly determined that the Commission’s policy extends to “fleeting nudity.” Given that the nudity depicted in NYPD Blue lasted about seven seconds and the "wardrobe malfunction" was clocked at less than one second, the Commission should have concerns about the impact of today's ruling on the Janet Jackson case.

5)      Processing the backlog of indecency complaints is a priority.  Big practical issues remain. For example, the FCC has a massive backlog of indecency complaints filed against broadcasters.  Such complaints often slow processing of applications and delay the closing of transactions. For now, observers must watch and wait to see how the FCC decides to proceed.  Expect the FCC to comb through the backlog of complaints and dismiss those cases built on “fleeting expletives” with respect to broadcasts that occurred prior to March 18, 2004.  The FCC could take the opportunity to dismiss those complaints that it deems to not implicate the agency’s current indecency policy.

In light of these developments, don’t expect the floodgates to open for the broadcast of coarse language or brief nudity on your local station any time soon. There are significant questions about how the Commission will enforce its indecency policies going forward. The hardest questions on broadcast indecency and the First Amendment will continue to be debated, but there’s every reason to expect that one day the Court will be asked to address them yet again.  In the meantime, stay tuned.

The TV Industry Isn't "Starting to Collapse." Here's Why.

Disruption does not occur in a vacuum. Recently Henry Blodget and Dan Frommer considered whether technological disruption may lead to the "collapse" of the television industry given the recent track record of the newspaper industry. The debate centers on TV viewers’ changing habits, and the Internet, new video providers (e.g., Hulu, Netflix and iTunes) and non-TV displays (e.g., smartphones and tablets) factor heavily into this debate. Technology has enhanced time-shifting, and viewers watch much less programming live (or nearly live) or via a traditional TV.  Some viewers replace linear program streams with on-demand viewing. Reasonable minds can differ on the ramifications of these changes. What this debate lacks, however, is a thorough assessment of the role that the legal systems play in this heavily regulated space – systems that, for better and for worse, can limit and delay industry-wide disruptions. 

Video programming markets exist within an expansive, multilayered regulatory structure that shapes the options available to viewers. The structure affects access to programming, access to distribution facilities, the terms and conditions of programming rights and other aspects of production and distribution. While Blodget sees vulnerability in the network model amid alternative means for production, acquisition and distribution, Frommer argues that changes in the TV industry will “happen a lot slower than you think” due to factors such as network bundling contracts and carryovers of cable bundling to the Internet. Program suppliers (whether network or syndicated), broadcasters, cable operators, Internet-based video service providers and others compete in this marketplace, but Federal policy also plays a significant role.

Blodget and Frommer focus on the rise and viability of new à la carte competitors to traditional broadcast, cable and satellite providers. These outlets provide a variety of programming, but such providers have differing levels of bargaining power and must compete to negotiate for programming rights. These providers lack certain regulatory benefits available to cable and satellite companies. Federal law assigns certain rights (and certain burdens) to "multichannel video programming distributors," or MVPDs. To date, the Federal Communications Commission has declined to extend this definition to a category of providers that it calls “Online Video Distributors” (OVDs) which include providers such as Netflix, Hulu and others. In a pending proceeding, the FCC has sought public comment on the definition of “MVPD” due to the wide-ranging policy implications.

An MVPD classification gives a provider certain regulatory benefits with respect to access to programming. For example: 

  • Under federal program access rules, among other things, cable-affiliated programmers must make their programming available to MVPDs on nondiscriminatory rates, terms and conditions. Classification issues, however, will impact the universe of parties in the marketplace. An “over-the-top” video provider, Sky Angel, filed a program access complaint against Discovery Communications and Animal Planet in a dispute over a terminated affiliation agreement. Although the complaint remains pending, in its initial ruling, the FCC's Media Bureau found that Sky Angel was not an MVPD because it did not provide subscribers with a transmission path. Extension of MVPD status to such providers would represent a dramatic change in the regulatory regime.
  • Federal law provides, with limited exceptions, that no MVPD may retransmit the signal of a broadcast station without the station’s express authority.  Every three years, commercial broadcasters must contact their local MVPDs and must elect whether to have their broadcast signals carried by those operators in accordance with a retransmission consent agreement or to invoke statutory rights of mandatory carriage. In addition, FCC rules require MVPDs to honor broadcasters’ exclusivity rights with respect to certain network, syndicated and/or sports programming. At present, only MVPDs are eligible to seek relief from the FCC to resolve disputes with broadcasters over these rights. Again, definitions matter.

Even non-MVPDs have benefitted from FCC actions to stimulate access to programming by OVDs.  The FCC's approval of Comcast/NBCU joint venture involved several conditions designed to facilitate access by OVDs to programming owned by the joint venture. While the FCC may lack explicit statutory authority to mandate such access, if FCC approval is required for a specific transaction, the agency sometimes requires the transacting parties to adhere to behavioral, structural or other conditions to get such approval. The Commission’s actions in the context of Comcast/NBCU and the Sky Angel case are introductory steps, potentially toward addressing more significant changes down the road.

Of course, access to programming also requires consideration of the benefits and burdens of copyright laws. The Copyright Act grants copyright holders limited bundles of rights to their works, such as rights to perform their copyrighted works in public (which includes broadcast programming and retransmission of such programming on MVPD networks), rights to preclude others from making public performances of these works and rights to reproduction of those works. Qualifying MVPDs can obtain compulsory or statutory licenses to retransmit certain video programming without having to negotiate with many individual copyright holders whose programs are included in the video stream. Copyright law issues are front and center in a legal challenge brought by broadcasters against the launch of Aereo’s subscription-only Internet service. Aereo plans to offer subscribers specific bundles of broadcast network programming for a fee. The networks assert that Aereo’s service constitutes copyright infringement and argue that while other providers pay fees to license the content, Aereo does not. Once again, legal definitions and regulatory uncertainty over emerging technologies affect access to programming.

Notice that I’ve focused only on certain regulations involving access to programming. A much longer blog post would deal with other important regulatory structures: for example, media ownership, access to network facilities, local video franchising, equipment regulation and the regulator’s role in dispute resolution.  More regulation translates into regulatory uncertainty (for example, over definitional issues), higher transaction costs, more litigation and more intensive lobbying. The lesson here is that the government regulates the video programming industry much more heavily than the newspaper industry, so it’s difficult to translate the problems facing the latter into predictions about the viability of the former.

So between Henry Blodget and Dan Frommer, who’s right about whether the TV business is “starting to collapse”? I see that as a false choice given the unpredictability of this rapidly changing marketplace. The pace of change on the Internet can be dramatic, but where regulation and litigation are involved, the pace can turn glacial. Thanks in part to the legal system, I don’t expect the “TV business” to “collapse” but rather to continue to evolve incrementally, with competition, new and disruptive technologies and government action serving as major drivers.

FCC Authorizes Channel Sharing for TV Stations in Advance of Incentive Auctions

At its open meeting last Friday, the Federal Communications Commission adopted rules that will enable TV stations to share channels of broadcast spectrum.  As the first step in the process to make TV band spectrum available for new uses, the new rules will allow TV stations to voluntarily share a single six megahertz channel as part of the incentive auction process approved by Congress in February.  This process will involve providing broadcasters with financial incentives to submit their licenses for cancellation in exchange for a share of proceeds of reauctioning the spectrum for new service providers.  The channel-sharing rules apply only to those TV stations that participate in the incentive auction process.  The rules will be effective 30 days following publication in the Federal Register. 

Under the new rules, TV stations must continue to transmit at least one standard definition stream over-the-air at no charge. These stations will still be licensed separately and thus subject to all of the associated regulatory obligations.  Only full power and Class A commercial and non-commercial TV stations are eligible; LPTV and TV translator stations cannot participate.  The Commission stated that each TV station would be required to continue to cover its community of license, but deferred to a separate proceeding issues related to loss of coverage (e.g., relocation of transmit site, propagation changes resulting from channel change).  Within these parameters, TV stations may enter into agreements to determine how the spectrum will be shared.

The Commission also concluded that, as required by the spectrum legislation, each separately licensed TV station sharing a single six megahertz channel will have one primary stream of programming that is subject to “must carry” rights.  In this regard, the new rules are intended to have no effect on cable or satellite carriage of TV stations, so long as the stations meet existing technical requirements such as providing a “good quality signal” of at least -61 dBm to the cable or satellite provider. 

Expect much more to come as the Commission attempts to clear TV stations and repack the remaining spectrum for use by TV stations, wireless carriers and unlicensed devices. For starters, the FCC will hold a channel sharing workshop on May 22. 

Coming Soon to a Noncommercial Broadcast Station Near You: Political Ads?

Picture a world where each episode of Sesame Street is brought to you by a letter, a number and a candidate for public office.  

Thanks to a recent appellate court decision, some spending on campaign advertising soon may be directed to an unexpected source: noncommercial broadcasters, such as public radio and TV stations.  In addition, a recent FCC decision has paved the way toward requiring these broadcasters to post online their local public file information about such advertising.  Unless the decisions are significantly modified or stricken, expect these rules to resonate through a political process that relies heavily on broadcast advertising.

A three-judge panel of the U.S. Court of Appeals for the 9th Circuit decided 2-1 to strike federal laws banning the airing of public issue and political advertisements on noncommercial broadcasting stations.  The statute in question, 47 U.S.C. Section 399b, prohibits noncommercial educational stations from broadcasting any of the following: 1) advertisements for goods and services on behalf of for-profit entities, 2) advertisements regarding "issues of public importance" and 3) political advertisements.  The decision invalidates the ban with respect to the last two categories, but not the first. Accordingly, advertisements for goods and services on behalf of for-profit entities remain impermissible.

The appellant, Minority Television Project, Inc. is a noncommercial broadcaster. The FCC had fined MTP $10,000 for "willfully and repeatedly" violating Section 399b by airing paid promotional messages from for-profit companies.  MTP alleged that it had declined to broadcast public issue and political advertisements out of concern of potential FCC fines and forfeitures arising from Section 399b. 

MTP argued that Section 399b violated the First Amendment because the "restriction on advertising was not narrowly tailored to the government's interest in preserving the educational programs on public broadcast stations."  The government countered that the restrictions on advertising were necessary to "preserve the educational nature of public interest broadcasting." Specifically, the government argued that making public stations dependent on advertising would result in stations replacing "their niche educational programs with more popular programs which have greater mass-market appeal, thus endangering the broadcast of the educational programs for which public broadcast stations exist."  

The court considered whether the government’s “broccoli is good for you” rationale passed constitutional muster. The panel rejected MTP’s call to hold the government to the “strict scrutiny” standard of First Amendment justification that applies to other media. Instead, the panel applied the "intermediate scrutiny" standard, and the government was required to prove that Section 399b was “narrowly tailored to further a substantial government interest.” The opinion noted that in a pending case before the U.S. Supreme Court, major broadcasters have challenged the continued application of “intermediate scrutiny” analysis to broadcast speech. The response: “just as golfers must play the ball as it lies, so too we must apply the law of broadcast regulation as it stands today.” According to the panel, the government’s case failed intermediate scrutiny with respect to the bans on issues of public importance and the bans on political advertisements.

Many questions remain as a result of the ruling:

Will noncommercial broadcasters begin accepting political announcements?  Even if a noncommercial station decides to begin accepting political announcements, there are legal risks.  First, the ruling is not yet final because it is subject to further judicial proceedings.  The FCC has a limited period to seek rehearing of the panel's decision. Often, but not always, the full appellate court affirms the decision of a three-judge panel of the same court. The U.S. Supreme Court case may also affect the timing of a decision on rehearing, particularly in the event of a change in the applicable legal standards (such as intermediate scrutiny) upon which the 9th Circuit panel relied.   Also, the ruling applies only to states in the 9th Circuit: Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon and Washington. Noncommercial broadcasters in other states may find that courts in their jurisdictions would determine that they are not bound by the 9th Circuit’s decision.

Will Congress react to the court ruling and change the law? In effect, the panel invited Congress to revisit the law and to provide more evidence to demonstrate that the law is constitutional.  It seems unlikely that Congress would enact such legislation in an election year, assuming that a change in the law is a legislative priority.  Moreover, Congress likely would not intervene while the judicial process is ongoing.

How would the decision impact other rules? The ruling does not address other laws that relate to candidate appearances and advertising on broadcast stations.  For example, federal candidates have statutory rights of “reasonable access” to commercial broadcast stations, but noncommercial broadcast stations are exempt from this statute.  Stations that choose to accept an advertisement from a candidate for any public office are required to give "equal opportunities" to other candidates for the same office, and, unlike the case of the “reasonable access” rules, noncommercial stations have no statutory exemption.  A commercial broadcaster is obligated to provide a candidate the “lowest unit charge” of the station for the same class and amount of time for a given period prior to an election or primary.  If the ruling stands, the FCC would have to adopt rule changes to clarify how these rules would apply to noncommercial stations, which rely on public contributions, underwriting and similar sources of funds for station operations. 

Also noteworthy: last Friday, the FCC adopted new rules requiring broadcasters to post portions of their local public inspection file online.  Some of these requirements will apply to noncommercial television broadcasters effective July 1, 2014, including a requirement to place “any new political file material” on the Commission’s website.  At present, the new rules would not apply to noncommercial radio stations. While the FCC’s new rules don’t explicitly reference the MTP case, they ultimately may expand the scope of the materials that must be kept in the file and made available to the public.

If it’s true that “all politics is local,” then by extension local broadcast stations play an important role in the political process.  As the 2012 election year revs into high gear, many expect significant increases in political ad spending for the broadcast airwaves.

For many noncommercial broadcasters, it’s not easy being “green” or, in this economy, “nonprofit.” Many noncommercial stations may find that their local viewers are valuable targets for political advertisements. In light of funding challenges for such stations and the potential for new revenue sources, these recent legal developments may result in dramatic changes to the political landscape.

Second Time's the Charm? FCC Again Requires Television Broadcasters to Post Their Public File Online

It’s déjà vu all over again.  For the second time in five years, the Federal Communications Commission will require commercial and noncommercial television broadcasters to post their local public inspection file online.  The FCC plans to phase in the online posting requirements over the next two years, starting with TV broadcasters in the largest markets.  The first requirement will be for stations to post the political file online, with the rest of the public file to follow thereafter. Here’s a summary of what we know so far. 

The FCC will require television stations to post their public files in a central, FCC-hosted website rather than in the paper file currently maintained at the station’s main studio.  The FCC will post to the public file those items filed electronically with the agency, such as applications and reports.  The licensees will have the obligation to post their remaining public file documents online, such as quarterly issues/programs lists and EEO Public File Reports.  Letters from the public, sponsorship identification and shared services agreements would be retained at the station’s main studio.

Broadcasters have expressed concern that political file information, which includes the rates charged to candidates, is sensitive.  As an alternative to providing data on the rates charged per spot for political ads, broadcasters had proposed measures such as reporting aggregated data regarding the buying habits of candidates and groups and the total amounts paid for political advertising. 

The FCC rejected this proposal in favor of gradually phasing in the requirement that TV broadcasters post their political files, based on their most current political data, online.  This requirement will take effect for the top four national networks in the top 50 markets later this summer and starting July 1, 2014 for the remaining television broadcasters.  Other stations could request a waiver based on financial or technical hardship.  The FCC will defer consideration of adopting these online requirements for radio licensees and multichannel video programming distributors for now until the FCC has experience with online posting by TV broadcasters.

The FCC’s previous effort to require broadcasters to post their public files online never took effect. Broadcasters pursued legal challenges at the FCC, in court and with the Office of Budget and Management (“OMB”).  Instead of seeing the appeal process through, the FCC abandoned its effort and started a new proceeding in October 2011. The agency adopted substantially the same requirements for posting the public file online in today’s action.

Expect legal challenges to the new rules along the same lines as previous challenges.  Presumably the first goal will be to request that the courts stay the FCC’s new rules while considering the legal challenges.  The stay request most likely would argue that disclosing the political file information online would cause irreparable harm even if an appeal of the new public file rules were successful.  Absent some kind of legal delay, network stations in the top 50 markets most likely would have to begin posting their political files online as early as this summer – just in time for the fall election season.

Stay tuned – we will have more on this decision next week.

Congress Makes Sweeping Changes to Spectrum Policy; Authorizes TV Band Incentive Auctions

On Friday, overwhelming majorities of both the House and the Senate passed a payroll extension bill that includes important changes to spectrum policy.  The legislation is expected to raise $15 billion for the Federal Treasury and to create hundreds of thousands of jobs. The details of the legislation are now delegated to the NTIA, the FCC and other agencies to develop reports and to adopt rules to implement Congress' objectives. 

Below is our take on some of the main provisions of the legislation as it applies to spectrum policy and wireless broadband services. 

Incentive Auctions and Band Clearing

Aside from public safety, the main driver of spectrum legislation was the need to address the spectrum crunch (real or imagined) for mobile wireless interests. To do this, Congress decided to offer TV broadcasters compensation to voluntarily relinquish their spectrum for repurposing by the FCC for broadband uses. Congress granted specific authority for a two-phase voluntary "incentive auction" that would clear a portion of the TV band (Channels 2-51) for mobile interests and, as part of that process, change the TV "white space" landscape. Because Channel 51 is adjacent to the Lower 700 MHz A Block (formerly Channel 52), the FCC is expected to attempt to "re-pack" the TV stations into the lower portion of the UHF band (beginning with Channel 14). The auction process is expected to take several years.

Under the legislation's language, "relinquishment" of a TV station means (1) relinquishing all usage rights to a channel, (2) relinquishing a UHF channel for a VHF channel, or (3) sharing a channel with another TV station. In lieu of relocation reimbursement, TV stations can obtain, as appropriate, a waiver of FCC rules to make flexible use of their spectrum so long as the TV broadcaster provides at least one programming stream at no charge. Depending on how the FCC ultimately interprets this provision, TV broadcasters could obtain a limited right to offer broadband on their spectrum alongside video service, but only if they forego relocation reimbursement.

Significantly, the FCC is required to reallocate and auction the T-Band (470-512 MHz, i.e., Channels 14-20) used by public safety in 11 major markets, with the spectrum sale used to cover relocation costs. Although not stated in the legislation, the FCC can also clear other users -- land mobile, for instance -- out of the TV bands. The FCC also can relocate radioastronomy users on Channel 37 at a cost of up to $300 million. The ability to relocate Channel 37 users could be a significant band-clearing opportunity because that channel operates as a nationwide encumbrance in the heart of the TV band.

TV White Spaces

Early House Majority versions of the bill would have required the FCC to auction all unlicensed spectrum (though it was unclear whether this included white space spectrum that had previously been allocated). The version of the legislation that passed essentially creates two flavors of white space.

  • First, the existing TV white space and the TV white space remaining after the re-packing -- remember, that's several years away -- will be available for fixed and mobile wireless use. There will no doubt be a loss of TV white space in many markets as a result of the incentive auction, but Congress and FCC staff expect that there will vacant TV channels will remain in many rural areas after the re-packing. The re-allocation of Channels 14-20 will create additional spectrum in major markets for TV stations to relocate, and the possible relocation of Channel 37 radioastronomy users will also clear spectrum.
  • Second, the FCC has the discretion to use relinquished spectrum or other spectrum to implement guard bands that would, in practice, create a nationwide unlicensed allocation as recommended in the National Broadband Plan. The FCC may "permit" the use of guard band for unlicensed use, but is not required to, and the guard bands must "be no larger than is technically reasonable to prevent harmful interference between licensed services outside the guard bands." (Reports were that earlier versions of the bill used the phrase "technically necessary.") Based on our discussions with the FCC, they see a guard band acting as a "duplex gap" band between LTE-Advanced uplink/downlink spectrum allocations, though this thinking is only preliminary and the ultimate band plan, channel sizes and technical rules will be determined through an FCC rulemaking proceeding. The limits of the FCC's discretion on guard bands appear to be subject to interpretation.

3550-3650 MHz

Earlier versions of both the Senate and House bills would have required the FCC to auction the 3550-3650 MHz band (with certain exceptions). The band is not allocated for commercial use; rather, the Department of Defense uses it at present. The final version removed the auction mandate, but requires NTIA to give priority to options involving exclusive non-Federal use and to choose sharing only if NTIA and OMB determine that relocation of a Federal user is not feasible because of technical or cost constraints. Thus, the 3550-3650 MHz band could be subject to auction ("exclusive use") unless it is not feasible to relocate Federal users.  If that's the case, commercial and Federal users could share the band under technical rules the FCC would adopt. The radar uses in the 3550-3650 MHz band may be difficult to relocate, which would make the case for shared unlicensed use easier.

Other Unlicensed Bands

The spectrum legislation identifies two additional bands for possible unlicensed use. First, NTIA, the Department of Defense and other agencies will study spectrum-sharing and risks to incumbent Federal users if unlicensed U-NII devices were allowed to operate in the 5350-5470 MHz and 5850-5925 MHz bands – a total of 195 MHz of spectrum. The agencies will issue reports on their findings. The report for the 5350-5470 MHz band is due in eight months, and the report on the 5850-5925 MHz band is due in 18 months.

Wireless Facilities Deployment

An under-appreciated section of the bill provides significant benefits to wireless companies, fixed and mobile, that want access to towers owned by state and local governments. Under the legislation, a local government must approve an "eligible facilities request" to modify an existing wireless tower or base station that does not "substantially change" the physical dimensions of the tower or base station. An "eligible facilities request" is a request to collocate new transmission equipment, remove transmission equipment or replace transmission equipment. The FCC will decide how to interpret "substantial change" pursuant to a rulemaking proceeding. In addition, GSA is required to develop master contracts for wireless antenna structures on property owned by the Federal government.


The new spectrum legislation is a beginning, not an end. Many details have yet to be determined, but many interests – including broadband providers, whether fixed or mobile, broadcasters, public safety users and others -- can find something to like in the new legislation.

FCC Fines Radio Broadcaster $44,000 For Lack of Sponsorship Identification

Last week the Federal Communications Commission fined a radio broadcaster $44,000 for violating the Commission’s sponsorship identification rules. Even more of an attention getter than the amount of the fine is the way FCC determined the fine -- by fining the broadcaster for each violation. 

In response to an FCC inquiry, the broadcaster stated that between March 2009 and May 2009, it aired program matter on behalf of Workers Independent News (“WIN”) in exchange for consideration.   The program matter consisted of 45 ninety-second spots, 27 fifteen-second promotional announcements, 2 two-hour programs and 1 one-hour program.  The broadcaster claimed that the appropriate sponsorship identifications were made for 34 of the 45 ninety-second spots.  The broadcaster stated that these 11 spots referenced WIN and the narrator but did not specifically state that the program was sponsored, paid for or furnished by WIN.  The announcements were directed toward a state legislative issue impacting the local economy.

The broadcaster argued that it had satisfied the sponsorship identification requirements by 1) identifying the sponsor by name in each announcement and 2) including each announcement within the other commercial matter for WIN, not within the station’s news content.  The FCC rejected each argument.  The FCC reminded the broadcaster that the purpose of the sponsorship identification rule is to provide listeners and viewers with information concerning who is attempting to persuade them.  The FCC determined that the mere mention of WIN did not provide sufficient information to the listener.  The FCC determined that Section 73.1212(f) of the Commission’s Rules, which considers mentioning the sponsor’s corporate or trade name during commercial matters as acceptable sponsorship identification, did not apply in this instance.

The FCC similarly rejected the broadcaster’s argument that the announcements were included within other commercial matter and not within the station’s news programming.  The FCC concluded that because the 11 announcements focused on a state legislative issue impacting the local economy, it would not be apparent to the listeners that the announcements were indeed sponsored programming, even if commercial programming surrounded the announcements.

The FCC’s analysis and determination is not surprising, but the way the FCC arrived at the $44,000 fine is.  The FCC relied upon its forfeiture guidelines, which establish a base forfeiture amount of $4,000 for each sponsorship identification violation.  The FCC multiplied this amount by the 11 announcements to arrive at the $44,000 fine, thereby treating each announcement as a separate violation.  While the FCC has discretion here, the fine seems somewhat excessive given that the broadcaster complied with the sponsorship identification requirements for the program length material and for an overwhelming majority of the announcements.  The FCC should have taken this into consideration and imposed a lesser fine.  This could represent a shift in how the FCC determines forfeitures in the future.  Regardless, this decision should serve as a wake up for broadcasters of the importance of complying with the Commission’s rules.

The message from the Commission is clear and unmistakable.   The agency will fine broadcasters for each violation regardless of mitigating circumstances.  Substantial or good faith compliance will not be enough.  Broadcasters should review their procedures for broadcasting commercial matter both to determine compliance with the sponsorship identification rules and to make sure that no commercial matter slips through which inadvertently does not include the requisite sponsorship identification.

Will M.I.A.'s "Middle Finger Malfunction" at the Super Bowl Lead to FCC Fines?

Stop me if you’ve heard this before.  An entertainer’s provocative gesture during the Super Bowl halftime show riles viewers and leads to calls for action by the Federal Communications Commission. Sound familiar? 

This football season, the entertainer in question is musical artist M.I.A., who drew attention when she “flipped off millions of viewers during TV’s most-watched telecast of the year.”  During her halftime performance, she made the “middle finger” gesture while singing a song in which the “S-Word” was implied but not clearly sung. The incident, which some have called a “middle finger malfunction,” recalls the 2004 Super Bowl halftime show involving Janet Jackson.  The FCC imposed $550,000 in fines ($27,500 per station) against Viacom-owned CBS broadcast stations for Ms. Jackson’s infamous “wardrobe malfunction,” only to have the fines twice stricken by an appellate court – once on appeal from the FCC, and once on remand from the U.S. Supreme Court. 

So far, the FCC has not commented regarding whether any indecency complaints have been filed with the Commission about last night's program. Thanks to statutory changes made a few years ago, the maximum forfeiture penalty for broadcasts of indecent, obscene or profane material is now higher than when the Jackson case was decided: $325,000 for each violation or each day of a continuing violation, capped at $3 million for a single act or failure to act. 

I've previously blogged about the U.S. Supreme Court's review of the FCC’s authority to regulate broadcast indecency with respect to “fleeting expletives” (language such as the “F-Word” or the “S-Word”) and nude buttocks. The “middle finger” gesture, however, involves neither nudity nor spoken language and is not at issue in those cases. So, does a middle finger gesture on broadcast TV violate the FCC’s rules?

While many use the terms “indecency” and “obscenity” interchangeably, in fact the FCC enforces laws that target discrete categories of obscene or indecent programming on broadcast (not cable or satellite) TV: 

  • The FCC defines indecent material as “language or material that, in context, depicts or describes, in terms patently offensive as measured by contemporary community standards for the broadcast medium, sexual or excretory organs or activities.”  Such material may only be broadcast during safe harbor hours (i.e., 10 p.m. to 6 a.m.).
  • The Supreme Court defines obscene material (which cannot be broadcast at any time) as material that meets a three-pronged test: 
    • An average person, applying contemporary community standards, must find that the material, as a whole, appeals to the prurient interest;
    • The material must depict or describe, in a patently offensive way, sexual conduct specifically defined by applicable law; and 
    • The material, taken as a whole, must lack serious literary, artistic, political or scientific value.

With respect to specific FCC guidance, the FCC does not appear to have issued any order finding the “middle finger” gesture to be obscene or indecent. A few years ago, the FCC briefly mentioned the gesture (fn. 94) in assessing a fine against Fox for “fleeting expletives” used by entertainer Nicole Richie during a televised awards show. The FCC argued that Fox was on notice that Ms. Richie had demonstrated a “penchant for vulgarity” by using the middle finger gesture during a previous broadcast. Separately, press reports indicate that the FCC received complaints about a 2009 awards show broadcast on NBC where director film Darren Aronofsky made the gesture on camera, but no FCC decision has been issued in connection with this broadcast. Alternatively, some have questioned whether FCC policies regarding the use of certain “visual images” in conjunction with song lyrics would encompass the middle finger gesture.

In my view, this sort of "Flying Fickle Finger of Fate" should not be deemed an FCC violation. There are definitional issues, First Amendment concerns and questions of whether the FCC has given fair, adequate notice.  Given the uncertainty about the FCC’s authority to enforce broadcast indecency policies due to the pending U.S. Supreme Court case, even if complaints are filed with the FCC, it is unlikely that the FCC would reach a decision on the complaints before the Court issues its decision.  In the meantime, it remains to be seen whether this halftime performance will sway public opinion on the issue or will influence the Court’s decision.

U.S. Supreme Court Considers the FCC's Authority to Regulate Fleeting Expletives, Nudity on Broadcast TV

If there was one surprise in this week’s oral argument at the U.S. Supreme Court about FCC regulation of broadcast indecency, it was the nudity in the courtroom. 

The Court is considering the Federal Communications Commission’s authority to regulate nudity and “fleeting expletives” on the broadcast airwaves in Federal Communications Commission, et al. v. Fox Television Stations, Inc. et al. The case involves the FCC’s appeal of two court decisions – one involving the Fox network and one involving the ABC network – that struck down the FCC’s “broadcast indecency” policies.  At issue is whether these FCC decisions violated the First and/or Fifth Amendments to the U.S. Constitution and whether the Court will reshape the FCC’s authority to enforce indecency standards for the broadcast airwaves.

Nudity, “Fleeting Expletives” and the Constitution

The consolidated appeal involves network broadcasts containing instances of the “F-Word” (used by Cher during a 2002 awards show on the Fox network and by Nicole Richie during a 2003 awards show on the same network), the “S-Word” (also used by Richie in the same show) and a bare backside (which appeared for fewer than seven seconds in a 2003 episode of ABC’s “NYPD Blue”).  The broadcasts aired outside the FCC’s “safe harbor” hours of 10 p.m. to 6 a.m., and in each instance, the FCC found the broadcasts to be actionably indecent, which the FCC defines as “language or material that, in context, depicts or describes, in terms patently offensive as measured by contemporary community standards for the broadcast medium, sexual or excretory organs or activities.” The U.S. Court of Appeals for the 2nd Circuit eventually overturned these two determinations in separate appeals. 

  • Fox Television Stations, Inc.  In the case of the two live awards show broadcasts, the FCC found the broadcasts to be indecent based on changes that the FCC made in January 2003 to its “fleeting expletives” policy. The FCC declined to issue a sanction, however, because the broadcasts occurred prior to this policy change. In 2007, the U.S. Court of Appeals for the 2nd Circuit found that the FCC’s policy was arbitrary and capricious under the Administrative Procedure Act (“APA”).  In 2009, the U.S. Supreme Court reversed and remanded the 2nd Circuit’s decision on APA grounds without reaching the constitutional questions. On remand, the 2nd Circuit in July 2010 struck the FCC’s orders on constitutional grounds, finding the FCC’s policy to be impermissibly and unconstitutionally vague.   
  • ABC, Inc. In the case of the NYPD Blue episode, the FCC imposed an indecency forfeiture of $27,500 against several ABC network-owned stations and affiliates, finding that the view of a woman’s unclothed buttocks was “sufficiently graphic and explicit to support an indecency finding,” that the shots were “repeated” and that the scene was “pandering, titillating, and shocking.” In the ABC case, the 2nd Circuit, in reliance on its 2010 decision in the Fox case, tossed the FCC’s fine against the ABC stations (both network and affiliates).        

The Supreme Court has consolidated the FCC’s appeals of these two decisions by the 2nd Circuit.  The case brings new attention to the Court’s landmark broadcast indecency decision in 1978’s FCC v. Pacifica Foundation. There, the Court found that the FCC did not violate the First Amendment when it applied its definition of indecency to a broadcast of George Carlin’s famous “filthy words” monologue.  In upholding the FCC’s authority, the Court noted 1) the “uniquely pervasive presence” of the broadcast media, 2) that airwaves are available in the privacy of the home, 3) that broadcasting is “uniquely accessible” to children and 4) in the government’s interest “in the ‘well being of its youth’ and in supporting ‘parents’ claim to authority in their own household.”  Here, the Court has been asked to overrule Pacifica, and as expected, the oral argument dealt extensively with this precedent. 

Takeaways from the Oral Argument

  • While it is problematic to read too much into questions that the Justices ask at oral argument, the Justices clearly struggled with the implications of the FCC’s broadcast indecency enforcement.  Justice Sotomayor, who formerly served as a Judge for the 2nd Circuit, is not participating in the case.  As a result, any 4-4 decision would allow the 2nd Circuit’s decision to stand.  In addition, this consolidated appeal involves two related cases involving different parties as well as different aspects of the FCC’s policy (i.e., nudity vs. “fleeting expletives”); accordingly, the Court may decide to treat these categories differently with separate rulings.
  • Much of the oral argument focused on differences in content between broadcast channels and cable channels and on the pervasiveness of broadcasting compared to other forms of media. Broadcasters have asserted that Pacifica should be overturned because of the changes in the media landscape since 1978, among other reasons.  For example, Carter Phillips, counsel for Fox, asked “how is it permissible to allow the FCC to regulate the broadcast networks on standards that are fundamentally different than cable, the internet and every other medium that exists?” Justice Alito voiced his opinion that “broadcast TV is living on borrowed time. It is not going to be long before it goes the way of vinyl records and 8 track tapes.” 
  • While the facts before the Court involve television broadcasts, the Solicitor General, representing the FCC, argued that overturning Pacifica would “sweep away indecency restriction with respect to radio as well as television” and that “a lot of the most vile and lewd material really is in radio.”  Justice Breyer asked whether the “First Amendment forbids the application of a good guideline to this case” and referred to the potential reversal of Pacifica as “earthshaking.”
  • While some Justices appeared to have little appetite to overturn Pacifica, several Justices questioned the FCC’s handling of specific situations. For example, Justice Kagan said “the way that this policy seems to work, it’s like nobody can use dirty words or nudity except for Steven Spielberg.” Her comment refers to the FCC’s findings in other cases that the films “Saving Private Ryan” and “Schindler’s List,” both directed by Steven Spielberg, were not indecent. 
  • Chief Justice Roberts said that “[a]ll we are asking for, what the government is asking for, is a few channels where you can say I’m not going to – they are not going to hear the S word, the F word. They are not going to see nudity.” Justices Kennedy and Scalia considered whether to hold broadcast media to a different standard in an effort to preserve a “safe haven.”  Justices Kennedy and Scalia cited the “symbolic value” of allowing the government to use public airwaves to “insist upon a certain modicum of decency.”  It is noteworthy that Scalia wrote the opinion in the recent Brown v. Entertainment Merchants Association case, where the Court found that video games qualify for First Amendment protection. There, Justice Scalia wrote that “Crudely violent video games, tawdry TV shows, and cheap novels and magazines are no less forms of speech than The Divine Comedy, and restrictions upon them must survive strict scrutiny.” 
  • There was extensive discussion about the role of advertisers in encouraging broadcasters and cable programmers to limit the use of material that falls within the FCC’s indecency definition. Counsel also discussed whether and how broadcast standards and practices would be affected if Pacifica was overruled or limited.  
  • Counsel for Fox disputed the suggestion by Justice Kagan that the current system “seems to work.” He argued that the “whole system has come to a screeching halt because of the difficulty in trying to resolve these issues.” He referred to the hold up of many TV license renewals at the FCC, an issue we’ve blogged about previously.  
  • The FCC’s actions and its indecency policy were challenged as unconstitutionally vague under the Fifth Amendment on the grounds of a lack of fair notice of what was prohibited and of arbitrary and discriminatory enforcement. Some Justices questioned the FCC’s approach.  Justice Ginsburg referenced the “appearance of arbitrariness about how the FCC is defining indecency in concrete situations.” The Solicitor General conceded that “there is not perfect clarity in this rule” but that “the alternative [for example, bright-line proscriptions against certain words or nudity] … would be worse.”  He also argued that “there isn’t really a vagueness issue left with respect to the fleeting expletives in the Fox case, because the Court said [in 2009] that there is no problem of arbitrary punishment because there was no forfeiture or other sanction.” By contrast, the FCC fined ABC for the “NYPD Blue” broadcast, and the Solicitor General agreed that the vagueness issue remained in play for that broadcast. 
  • As for the nudity in the courtroom?  The Justices asked about permissible displays of nudity on broadcast television – for example, whether broadcasters could air the musical “Hair,” the opera “Metropolis” or other programs without running afoul of the indecency regulations. Seth Waxman, counsel to ABC, pointed out that the FCC has pending complaints “about the opening episode of the last Olympics, which included a statue very much like some of the statues that are here in this courtroom, that had bare breasts and buttocks.” Time will tell whether these courtroom displays will sway any of the Justices. 

The Court is expected to rule on this case during its current term, which ends in June.


The FCC has adopted new rules governing how loud commercials may be in digital programming, in response to the Commercial Advertisement Loudness Mitigation (“CALM”) Act.  As a result, beginning December 13, 2012, all digital TV broadcasters, digital cable operators and other digital multichannel video programming distributers (“MVPDs”) must make sure that their digital TV commercials are transmitting at volumes no louder than the accompanying program, in accordance with industry standards.  For the first time the television industry must monitor and if necessary adjust the loudness of television commercials. 

Who Must Comply?  The new rules apply to digital TV commercials broadcast on digital TV or cable stations as well as to digital MVPDs.  The new rules do not apply to analog broadcasts or to non-digital MVPD service.  The new rules will not apply to noncommercial broadcast stations unless the stations transmit commercial advertisements as part of an ancillary or supplementary service.  Under limited circumstances the FCC may grant waivers based upon financial hardship.

Who is Responsible for Compliance?  Complying with the new rules will vary based on whether the commercial is locally inserted or embedded.  “Locally inserted” commercials are added by the station or MVPD prior to transmission to the public, while “embedded” commercials are placed in the programming by a third party and then transmitted by the station or MVPD.  Most stations or MVPDs will have a higher standard of care for locally inserted commercials than for embedded commercials.

What is the Standard of Compliance?  The FCC has created safe harbors for embedded and for locally inserted commercials.  For embedded commercials, stations and MVPDs must have the proper equipment to pass through compliant programming from third parties.  Compliant programming means programming that uses industry accepted standards for ensuring that commercials will be transmitted at appropriate levels consistent with the Commission’s rules and the CALM Act.  The equipment must be properly installed, maintained and utilized.  The stations and MVPDs must obtain certifications of compliance from the programmers, must conduct annual spot checks of non-certified programming and must conduct spot checks of specific channels in the event the FCC so directs.    The spot checks will vary depending upon the size of the television station or MVPD, with rigorous spot checking for the largest entities and less to no spot checking for the smaller stations and MVPDS.  The FCC plans to phase out the spot checks after completion of two annual spot checks, as more programmers certify compliance.  A station or MVPD is eligible for the safe harbor for embedded commercials in a particular program if the programmer provides a certification that the programming is compliant and the station or MVPD has no reason to believe the certification is false.

For locally inserted commercials, in addition to proper installation and maintenance of equipment, the station or MVPD must maintain records showing the use of the equipment in the regular course of business and that the equipment is maintained and tested to ensure continued proper operation.  The station or MVPD must be able to certify that it has no knowledge that the equipment is in violation of industry standards and if a violation has occurred, that the equipment has been repaired in a prompt manner.

Television stations, cable operators and MVPDs will need some time to adapt to these new requirements.  Although the requirements do not go into effect for a year, common sense dictates taking steps now to get ready for the new requirements.  This includes researching and if necessary making plans to purchase any equipment, establishing procedures for complying with the new rules and above all, keeping accurate and complete records.

Presumably, it will take months (perhaps years) for some programmers to bring all of their programming (and inserted commercials) into compliance.  Therefore, careful scrutiny of programming should be undertaken, certainly during the two-year period when the FCC will require spot checking.

Coming Soon: FCC to Require TV Broadcasters to Post Contents of Public File Online

The Federal Communications Commission (“FCC”) took a major step today toward requiring television broadcasters to place the contents of their local public inspection file online.  With today’s action, the FCC is fast-tracking a 2007 Report and Order that required television broadcasters to put their local public inspection file online.  The 2007 decision did not take effect thanks to court challenges to the new rules and to inaction by the Office of Management and Budget with respect to adopting a standardized television disclosure form (FCC Form 355) that would have replaced how broadcasters prepare their Quarterly Issues/Programs Lists. 

The 2007 Report and Order required television broadcasters for the first time to post their public inspection file (with the exception of their political file) online if the station had a web site.  In addition, broadcasters would have been required to complete and post Form 355 on their websites on a quarterly basis.  The FCC claimed these changes would not change the materials that broadcasters would have to maintain in the local public inspection file but by posting the material online would make the contents more readily available to the public.  Understandably, broadcasters appealed the FCC decision, concerned about the onerous burdens of the new rules.  Almost four years later, none of the new public file requirements have gone into effect for the reasons discussed above. 

Recognizing the impasse that it faced, today the FCC vacated the 2007 Report and Order -- in essence the agency rescinded its proposals.  Instead, the FCC commenced a new rule making proceeding to achieve the same goal of broadcasters posting the public file online.  Under the new proposal: 

●          The FCC would create an online portal that broadcasters would use to post their local public file.  Broadcasters would not have to place the information on their website.

●          Broadcasters would not have to post information already on file with the FCC; the agency would import that information to the online public file.

●          Broadcasters would not post online some information, such as letters and e-mails from the public.

●          Broadcasters could be required to post other information, such as sponsorship identification information (i.e., political) and shared services agreements.

●          A revised enhanced disclosure form would be adopted.

●          Data tools would be created for the public to access and evaluate this information.

The FCC views today’s proposal as consistent with a government-wide mandate to increase transparency and with the Commission’s broader efforts to modernize data while transitioning from a paper to electronic world.  What is left unsaid is the enormous cost that these proposals will impose on television broadcasters.  It does not necessarily follow that the low barrier to accessing this information will serve the public interest.  The placement of this material online, while commendable on one hand, could open the floodgate for the filing of spurious petitions against broadcasters.  Broadcasters could experience a significant increase in expenses in defending against such frivolous complaints.  One need look no further than the deluge of indecency complaints made possible by the FCC with on-line filing to see how ineffective and costly this process (no matter how commendable) could be.

These concerns do not even include the considerable expense broadcasters will incur transferring the contents of the local public file online, whether to a station website or the FCC.  Nor does this take into consideration the costs broadcasters will incur morphing their Quarterly Issues/Programs Lists into the new enhanced disclosures form, in the event the FCC decides to implement a revised form.

Radio broadcasters should take heed.  If the Commission successfully adopts and implements these new requirements, rest assured that one day soon the FCC will extend these requirements to radio broadcasters as well.

Lebron Fined $15,000 by FCC

Today’s announcement from the FCC’s Enforcement Bureau – a proposed forfeiture of $15,000 against Lebron – caught our attention. We are all aware that certain NBA players have a lot of time on their hands during the National Basketball Association lockout. Nevertheless, Lebron was alleged to have operated an unlicensed radio transmitter in Guayama, Puerto Rico in violation of Section 301 of the Communications Act. As it turns out, upon closer inspection, LeBron James has not taken his talents to Puerto Rico and likely will not be paying the $15,000 fine. Expect confused Cleveland fans to rejoice at the news. 

License Renewal Applications for Florida, Puerto Rico and Virgin Islands Radio Stations Must be Filed with FCC by October 3, 2011

Commercial and noncommercial full power radio and FM translator stations licensed to communities in Florida, Puerto Rico and Virgin Islands must electronically file their applications for renewal of license (Form 303-S) and Broadcast Equal Employment Opportunity Report (Form 396) with the FCC by October 3, 2011.  Noncommercial full power radio stations must file an ownership report (Form 323-E) as well.  Commercial broadcasters must pay the filing fee within 14 days of filing the renewal application or the FCC will dismiss the application.  

I’ve blogged about some of the dos and don’ts of the FCC’s license renewal process here.

Fairness Doctrine, Controversial FCC Policy and 1st Amendment Landmark, Dies at 62

The Fairness Doctrine, a longtime controversial feature of the Federal Communications Commission’s media policy and a landmark of First Amendment law, died Wednesday in Washington, DC. It was 62. 

The cause of death was the FCC’s decision to eliminate an “unnecessary distraction” as it deleted “83 outdated and obsolete media-related rules,” said FCC Chairman Julius Genachowski. The Fairness Doctrine had remained on the FCC's books despite not being enforced since 1987. Other announced deletions included the vacated 2003 broadcast flag rules and certain cable rules that had not been properly amended to reflect the Commission’s repeal of the personal attack and political editorial rules in 2000. Yesterday's decision also referenced the executive order signed by President Obama in January aimed at eliminating burdensome or unnecessary regulations of independent agencies. 

Born in 1949, the Fairness Doctrine was part of the FCC’s effort to require broadcasters to adequately cover, and to air conflicting viewpoints on, issues of public importance. At 20, the Fairness Doctrine survived a constitutional challenge in Red Lion Broadcasting Co. v. FCC. The U.S. Supreme Court found in 1969 that broadcasters have First Amendment speech rights but that the scarcity of broadcast frequencies justified the FCC’s exercise of authority via the Fairness Doctrine and associated rules. 

Nevertheless, by 1987 the FCC decided to stop enforcing the Fairness Doctrine, finding that the doctrine did not serve the public interest. In 1989, the U.S. Court of Appeals for the District of Columbia affirmed without reaching the constitutional issues. The change in enforcement paved the way for expansion in political talk radio. The Fairness Doctrine, however, remained on the FCC's books, and questions lingered about whether it would be revived.

The Fairness Doctrine is survived by other FCC rules governing political broadcasting, including requirements for broadcasters to provide reasonable access to candidates for federal elective office, to provide equal opportunities to political candidates for any legally qualified office, to apply the lowest unit rate for candidate ads during specified days before primaries and elections and to properly identify sponsors of political ads. Yesterday’s order did not address the “Zapple Doctrine,” a rule based on the Fairness Doctrine that required stations to provide “quasi-equal” opportunities when supporters of a candidate appear on a broadcast station. Unlike the Fairness Doctrine, the Zapple Doctrine never has been explicitly overturned. In addition, the ongoing vitality of the Red Lion decision and the FCC's regulatory authority likely will be among the issues in the U.S. Supreme Court’s consideration of the FCC’s appeal of U.S. Appeals Court decisions finding FCC indecency policies to be unconstitutional.

The Order will take effect upon publication in the Federal Register.

Turn Out the Lights: FCC Sets Expiration Dates for End of Analog and Out-of-Core LPTV Operations

The FCC has announced the dates by which LPTV stations must cease operating in analog and on the out-of-core channels (Channels 52-69).  The deadlines are necessary to accommodate the digital transition of LPTV stations and to make the out-of-core channels available for wireless services in the 700 MHz band. 

LPTV stations operating on one of the out-of-core channels must cease operations by December 31, 2011.  LPTV stations operating in analog must cease operations by September 1, 2015.  As always, LPTV stations must be aware of additional deadlines or else risk losing valuable rights.  These deadlines fall into two categories:  out-of-core LPTV stations and analog LPTV stations. 


To accommodate these new transition dates, the FCC:

●  Extended all existing digital construction permits for LPTV stations until September 1, 2015.

●  Dismissed applications for new analog low power television facilities that did not request operation on digital facilities by May 24, 2010.

●  Determined that if an LPTV station holds a construction permit for an unbuilt analog and unbuilt digital companion channel, and the analog permit expires and is forfeited, the digital permit is also forfeited (notwithstanding the later expiration date on that permit).

The maximum permissible digital Effective Radiated Power (“ERP”) for LPTV stations operating on VHF Channels 2 to 13 is increased to 3 kilowatts.  The maximum ERP for LPTV Stations operation on UHF Channels 14 to 51 will remain at 15 kilowatts.

Beginning December 1, 2011, LPTV stations providing ancillary or supplementary services will be required to file the annual Ancillary and Supplementary Services Report (FCC Form 317) and pay a fee of five percent of the gross revenues of any ancillary and supplementary services provided.

While it is understandable that the FCC wants to clear the out-of-core channels to accommodate the new licensees in the 700 MHz band, the timing is unfortunate.  If the FCC decides in the future to repackage the in-core channels as part of allocating spectrum for broadband, whether voluntary or otherwise, LPTV stations could find themselves in the undesirable position of having to change channels not once but twice, with the associated costs.

It is important that LPTV stations focus on these expiration deadlines, especially if they are operating in the out-of-core channels.  Failure to take timely action may result in LPTV stations finding themselves off the air --- permanently.

Appeals Court Remands FCC's Media Ownership Rules; Raises More Questions than Answers

Media ownership is in the news again as the Federal Communication’s Commission’s latest modifications to its media ownership rules have been affirmed in part and remanded in part by a three-judge panel of the U.S. Court of Appeals for the 3rd Circuit.  Most significantly, while most of the rules were affirmed, the FCC’s changes to its newspaper/broadcast cross ownership rule (“NBCO”) and its revenue-based “eligible entity” definitions were remanded for further consideration.  

The decision retains the status quo for most of the media ownership rules and does nothing to resolve the NBCO rule – to the contrary, the regulatory uncertainty that clouds the troubled newspaper industry’s ability to combine operations with local broadcasters will continue until the FCC adopts a new NBCO rule. 

Similarly, the decision to remand to the FCC for further consideration changes in the media ownership rules to promote diversity in ownership for minorities and females fails to provide guidance on what criteria are necessary for any rules to survive Constitutional scrutiny. 

The only certainty provided in the decision is that the FCC’s media ownership rules for television and radio remain largely unchanged from almost a decade ago despite the radical changes that have reshaped the media marketplace.  And, most likely, significant changes to those rules will not occur in the foreseeable future. 

In light of this action, many commenters have focused on picking winners and losers.  If only it were that simple, given the recent history of the FCC’s efforts to modify its broadcast ownership rules (click to enlarge):

Media Ownership Timeline 2003-2011.jpgThe panel's decision focused on the 2008 NBCO rule, the Diversity Order and the FCC ownership and cross-ownership caps for radio and television.  The Court vacated and remanded the 2008 NBCO rule, finding that the FCC provided inadequate notice of and time for the public to comment on the new NBCO rule in violation of the Administrative Procedure Act.  The Court expects the Commission to address the court’s concerns and provide proper notice and allow comment in the context of the ongoing 2010 Quadrennial Review of the Commission’s media ownership rules.  The judges refused to consider challenges to five permanent waivers of the NBCO rule granted in 2008, concluding that the parties had not yet exhausted their administrative appeals before the FCC and that the appropriate venue for appealing any such decision is the U.S. Court of Appeals for the D.C. Circuit and not the 3rd Circuit.

The Court rejected various appeals challenging the Commission’s decision to retain the pre-2003 rules with regard to ownership caps for radio and TV stations in local markets and cross ownership of TV and radio stations in the same market.  The appeals sought to increase or eliminate the ownership caps altogether.  The Court held that the FCC’s authority to adopt ownership caps did not infringe upon First Amendment rights because the rules are rationally related to substantial government interests in promoting competition and protective viewpoint diversity.  Further, the judges found that the FCC had provided sufficient reasons for the ownership caps in its 2003 order. 

The Court rejected the definition of eligible entity adopted by the FCC in the Diversity Order, finding that the agency did not show how the new definition would increase broadcast ownership by minorities and females.  The judges concluded that most of the proposed expansion of eligible entities was focused either on small businesses or reinforcing existing prohibitions against discrimination.  The Court noted that the correlation between ownership of broadcast stations by small businesses and minorities and women were approximately the same, suggesting that most small business owners were minorities or females.  The Court instructed the FCC to consider other proposed definitions (such as socially or economically disadvantaged business) that might expand broadcast ownership by minorities and women.  The Court instructed the FCC to complete this review within context of the ongoing 2010 Quadrennial Review. 

As is often the case in life, the Court's decision represents a partial victory and partial defeat for all interested parties.  Critics of media consolidation should be pleased with the remand of the NBCO rules.  Because the remand is based on procedural deficiencies, however, the FCC could adopt new rules that allow the same or greater flexibility for NBCO in the future.  Proponents for amending the media ownership rules to reflect the current economic and market place realities cannot be surprised with the Court's decision to leave in place the Commission’s pre-2003 media ownership rules.  On the other hand, proponents of reducing the ownership caps cannot be pleased either, since the panel left intact the Commission’s media ownership caps and cross-ownership rules in effect prior to 2003 (see our Comparison of Changes in the FCC's Media Ownership Rules). Even the remand on the Diversity Order, while encouraging to proponents of increasing media ownership for minorities and women, does not guarantee that meaningful rules can be implemented that will pass constitutional muster.  In other words, while the adoption of gender and race neutral proposals most likely would survive a constitutional challenge, it is difficult to see how such neutral proposals would achieve the objective of advancing minority and female ownership in the broadcast industry rather than provide additional window dressing.

It is uncertain how the Commission will revisit these issues in the 2010 Quadrennial Review.  The Commission must address the 3rd Circuit’s remand of the NBCO rule and the Diversity Order.  After the 3rd Circuit rejected the media ownership rules the Commission adopted in 2003, the Commission in 2008 decided to retain the pre-2003 rules.  The Commission could adopt a new NBCO allowing for ownership of newspapers and broadcast stations or retain the pre-2008 rules and not allow any cross ownership.  

Most likely the Commission will adopt new rules to assist minorities and women in participating in ownership of broadcast stations.  The challenge for the Commission will be to adopt new rules that are beneficial while remaining race and gender neutral.  For example, it is unclear whether reintroducing the tax certificate policy for the sale of broadcast stations to minorities and females would withstand Constitutional scrutiny, though tax certificates can be helpful in promoting diversity by giving small businesses leverage in a negotiation. 

The biggest challenge will be for broadcasters seeking to relax the Commission ownership caps.  Broadcasters should file comments in the 2010 Quadrennial Review urging relaxation of the ownership caps, for example.  Presumably the Commission will issue a public notice in the future inviting comment on the issues raised by the 3rd Circuit’s decision.  We have blogged previously that application of the duopoly rules for television stations in medium to smaller markets, without the safety net of “small market” waivers, undermines localism.  

At the same time broadcasters must recognize that, once again, the media ownership rules are in a state of uncertainty and litigation, which likely will remain unresolved for the near future.

FCC's Proposals for Clearing FM Translator Application Backlog May Harm AM Stations

Approximately 6,500 applications for new FM translator service have languished since 2003, with each application representing a potential missed opportunity to enhance local service to the public. Yesterday, the Federal Communications Commission announced a new notice of proposed rulemaking seeking comments on how to reduce the backlog.  Unfortunately, the FCC advocates throwing out many applications instead of expediting their processing.  Even worse, the FCC has imposed a freeze on the processing of applications for existing translator stations seeking to serve urban markets. 

The 6,500 translator applications have caused friction among proponents of FM translator and LPFM stations.  Translator applicants are frustrated by the FCC’s processing delays, while LPFM proponents are concerned that granting these applications will preclude the licensing of future LPFM stations, especially in larger markets.  Further complicating the matter: a substantial number of the pending applications were filed by two affiliated applicants; Radio Assist Ministries and Edgewater Broadcasting. 

Prior FCC action has focused on balancing the competing concerns of the translator and LPFM factions.  In 2007, the FCC adopted a cap preventing applicants from filing more than 10 applications in any application filing window.  Applying the cap to the translator applications would require dismissal of 80 percent of the applications. 

The FCC seeks public comment on its conclusion that the 10 application cap is inconsistent with the Local Community Radio Act of 2010 (“LCRA”), which became law in January 2011.  The LCRA repealed the requirement that LPFM stations operating on the third adjacent channel to a full-power station must provide interference protection to that station.  The LCRA also assigns a co-equal status to translators, booster stations and LPFM stations.  The FCC also seeks comment on whether the FCC has authority to give priority to later-filed LPFM applications over a pending translator application, given the co-equal status under the LCRA.  The FCC is not seeking comments on relaxing certain technical restrictions as required under the LCRA. 

The FCC is considering several alternatives to address the competing concerns of translator and LPFM stations.

  • Opening a joint translator/LPFM filing window.  Under that proposal, the FCC would dismiss the pending translator applications and would open a new filing window for new translator and LPFM stations.
  • Prioritizing future LPFM applications over the pending translator applications. The FCC is uncertain whether this proposal would satisfy the co-equal status set forth in the LCRA.
  • Dismissing some of the pending translator applications for markets in which there are an insufficient number of LPFM channels as determined by the FCC.

The FCC proposes establishing LPFM channel “floors” based on market size.  For example, all pending translator applications in Markets 1-20 would be dismissed if there are not at least eight available LPFM channels in the market.  Lower LPFM channel floors would be established for markets 21-50, 51-100, 101-150 and smaller markets in which more than four translator applications are pending.  The FCC’s analysis of the results for pending translator applications based on specific rated markets are available in Excel and PDF formats.

The FCC is suspending processing of any pending applications for existing FM translator stations that propose a first-time transmitter site within any market that has fewer LPFM channels than the proposed channel floor.  The FCC also is imposing an immediate freeze on any new translator applications proposing a move into a new market.

The FCC remains concerned about the trafficking of authorizations granted for the translator applicants.  The FCC seeks comments on what limitations can be imposed under the LCRA, including national application caps of 50 or 75 and local application caps. 

Finally, the FCC is reconsidering its restriction on the use of FM translator stations to rebroadcast AM stations.  At present, only FM translator stations with licenses or permits in effect by May 1, 2009 may rebroadcast the signal of an AM station.  The FCC seeks comment on whether the May 1, 2009 limit should remain intact or should be extended to include the pending 6,500 translator applications. 

The FCC’s approach, eliminating the 10-application cap and potentially increasing the number of FM translator stations that may rebroadcast AM stations, nevertheless contains several proposals that could halt the progress in providing programming to communities.  More than 500 AM stations now use FM translator stations to rebroadcast their AM signals, making it possible to provide local news, information, sports and other programming (especially during evening hours for daytime-only AM stations) that otherwise might not be available.  The proposed LPFM channel limitations undermine that progress.  Even more troublesome is the immediate suspension of processing translator applications and the freeze on so-called market move-ins.  To broadcast AM stations over FM translator stations, it is often necessary to move the translator station closer to the AM station.  The freeze would make it extremely difficult to move translator stations to locations to rebroadcast AM stations, with the resultant diminution in service to the public. 

All in all, while the FCC purports to balance the competing concerns of translator and LPFM stations, the FCC’s proposals actually give an advantage to LPFM, in part by failing to address the impact to AM stations that also rely on translator service.

Comments and Reply Comments must be filed within 30 days and 45 days after publication of the FCC's rulemaking proposal in the Federal Register.

FCC Working Group Releases Blueprint for Future of Media

The FCC recently released a long-anticipated report on the future of journalism and localism, prepared by the FCC Working Group on the Information Needs of Communities. 

The report, entitled “Information Needs of Communities: The Changing Media Landscape in a Broadband Age,” could be a potential road map for the FCC moving forward on overhauling and updating the agency’s regulatory approach to print, broadcast, cable and the Internet. The report’s conclusions and recommendations are important because they signal the most current thinking of FCC staff about their roles as regulators.  Nevertheless, a lengthy process remains to transform these recommendations into regulations and policy.  It is unclear how many recommendations ultimately will be adopted. 

The working group comprises journalists, scholars, entrepreneurs and government officials, all of whom the FCC selected.  In 2009, a bipartisan commission by the Knight Foundation considered how technology is changing how the media functions and communities receive and process information.  The Knight Commission called on the FCC to examine these issues more closely, which led to formation of the working group.    

The report presents an optimistic view of the state of journalism.  News and information gathering is more vibrant than ever, and local news continues to play a vital role for media.  Commercial and nonprofit media are working on collaborative projects.  Nonprofit media have become more varied and more important.  The Internet has led to the free exchange of ideas and information.  The report, however, observes that the abundance of media outlets does not necessarily translate into an abundance of reporting. 

How does the working group propose to bridge this gap between the growth of media outlets and the reduction in reporting?  Through a combination of reducing regulatory burdens on media, encouraging entrepreneurship and philanthropy, and focusing on the historically underserved.  Here are some key components of the report: 

Online Disclosure and Transparency.  The report advocates that broadcasters should be required to provide more information about their operations online.  For example, the report recommends: 

  • eliminating the FCC’s requirement that local television stations retain a paper copy of their quarterly-issues programs lists and replacing it with a streamlined, web-based form. The form could include the amount of community-related programming, news-sharing and partnership arrangements, how multicast channels are being used, sponsorship identification, disclosures and the level of website accessibility for people with disabilities. 
  • requiring broadcasters to disclose any pay-for-play arrangements online in addition to the current required on-air disclosures. 
  • requiring satellite operators to post their disclosure forms online. 
  • migrating online or eliminating any material that FCC licensees are required by law to keep in public files and repealing the burdensome enhanced disclosure rules adopted in 2007.  These rules, which have not taken effect, were designed to replace the broadcaster’s quarterly issues/programs lists with a standard form that would report detailed programming information to the Commission and would post the completed form on the Internet. 
  • terminating the FCC’s localism proceeding, which proposed among other items that broadcast stations create community advisory boards, require staff to be on site whenever a station was on the air and provide reports on the quantity of local music played. 
  • formally repealing any remnants of the Fairness Doctrine, which was stricken in 1987. 

Universal Broadband. The report finds that local media innovation, as well as the information health of communities, requires a universal and open Internet. Efforts to expand broadband would include the use of voluntary incentive auctions for commercial and noncommercial broadcasters. 

Underserved Audience.  The report recommends that the FCC ensure that modern media work for people in historically underserved areas.  The report suggests: 

  • reserving TV channels 5 and 6 for TV and radio opportunities for new small businesses, including those owned by minorities and women. 
  • implementing the Local Community Radio Act in a manner that supports the growth of LPFM stations. 
  • that Congress restore the tax certificate program to promote diversity in media ownership. 

State-based C-SPANs. To promote the availability of local public affairs programming, the working group recommends establishment of a state-based C-SPAN in every state and that Congress give regulatory relief to multichannel video programming distributors who help facilitate such networks. 

Media Ownership and Access.  The report remains neutral with respect to increased media ownership, favoring an approach that considers the impact of the Commission’s rules as currently crafted or proposed on local news and public affairs reporting in the community as a whole.  The report implies that the focus of media ownership is whether the arrangement contributes to the overall media health of the community.  This approach may give some hope to broadcasters in smaller markets that the FCC may someday be more open to consolidation. The report also recommends re-assessment of the effectiveness of the satellite TV set-aside for educational programming and of cable TV leased access systems. 

Public Interest.  The report’s public interest analysis is its most interesting and surprising aspect.  The report concludes that many rules intended to advance public interest goals are ineffective and out of sync with the information needs of communities and the nature of modern local media markets.  In some cases, policies do not achieve their intended goals.  In other cases, policies that might have once made sense have not kept up with changes in media markets.  Several policies are not sufficiently oriented towards addressing the local information gap.  Most of all, any rules or policies must live within and respect the essential constraints of the First Amendment. 

Notably, the report states that government is not the solution to providing robust local news and information but can remove obstacles confronting those working to solve these problems.  Instead, most of the solutions to today’s media problems will be found by entrepreneurs, reporters and creative citizens, not by legislators or administrative agencies. 

In 475 pages filled with recommendations, the report defies a quick and simple analysis.  At first blush, one is stricken by the report’s ambitious, comprehensive nature; in the end, however, such scope guarantees that each and every recommendation will not ultimately become law.  Some will face Constitutional challenges (such as any laws that specifically favor minorities or females as opposed to small businesses) and others will face challenges from competing interests and other stakeholders.  All of this assumes of course that there is no change in administration next year, in which case the report could find itself relegated to the dustbin of history, as have so many previous reports. 

One last point: it does not necessarily follow that adoption of these recommendations will result in massive government deregulation.  For example, while substitution of a new disclosure form for the quarterly issues/programs list and elimination of the enhanced disclosure form is certainly welcome news, the report does recommend adopting a new disclosure form.  A parallel example may be the changes in the FCC’s Equal Employment Opportunity (“EEO”) policies; a change from the agency’s traditional analysis to the modern EEO Program Reports.  Although the changes modernized the EEO process, by no means did it unburden broadcasters’ EEO obligations. 

Even with these provisos, the report represents an impressive accomplishment in bringing the discussion of journalism, localism and the media into modern times.

Shhh! FCC Proposes Rules to Turn Down Loud Commercials

There’s a kind of hush on the way as lawmakers and regulators in Washington, DC have quickly escalated their war on loud commercials in video programming.  On May 27, 2011, the Federal Communications Commission proposed new rules to implement the Commercial Advertisement Loudness Mitigation Act (the “CALM Act”), enacted by Congress on December 15, 2010.  These rule changes would incorporate new technical standards aimed at requiring broadcast stations, cable operators and other multichannel video programming distributors (“MVPDs”)  to turn down the volume of commercials in video programming. The FCC is required to prescribe regulations by December 15, 2011, and the new regulations would have to take effect within one year after the date they are adopted.  The comment cycle has been announced in the Federal Register. Comments are due on or before July 5, 2011 and reply comments are due on or before July 18, 2011. 

What has prompted legislation and new regulations designed to give viewers serenity from loud commercials?  According to the FCC, complaints about loud commercials are not new, but the rise of digital television has expanded the dynamic range of audio, both in program material and in commercials. The FCC stated that it has received more than 800 complaints about “loud commercials” since January 2008.  The CALM Act is not only specific in how Congress expects the FCC to tackle the issue, it also sharply limits the FCC’s authority on the matter.

As the CALM Act requires, the new rules would incorporate a technical standard published by the Advanced Television Systems Committee (“ATSC”) called ATSC A/85. A consumer’s home receiver would be capable of automatically adjusting volume based on metadata (called a “dialnorm”) encoded in the programming.  These volume adjustments would occur as programming transitions between program material and commercials or when the viewer changes channels.  Under the proposed rules, the ATSC A/85 standard and “successor” standards would be incorporated by reference into the rules and that public notice and an opportunity for comment would not be necessary.

For broadcasters and MVPDs, the new regulations likely will produce disquiet about increased regulatory risk and legal liability. Some considerations: 

  • The rules would apply to all commercials transmitted by a broadcaster or an MVPD. There be no exceptions for commercials that are inserted by third-party content providers; thus raising questions about who bears the ultimate responsibility for compliance.  The rules would not be enforced directly against third-party content providers, and there will be situations where responsibility remains to be allocated – for example, if an MVPD carries a broadcast station’s programming that contains loud commercials.
  • The FCC has raised some interpretive questions regarding what counts as a “commercial advertisement” for purposes of the rules. For example, the FCC wants to know whether the rules would include political ads by a legally qualified candidate or promotions of specific video programs. In addition, the FCC has asked about the impact on noncommercial broadcast stations, which are legally prohibited from broadcasting advertisements.
  • Broadcasters and MVPDs would have new burdens to demonstrate compliance with the rules in response to a consumer complaint alleging loud commercials.  Compliance could occur with respect to a “safe harbor” under the statute or in other ways.  To qualify for the safe harbor, the entity would have to install, utilize and maintain in a “commercially reasonable manner” the equipment and necessary software to comply with the ATSC A/85 standard.  The FCC has sought comment on what practices are “commercially reasonable” for this purpose.  The FCC also wants to know other ways compliance can be demonstrated. For example, stations and MVPDs may choose to enter into agreements with content providers whereby the provider would agree to deliver content that complies with ATSC A/85 RP. The station or MVPD would remain responsible but could choose to negotiate for indemnification clauses in these contracts.
  • Broadcast stations and MVPDs would be able to apply for a limited, one-year waiver from the CALM Act requirements based on financial hardship.  The FCC cites a Senate Committee report that estimates the cost of equipment as ranging from a few thousand to about $20,000 per device.  Under the FCC’s proposal, financial hardship would be demonstrated based on evidence of the station’s financial condition, cost estimates for new equipment, a detailed explanation of the justification for the postponement and an estimate of the time to comply.  Waiver proponents would not be required to demonstrate financial hardship.  The FCC has sought further comment regarding whether blanket waivers may be necessary in smaller markets.
  • The FCC has identified “practical challenges” in compliance for some MVPDs who use a different type of audio system than the AC-3 system for which the technical standard was designed but who nevertheless would be subject to the rule.  The FCC has sought comment about these challenges.
  • Some providers receive program material from third-party programmers.  The FCC wants input on the technical ability to pre-screen that content for loud commercials.
  • The FCC has proposed a consumer-driven complaint process whereby consumers would be permitted to prepare and submit an online form that relates specifically to complaints about loud commercials.  There would be no filing fee, but the complainant would be required to submit contact information and specific information about the programming that is the subject of the complaint.  The broadcaster or MVPD receiving the complaint would be expected to retain records and documentation to demonstrate compliance. 

Despite the prevalence of digital video recorders (or more importantly, their fast-forward functionality) and the volume button on remote controls, through the CALM Act, Congress has charged the FCC to act quickly to combat loud commercials.  As the NPRM makes clear, however, questions remain, and we have yet to hear the answers.    

Don't Change that Channel: FCC Takes Steps to Transition TV Stations ... Again

Effective immediately, the Federal Communications Commission will no longer accept rulemaking petitions for TV stations to change their licensed channels. This is unfortunate news for stations who are still studying ways to improve free local over-the-air DTV service. 

Today’s announcement comes after the FCC staff’s completion of nearly 100 channel changes since lifting its filing freeze on May 30, 2008. FCC staff apparently believes that licensees have had sufficient time to evaluate engineering options and presumes there is no pent-up demand for channel changes. Such speculation might have been avoided if instead of an immediate freeze, a short filing window was established to permit filings for channel changes before the freeze became effective. 

FCC staff indicates that the freeze is necessary to facilitate the re-packing and reallocation of portions of the TV Band for broadband services, as recommended in the National Broadband Plan. While the FCC lacks authority to conduct incentive auctions, it may re-pack the TV band to create more spectrum for wireless broadband. FCC Chairman Julius Genachowski signaled his interest in repacking the TV band in his April 12, 2011 remarks at the NAB Show. FCC staff has been doing a road show around the country promoting the benefits of incentive auctions, so this action comes as no great surprise. 

What is becoming clear is that TV stations should begin contemplating a second DTV transition and the possibility of changing channels yet again. In the meantime, FCC staff has taken a step toward minimizing the number of moving parts in this transition by making sure that TV stations stay put, for now. 

For more information, don’t change that channel …

Pre-Filing Announcements for NC and SC Radio Stations begin June 1, 2011

As part of the process of filing for FCC renewal of their broadcast licenses, commercial and noncommercial full power radio stations licensed to communities in North Carolina and South Carolina must begin their pre-filing announcements on June 1, 2011.  Radio stations must air these announcements at least once a day on the 1st and 16th days of June and July.  At least two of the announcements must be broadcast between 7:00 a.m. to 9:00 a.m. and/or between 4:00 p.m. to 6:00 p.m.  If the broadcast station does not operate during these hours, two of the announcements must be broadcast during the first two hours of operation. 

FM translator stations do not need to make any pre-filing announcements. 

For more information about the broadcast license renewal process, see my blog pieces here and here.

Post-Filing Announcements for DC, MD, VA and WV Radio Stations begin June 1, 2011

As part of the process of filing for FCC renewal of their broadcast licenses, commercial and noncommercial full power radio and FM translator stations licensed to communities in the District of Columbia, Maryland, Virginia and West Virginia must begin their post-filing announcements on June 1, 2011.  Radio stations must air these announcements at least once a day on the 1st and 16th days of June, July and August as follows: 

●          At least three of the announcements between 7:00 a.m. to 9:00 a.m. and/or between 4:00 p.m. to 6:00 p.m.

●          One announcement between 9:00 a.m. to noon

●          One announcement between noon to 4:00 p.m.

●          One announcement between 7:00 p.m. to midnight. 

If the broadcast station does not operate during these hours, two of the announcements must be broadcast during the first two hours of operation.

FM translator stations must publish the text of the post-filing announcement in a daily, weekly or bi-weekly newspaper of general circulation in the community of license at least once immediately following filing of the license renewal application.

For more information about the broadcast license renewal process, see my blog pieces here and here.

FCC Concludes Auction of 108 Vacant FM Allotments; Total Bids Reach $8,537,655

The FCC completed Auction 91 yesterday, netting more than $8.5 million for the U.S. Treasury while awarding 108 new FM construction permits to 66 winning bidders.  The results represent a significant increase in total bids over the last auction of FM Allotments (Auction 79), where the FCC collected more than $5 million while awarding 85 construction permits to 53 winning bidders. 

A comparison of the results is instructive: 

Auction No.

Date Concluded

# of FM Allotments Awarded

Total Bids (Net)

Total Number of Winning Bidders

Average per FM Allotment














Clearly Auction 91 generated more interest and more dollars than Auction 79.  There are several possible reasons. First, Auction 91 proposed more construction permits (144) for auction than Auction 79 (112).  Auction 91 had 117 qualified bidders while Auction 79 had only 77.  Several markets in Auction 91 were highly contested, with vigorous bidding among existing broadcasters and new entrants in certain markets.  As a result, five of the allotments went for more than a half a million dollars while an additional 14 allotments sold for $100,000 or more.  Auction 91 could reflect the frustrations of new and existing broadcasters wishing to purchase existing radio broadcast stations.  It is no secret the reduction in valuation of broadcast properties combined with a lack of funding for new acquisitions has resulted in a significant drop in broadcast transactions over the past several years.  Consequently, existing and new broadcasters interested in purchasing FM stations could have been motivated to participate in Auction 91.  And of course, never underestimate the interest of spectrum speculators who see an opportunity to upgrade a vacant allotment either through increasing power or changing the community of license. 

Unanswered is what the FCC will do with the 36 allotments that received no bids.  About half of these allotments have been offered in two or more FCC auctions and received no bids from the public. The issue is when the FCC will decide to delete these allotments because of lack of interest from the public.

Even though bidding in Auction 91 is closed, the FCC’s anti-collusion rules prohibit any applicants in Auction 91 from talking with each other until the down payment is made by the winning bidders.  The down payment will be due 10 days after the FCC releases a public notice announcing the winning bidders.  The FCC should release this public notice within the next several days.

FCC to Report to Congress on Economic Impact of LPFM

The FCC is seeking comments on the economic impact that low power FM stations (“LPFM”) may have on full-service commercial stations.  These comments will form the basis of a report that the FCC must submit to the Congress as required by the Local Community Radio Act of 2010 (“LCRA”)The LCRA relaxed technical restrictions on LPFM stations in an effort to help grow LPFM service.  For example, the LCRA requires the FCC to eliminate the third-adjacent channel protection that full-service FM stations now enjoy from LPFM stations, FM translator stations and FM booster stations.  The LCRA also allows the FCC to grant LPFM stations a waiver of second-adjacent channel protections to full-service FM stations.  These changes when taken together could allow a significant increase in new LPFM stations, possibly to the detriment of full-service FM stations; hence the necessity and importance of the FCC report to the Congress. 

The FCC wants comments from the public on the current and potential economic impact that the addition of new LPFM stations could have on full-service FM stations.  The FCC left unanswered whether the agency will include the potential economic effect in its report.  The FCC also wants comments on the appropriate measurement for the economic impact; the effect of LPFM stations on audience ratings or advertising revenue. 

This approach has three problems.  The first is the difficulty for the FCC to develop any meaningful metrics that measure the effect of LPFM stations on full service stations with regard to advertising revenue.  LPFM stations compete indirectly with full-service FM stations.  LPFM stations must operate as noncommercial stations, financed through underwriting and listener support.  Full-service FM stations sell advertising time based on ratings.  It will be challenging for the FCC to compare the noncommercial economics of LPFM to the commercial economics of full-service stations. 

Second, Congress seeks information on the effect LPFM stations will have on full service FM stations only.  The LCRA, however, would make it possible for FM translator stations and FM booster stations to relocate closer to urban markets or for the FCC to license new stations.  FM translator and booster stations extend the reach of full-service stations, presumably with some economic impact on other full service stations.  In addition, FM translator stations can now rebroadcast AM stations, extending the reach of those stations. 

Third, the FCC will not consider the potential economic impact on full-service stations due to interference from LPFM stations.  LPFM stations are prohibited from causing interference to full-service FM stations, and there are also practical limitations to such LPFM station interference. In the event interference does occur, it is more likely that full-service stations will cause interference to LPFM stations than the reverse.  Such prohibitions and practical considerations do not assure that such interference may not occur; accordingly, for the report to the Congress to be meaningful, it must account for the economic impact associated with such interference, if any. 

Comments in this proceeding (MB Docket No. 11-83) are due on June 24, 2011, and replies are due on July 25, 2011.

Broadcasters Fined for Airing Video News Releases Without Proper Sponsor Identification

Two television stations discovered the pitfalls of broadcasting video news releases (“VNR”) when the Federal Communications Commission fined each station $4,000 for broadcasting a VNR without the proper sponsorship identification.  VNRs are prepackaged news stories that may use actors to play reporters and may include suggested scripts to introduce the stories.  The FCC believes that listeners and viewers are entitled to know who seeks to persuade them with VNRs.  In April 2005 the FCC released a public notice warning broadcasters of the risks of running VNRs produced by third parties without appropriate sponsorship identification and reminded broadcasters that the FCC will take appropriate enforcement action where necessary. 

According to the FCC, the apparent violations date back to 2006, when Stations WMGM-TV and KMSP-TV broadcast VNRs during their news programs.  WMGM aired a VNR on common cold remedies produced by Matrixx Initiatives, the makers of Zicam cold remedy.  KMSP broadcast a VNR on new car designs produced by General Motors.  Free Press and the Center for Media and Democracy filed complaints with the FCC, claiming the stations did not include the requisite sponsorship identification for Matrixx and General Motors in the VNRs.  The stations disagreed, arguing that the references to any products were fleeting, that neither station received any consideration for broadcasting the VNRs and that action by the FCC violated the broadcasters’ First Amendment rights. 

The FCC concluded that WMGM and KMSP should have included sponsorship identification because product discussion and placement in the VNRs were more than fleeting and were disproportionate to the subject matter discussed.  Among the contributing factors: 

  • Each VNR showed only the sponsor’s products, not those of any competitors.  The Matrixx VNR showed four different shots of Zicam and mentioned a health survey sponsored by Zicam. The General Motors VNR included 12 different shots of three different General Motors convertibles. Neither VNR mentioned the products of any competitors. 
  • Each VNR included expert testimony supporting the featured product. The Matrixx VNR included testimony from a physician recommending Zicam, while the General Motors VNR included an interview with the head of product development for General Motors and a trade magazine mentioning favorably the new General Motors convertibles. 
  • The FCC’s 2004 Public Notice announced its concerns about VNRs and proper sponsorship identification. 

The FCC rejected arguments that sponsorship identification was not required.  Instead, the FCC determined that sponsorship identification was required because the products were shown to an extent that was disproportionate to the subject matter of the VNR, rejecting arguments that station employees received no consideration for the broadcast and that the references to the sponsors were fleeting. 

The FCC also rejected arguments that the fines violate the broadcasters’ First Amendment rights.  The FCC noted that the Communications Act grants the FCC broad authority to investigate complaints about VNRs and sponsorship identification.  Further, the sponsorship identification rules are disclosure requirements that do not restrict free speech.  According to the FCC, broadcasters remain free to exercise their newsgathering and editorial functions with regard to news.  All broadcasters need do is provide the proper sponsorship identification. 

It is understandable for broadcasters to consider airing VNRs, both as a service to the public and to help control costs.  The recent fines should serve as a reminder to broadcasters that before accepting a VNR, it is important to consider the relationship between the producer and the product or service and whether the product placement is fleeting or disproportionate to the news story.

FCC Enforcement Advisory: New License Renewal Form Requires Broadcasters to Certify Non-discrimination in Advertising Agreements

The Federal Communications Commission's Enforcement Bureau has released an Enforcement Advisory reminding broadcasters of their obligation to include non-discriminatory language in advertising agreements.  This follows on the FCC’s recent revision of the license renewal application (Form 303-S, March 2011 version) that broadcasters must file with the FCC during the license renewal cycles, which begin on June 1, 2011. As I’ve blogged previously, the new renewal application requires applicants for commercial broadcast stations to certify that the licensee’s advertising agreements do not discriminate on the basis of race or ethnicity and that all such agreements contain certain nondiscrimination clauses.  Prohibited discrimination would include “no urban/Spanish” dictates. 

Broadcasters must have a good faith basis for making this certification and a reasonable basis for believing that factual information provided to the FCC is truthful and accurate.  For example, a broadcaster relying upon a third party for advertising agreements still remains responsible for complying with the FCC’s non-discrimination requirements.  Applicants who cannot make this certification must include an exhibit explaining the reasons why including an explanation of the person and matters involved and why the FCC should grant the renewal application. 

The certification covers the period from March 14, 2011 (the effective date of the new Form 303-S) through the date that the station files renewal application.  For subsequent renewal applications, the certification will cover the entire renewal term. 

NCE licensees are not required to make this certification.

Pre-Filing Announcements for DC, MD, VA and WV Radio Stations begin April 1, 2011

As part of the process of filing for FCC renewal of their broadcast licenses, commercial and noncommercial full power radio stations licensed to communities in the District of Columbia, Maryland, Virginia and West Virginia must begin their pre-filing announcements on April 1, 2011.  Radio stations must air these announcements at least once a day on the 1st and 16th days of April and May.  At least two of the announcements must be broadcast between 7:00 a.m. to 9:00 a.m. and/or between 4:00 p.m. to 6:00 p.m.  If the broadcast station does not operate during these hours, two of the announcements must be broadcast during the first two hours of operation. 

FM translator stations do not need to make any pre-filing announcements. 

For more information about the broadcast license renewal process, see my blog piece here.

FCC's New Rules for Rural AM and FM Radio Service Make Waves but Miss the Mark

The Federal Communications Commission’s job description includes the responsibility to implement rules and procedures for awarding new broadcast stations and for permitting incumbent AM and FM stations to relocate their facilities, and by extension, their service areas.  The FCC recently revised its criteria for selecting among competing proposals for new AM stations, new FM allotments and FM stations seeking to change their community of license. The new rules fall short of providing broadcasters with the necessary flexibility to relocate radio stations where they will provide the maximum service to the public. 

Section 307(b) of the Communications Act requires the FCC to make a fair, efficient and equitable distribution of radio service.  In discharging this obligation when awarding new AM or FM stations or approving community-of-license changes, the FCC relies upon four priorities for selecting among competing proposals: 

  • (1) first fulltime aural (reception) service;
  • (2) second fulltime aural service;
  • (3) first local (transmission) service; and
  • (4) other public interest matters. 

The FCC gives equal consideration to Priorities (2) and (3), and competing parties who propose the highest priority service or, if the priorities are equal, propose service to the larger community or population, will be entitled to a preference for their proposed station or communityThe FCC is concerned that reliance upon these priorities has caused the FCC to favor urbanized areas – at the expense of smaller communities or rural areas – when granting new AM stations, new FM allotments and community of license changes.  Under the new rules, the FCC will de-emphasize population differences as a principal metric in awarding Section 307(b) preferences in favor of a “more realistic” evaluation of the totality of the station’s proposed service.  The FCC will emphasize that the goal of Section 307(b) is to prevent excessive concentration of radio service in larger cities. To the FCC, Section 307(b) essentially is a listener-centric consumer statute rather than a broadcaster-centric mandate designed to promote spectral efficiency.

Revised Priority 3 Showing: First Local Service in A Community Located Near an Urbanized Area.  The most important change to the FCC’s rules is the rebuttable presumption that any proposal for first local service (Priority 3) for a community near an urbanized area that could place a principal community contour signal over at least 50% the urbanized area, or could be modified to place such coverage, will be presumed to serve the entire urbanized area rather than the proposed community.  This presumption may be rebutted by a compelling showing:  (1) that the proposed community is truly independent of the urbanized area; (2) of the community’s specific need for an outlet for local expression separate from the urbanized area; and (3) the ability of the proposed station to provide that outlet. 

The required showing can be based on the existing three-prong test established in Faye & Richard Tuck:  (1) the degree to which the proposed station will provide coverage to the urbanized area; (2) the size and proximity of the proposed community to the central city of the urbanized area; and (3) the interdependence of the proposed community of license and the urbanized area.  The FCC has heightened the scrutiny of factors in support of the third prong.  For example, applicants must submit evidence of the number of local residents who work in the community, not merely extrapolations from commute times or listing local business in the community.  Similarly, the application must include evidence that the community’s residents perceive themselves as separate and distinct from the urbanized area, rather than statements to that effect from town officials or business leaders.  In addition to demonstrating independence, a compelling showing sufficient to rebut the urbanized area presumption must also include evidence of the community’s need for an outlet of local expression.  Examples could include the community’s rate of growth, the existence of substantial local government necessitating coverage, and physical, geographical or cultural barriers separating the community from the remainder of the urbanized area. 

Revised Public Interest Showing (Priority 4).  In determining whether a proposed allotment betters serves the purposes of Section 307(b) under Priority (4), the FCC will look favorably upon proposals emphasizing service to underserved areas; i.e., those receiving fewer than five aural services.  A proposal to provide service to a third, fourth and/or fifth aural service to at least 25% of the population in the proposed primary service area, provided the proposed community of license has two or fewer local transmission services, will receive a dispositive Section 307(b) preference under Priority (4). 

The table below compares the rule changes for Priority 3 and Priority 4 for proposals for new AM services, for new FM services and for changes in communities of license: 


Priority 3

(first local transmission service)

Priority 4

(other public interest matters)





New AM Service Applicant

Station proposing 1st local service presumed to serve Urbanized Area (“UA”) if contour covered at least 50% of the UA; rebuttable by Tuck showing.

Greater presumption of service to UA; more detailed Tuck showing now required.

Could establish P4 by gains in areas and population and/or more than de minimis service to underserved areas.

Must propose a 3rd, 4th or 5th reception service to at least 25% of the population within the proposed primary service area. The community of license must have two or fewer local transmission services.

Can demonstrate P4 by gains in area and population but only if there are no underserved areas.

New FM Service Applicant

Station proposing 1st local service presumed to serve UA if contour covered at least 50% of the UA; rebuttable by Tuck showing.

Greater presumption of service to UA; more detailed Tuck showing now required.

Could establish P4 by gains in areas and population and/or more than de minimis service to underserved areas.

Must propose a 3rd, 4th or 5th reception service to more than a de minimis population within the proposed primary service area.

Can demonstrate P4 by gains in area and population but only if there are no underserved areas.

Petitioner for Change in Community of License

Station proposing 1st local service presumed to serve UA if contour covered at least 50% of the UA; rebuttable by Tuck showing.


Greater presumption of service to UA; more detailed Tuck showing now required.

Acceptable P4 showings could include gains in areas and population and/or more than de minimis service to underserved areas.

Proposal may not create a white or grey area. 

High bar to proposals that create an underserved area to more than 15% of the population or seek removal of a second local service from a community with a population of 7,500 or greater.

Must propose a 3rd, 4th or 5th reception service to at least 25% of the population within the proposed primary service area.

Can demonstrate P4 by gains in area and population but only if there are no underserved areas.

Proposals for New AM Service.  In considering competing proposals to provide new AM service, the FCC will apply the new rebuttable presumption of service to an urbanized area along with the revised Priority (4) showing. The determination of whether a proposal could cover 50% or more of an urbanized area will be limited to a consideration of minor modifications to the proposal, without changing the proposed antenna configuration or site, and the spectrum availability as of the close of the filing window.  If the FCC cannot make a 307(b) determination among competing applicants using these criteria, the FCC will make the selection using an auction process.  The FCC will not apply these new procedures to pending applications for new AM stations and major modifications to AM stations filed in the 2004 AM Auction 84 filing window.  The FCC will however apply these new procedures to any other pending applications.

Proposals for new FM Allotments.  In considering competing proposals for new FM service, the FCC will apply the new rebuttable presumption of service to an urbanized area along with the revised Priority (4) showing provided coverage is to more than a de minimis population.  The determination of whether a proposal could cover 50% or more of an urbanized area is more expansive for new FM allotments than new AM allotments.  The applicant must certify that there are no existing towers in the area to which, at the time of filing, the applicant’s antenna could be relocated pursuant to a minor modification application to serve 50% or more of the urbanized area.  If the revised Priority (4) does not apply, then the FCC considers raw population totals in support of Priority (4).  These new rules will not apply to any non-final FM allotment proceedings, including “hybrid” coordinated application/allotment proceedings.  The revised procedures will apply to all pending petitions to amend the FM Table of Allotments and to all other open FM allotment proceedings and non-final FM allotment orders. 

Proposals to Change Community of License.  The FCC’s strictest requirements will apply to existing broadcast stations seeking to change their community of license.  The FCC will apply the rebuttable presumption of service to an urbanized area along with the revised Priority (4) showing.  Proposals that would create a white or grey area would be prohibited.  The FCC would strongly disfavor any change that would result in the net loss of a third, fourth or fifth reception service to more than 15% of the population in the station’s current protected contour.  Applicants must not only set forth the size of the populations gaining and losing service but also the number of services those populations will receive if the application is granted and an explanation of how the proposal advances the revised Section 307(b) priorities.  The FCC will strongly disfavor any proposed removal of a second or local transmission service from a community of substantial size (with a population of 7,500 or greater).  These procedures will apply to any pending applications to change community of license. 

The FCC’s new procedures have several problems.  First, the agency presumes a problem where none exists in light of existing protections against the migration of radio stations from rural to urban markets.  New and existing stations have limitations on their ability to migrate into urbanized areas due to the FCC’s technical rules relating to mileage separation, city-of-license coverage, prohibitions against removing a sole first local service from a community, and restrictions on the filing of contingent applications. 

Moreover, the FCC does not consider the population of the urbanized area in adopting its new policies.  An “urbanized” area can have as few as 50,000 people but is treated under the rules the same way as one with hundreds of thousands, or even millions, of people.  The technical and policy restrictions already in place make it extremely difficult for an existing or new station to be located in one of the larger urban markets.  The new policies now will make it extremely difficult to relocate stations to the smaller or newer urbanized markets. The FCC also does not consider the population migration that has occurred over the past several decades.  Instead, the FCC would seem to prefer to lock radio stations in to their current communities, restricting a station’s ability to improve their service to better serve the public.  It is ironic that in adopting its policies for expanding broadband service, the FCC seeks to reclaim spectrum under the guise of promoting spectrum efficiency but in its new rules implicitly reject spectrum efficiency as an important objective for broadcast services. 

The FCC does not hide its preference for auctioning broadcast spectrum to the highest bidder instead of placing greater emphasis on Section 307(b) determinations.  The auction process works against the FCC’s goals of increasing broadcast ownership by minority and females. Further, the FCC fails to consider the considerable time between the initial proposal for a new AM or FM broadcast station and the auction of the station – a time lapse where changed economic conditions and business plans can affect construction and operation of the new station.  Case in point: Auction 91 will auction 144 new FM station construction permits, 37 of which are holdovers from the prior auction where no winning bid was placed.  This underscores the lack of interest of certain allotments made to rural areas. 

The FCC’s new procedures also are tilted against relocating new or existing radio stations near or within urbanized areas.  Concerned with the alleged migration of new and existing radio stations from rural markets to urbanized markets, the FCC creates roadblocks and imposes high costs for parties interested in a station near or within an urbanized area.  The new Tuck showings impose a financial burden that will deter many applicants from proceeding. 

In short, the new rules represent a missed opportunity to adopt a balanced approach between serving rural and urbanized areas.  Broadcasters must have the flexibility to go where the people go.  Sadly, the FCC’s new policies work against the public’s interest.

FCC Releases Broadcast Ownership Data, but Flawed Approach Limits Its Usefulness

Last July, commercial broadcasters jumped through hoops to file the new biennial ownership reports (the Form 323) with the Federal Communications Commission.  Now the FCC has published the results of the information collected in those reports.  The public may review the ownership information for broadcasters based on ownership structure, ownership relationships, ownership interests, ownership groups and other categories in downloadable files. 

The ownership reports filed last July (reporting broadcast ownership as of November 1, 2009) are the first in a series of “snapshots” of broadcast ownership data.  The new reports break down the ownership information into categories to provide for analysis on many levels.  With ownership reports to be filed biennially and by the same date, the FCC hopes to provide a reliable basis for analyzing ownership trends in the broadcast industry, including ownership by minorities and females. 

The problem with this approach is the FCC’s collection of ownership information is incomplete.  The FCC is not collecting the same ownership information for noncommercial stations and low power FM stations. The most recent broadcast totals indicate that 22.83% of the full power broadcast and LPFM stations are noncommercial.  These stations were not included in the broadcast information filed with the FCC last July.  A further 11.65% of the full power broadcast stations did not file ownership reports last July.  Eliminating these categories of stations from any ownership analysis removes a substantial number of stations from consideration, thereby all but guaranteeing that any analysis will be flawed. 

The FCC has pending a proceeding to consider similar collection of ownership data for noncommercial broadcast stations.  Until the noncommercial stations and the commercial stations that did not file ownership reports last July are included in any snapshot of the ownership makeup of the broadcast industry, any analysis will be of no use to the FCC in moving forward with any changes in media ownership involving underrepresented groups.

Missing Broadcast Program Reports Leads to $38,000 in FCC Fines

In a challenging economy, regulatory compliance may become the first casualty for a business.  A recent lack of diligence in meeting basic Federal Communications Commission obligations spelled trouble for four broadcasters in FCC enforcement actions announced last week. The FCC fined these broadcasters a combined $38,000 because their stations’ local public inspection files were missing the required quarterly issues/programs reports. 

Under FCC rules, broadcasters must place in their local public inspection file at the end of each quarter a list of those programs broadcast on the station responsive to issues of importance to the community.  These quarterly issues/programs reports form the basis for documenting broadcasters’ license-renewal expectancy, which in turn protects broadcasters from the filing of competing applications for their broadcast license at license renewal time. 

When the FCC inspects a broadcast station, even on an unrelated matter, it is almost a certainty that the FCC will check the station’s local public inspection file.  The FCC may inspect the local public file as part of a random inspection or in response to a complaint and may discover the missing quarterly issues/programs reports.  Broadcast licensees must disclose on their license renewal application if any reports are missing. 

The individual fines ranged from $8,000 for missing quarterly/programs reports for two full years to $12,000 for missing reports for three full years

The next license renewal cycle for radio broadcasters begins on June 1, 2011.  Now is the time for broadcasters to review their local public inspection file and make sure it is complete and accurate.  Most state broadcasters associations will also conduct a mock inspection.  These can be valuable in avoiding costly fines later.  It will be too late once the FCC inspector or a member of the public stops by to check out the file.

FCC's Revisions to Broadcast License Renewal Application Warrant Close Attention from Licensees

Broadcasters take note: the Federal Communications Commission has revised the license renewal application (Form 303-S) that you must file with the FCC during the upcoming license renewal cycle, which begins on June 1, 2011 for radio stations.  Among other things, these revisions will require broadcasters to disclose more detailed information about ownership, nondiscrimination policies and operating schedules during the license term.  Given the legal risks associated with making inadequate or improper disclosures to the FCC, it is important to become familiar with these new requirements so that the broadcaster can submit an accurate renewal form. 

One key revision is in the ownership disclosure.  The broadcast licensee now must disclose all parties with an “attributable” interest in the licensee in light of the FCC’s Equity Debt Plus standard (“EDP”).  Under this standard a party is deemed to have an attributable interest in a licensee if that party has a combined debt and equity interest in the licensee of more than 33 1/3% and that party holds an attributable interest in another station in the same market.  Licensees should be familiar with the EDP standard because it has been a requirement on assignment and transfer applications for several years.

In addition, the revised renewal application includes some new certifications that licensees should give careful consideration:

  • Licensees must certify that their advertising sales agreements do not discriminate on the basis of race or ethnicity and that all such agreements contain nondiscrimination clauses.  It is unclear what the FCC considers acceptable language for inclusion in such agreements (or why the certification appears to exclude discrimination based on sex).
  • Licensees must certify that the broadcast station has not been silent or operating for less than its permitted operating hours for more than 30 consecutive days.  If the licensee cannot make this certification, it must submit an exhibit specifying the exact dates during the license term when the station was silent or operating for less than the minimum hours.  What is unclear is whether a station operating with reduced power but still on the air would need to submit an exhibit.

Broadcasters should review their station operations to make sure they can check “yes” to the two new certification requirements.  Expect the FCC to review carefully any application where the applicant cannot make these certifications -- and to impose forfeitures or other penalties, where appropriate.

The revised renewal application eliminates the requirement that broadcasters include an exhibit to demonstrate compliance with the FCC’s maximum permissible radio frequency (“RF”) exposure limits.  Licensees must still certify that their broadcast facilities comply with the FCC’s maximum permissible RF limits.

The new Form 303-S reflects developments since the FCC last updated the renewal application in September 2009.  The new form will become effective on March 14, 2011.  Licensees must use the revised form when filing their renewal applications between June 1, 2011 and April 1, 2014

"Déjà vu All Over Again": Radio License Renewal Cycle Begins June 1, 2011

The license renewal cycle for radio stations is fast approaching, and to paraphrase Yogi Berra, for many broadcasters the familiar renewal process should be “déjà vu all over again.”  That said, broadcasters should take care to prepare their renewal applications to avoid common filing errors and should review their practices to help ensure that they can obtain renewal of their license through filing a complete and correct renewal application with the Federal Communications Commission – particularly in light of recent changes in the renewal application. 

The renewal cycle for radio stations begins on June 1, 2011 (the deadline for stations licensed to communities in Maryland, Virginia, West Virginia and the District of Columbia to file their renewal applications) and winds up on April 1, 2014 (the license renewal deadline for stations licensed to communities in Delaware and Pennsylvania).  Between these dates, radio stations licensed to the remaining U.S. states and territories will file their license renewal applications.  TV stations operate on a different renewal cycle. 

The FCC has released a new version of the license renewal application (Form 303-S), which licensees must use in this renewal cycle.  The revised Form 303-S includes a question on the FCC’s anti-discrimination policy and whether the broadcast station has been silent, as discussed below. 

What can we expect to see during this license renewal cycle?  

○          Renewed and vigorous review of a licensee’s EEO Public File Report obligations.  Licensees with five or more full time employees must prepare an EEO Public File Report on the anniversary of the date when the station would file its license renewal application.  The EEO Public File Report must be placed in the station’s local public inspection file and must be posted on the web site for the station, if one exists.  When the broadcaster files the renewal application for the station with the FCC, the broadcaster must also file the station’s two most recent EEO Public File Reports.  The FCC has stepped up enforcement in this area, recently fining two radio stations for incomplete EEO Public File Reports.  Additional enforcement action is expected in the future. 

○          Fines for filing late or incomplete renewal applications.  The FCC fined broadcasters during the last renewal cycle for late filed or incomplete renewal applications.  Expect to see the FCC continue that trend, with little-to-no tolerance for broadcasters who submit incomplete renewal applications. 

○          Review of whether the station complies with the FCC’s non-discriminatory policy regarding sales contracts.  Licensees will be required to certify in the renewal application that the station’s advertising sales agreements do not discriminate on the basis of race or ethnicity and that all such agreements include nondiscrimination clauses.  Because of uncertainty regarding what language must be included in a sales agreement to satisfy this requirement, broadcasters should review their sales policy carefully. 

○          Was the station silent during the license term?  The renewal application requires licensees to certify that the station has not been silent (or operating with reduced power) for more than 30 days.  If the licensee cannot make this certification, the licensee must submit an exhibit listing the exact dates during the preceding license term when the station was silent or operating with reduced power. 

○          Enforcement Bureau hold on the renewal application.  The FCC generally defers processing renewal applications if the Enforcement Bureau has put a hold on processing the application.  The most common reason that the Enforcement Bureau would put a hold on a renewal application is because of a pending indecency complaint against the station. The FCC has not yet granted renewal applications for a small number of radio stations from the last renewal cycle because of indecency complaints. 

○          Timing of assignment applications.  The FCC will not grant an assignment or transfer application for a station while the renewal application for the station remains pending before the FCC. It is important that broadcasters plan the sale or transfer or a broadcast license to avoid overlapping with the renewal application. 

During the last renewal cycle, the FCC issued some hefty fines to broadcasters for common and avoidable filing mistakes:

○          Failure to file the license renewal application in a timely manner.  License renewal applications must be filed four months before the broadcast license expires.  For example, if a broadcast license expires on October 1, 2011, the renewal application must be filed before June 1, 2011.  During the last renewal cycle, some broadcasters waited to file their renewal application until just before the license expiration date.  Worse, others did not file until after their license had expired

○          Failure to file the license renewal application electronically.  A licensee must file their renewal application with the FCC electronically.  The FCC will not accept filings submitted on paper

○          Failure to pay the filing fee in a timely manner.  Commercial licensees must pay the filing fee for a renewal application within 14 days of submission of the application.  The FCC must receive payment by the 14th day.  Several times during the last cycle, licensees timely submitted their license renewal application only to forget to pay the filing fee

○          Failure to request special temporary authority to continue broadcasting.  If a licensee does not file their renewal application before the license expires, the broadcaster no longer has FCC authority to broadcast its signal.  The broadcaster must file with the FCC a request for special temporary authority for the station to continue broadcasting. 

○          Make sure the station local public inspection file is complete.  The renewal application requires broadcasters to certify the station’s local public inspection file is complete and documents timely placed in the file.  The most common documents missing from the local public file during the last renewal cycle were the station’s quarterly issues/programs lists.

            The FCC may have streamlined its license renewal process over the years, but the obligations of broadcasters to serve their community remain.  Now is the time for broadcasters to make sure their station is ready for the new license renewal cycle.  Review your local public inspection file and make sure it is complete and accurate.  Know when you must file your license renewal application.  Above all, be diligent and treat the license renewal application with the importance it deserves.

Comcast-NBCU: FCC's Merger Conditions Will Impact the Retransmission Consent Marketplace

In light of Saturday’s announcement that the new joint venture between Comcast Corporation and NBC Universal, Inc. (“Comcast-NBCU”) is open for business, it is an opportune time to consider how this new media force will affect the competitive marketplace for retransmission consent – i.e., broadcasters’ statutory right to obtain compensation for their content by granting or withholding consent to carriage of their programming by cable companies, satellite operators and other multichannel video programming distributors (“MVPDs”). The Comcast-NBCU deal has some strings attached – by virtue of the merger review process by the Federal Communications Commission and the U.S. Department of Justice – that will affect not just Comcast-NBCU but also broadcasters who compete in the video programming marketplace.

First, a few words about these strings.  The FCC’s approval of Comcast-NBCU venture represents only the latest instance of the FCC using its merger review process to advance broader public interest objectives not readily achievable through the FCC’s general rulemaking procedures. This is nothing new. Over the years, the Commission has used its merger-review process to elicit “voluntary” commitments and to impose merger conditions to achieve its goals.  This has been the case regardless of whether Republicans or Democrats comprised the majority of the Commissioners and regardless of any conditions imposed by DOJ. Ask AT&T and BellSouth, for example.

Conditions attached to the FCC’s approval of Comcast-NBCU will affect the marketplace in many ways, particularly given that they will be in place for up to seven years.  That said, focus for now on retransmission consent. The Comcast-NBCU joint venture presents a special case because it combines a distribution network with substantial programming assets, including TV stations, cable channels and a major broadcast network. Many fear that this degree of vertical integration could distort the competitive marketplace through the extensive aggregation of content with distribution. For example, the FCC expressed concern that Comcast-NBCU would attempt to disadvantage rival MVPDs by withholding Comcast-NBCU programming or by raising programming costs.  As a result, the FCC, by conditionally approving the Comcast-NBCU deal, has made clear its willingness to take steps to intervene in the marketplace when it fears that a proposed transaction would increase an entity’s ability and incentive to reduce competition from rival video programming vendors by withholding carriage or imposing unreasonable terms and conditions on carriage deals.

Some of these conditions may have consequences for TV broadcasters other than NBCU. Specifically: 

  • Arbitration and Standstill Remedies for MVPDs. Competing MVPDs may negotiate with Comcast-NBCU for access to Comcast-NBCU video programming, but if a dispute arises about prices, terms or conditions, the FCC has deemed that MVPDs may invoke a commercial arbitration process to resolve the dispute. The FCC’s order sets forth a baseball-style arbitration process, and Comcast will be required to continue to supply the programming that is the subject of the dispute until the dispute is resolved. This standstill requirement is designed to preserve the status quo pending resolution of the dispute.
  • Network affiliation and retransmission consent remedies. By combining network and distribution assets, Comcast-NBCU raises the potential for interference with the retransmission consent process. As a result, NBCU and Comcast have entered into two agreements relating to network affiliation and retransmission consent.  In the first agreement, Comcast-NBCU have agreed among other things 1) that the NBC Network will be solely responsible for negotiating network affiliate agreements with local NBC affiliates, while Comcast and/or its affiliates will be solely responsible for negotiating retransmission consent agreements with individual local NBC affiliates; 2) nondiscrimination provisions will apply with respect to network affiliation and retransmission consent agreements, 3) Comcast will honor NBC’s agreements to preserve network nonduplication to prevent importation of another affiliate’s broadcast station signal into an NBC affiliate’s market, 4) decisions regarding exclusivity will be left to the NBC Network, 5) in connection with any carriage negotiations between NBC affiliates and Comcast, Comcast is prohibited from applying a direct feed to its systems in the station’s market; and 6) Comcast will not seek repeal of the current retransmission consent regime.  In the second agreement, Comcast has agreed generally to separate its retransmission negotiations from the knowledge and influence of NBCU and to not discriminate against ABC, CBS and Fox affiliates in favor of any NBCU-owned or affiliated station.

So how would the presence of baseball-style arbitration and standstill requirements in disputes among MVPDs affect the market for retransmission consent for broadcasters?  The answer is in the tea leaves.  In applying these conditions to Comcast-NBCU, the FCC is signaling an increased willingness to require arbitration of carriage disputes – arbitration that is not required in the case of retransmission consent disagreements between a broadcaster and an MVPD – and to, via standstill, prevent parties from withholding programming pending the outcome of a carriage dispute.  The arbitration/standstill remedies apply only with respect to MVPD complaints against Comcast-NBCU; however, an ongoing rulemaking proceeding considers whether similar tools should be available in retransmission consent disputes.

This is problematic – mandating arbitration or requiring interim carriage should not be applied to thwart broadcasters’ retransmission consent rights.  Questions have been raised about the FCC’s authority to impose such an arbitration requirement absent Congressional action. The standstill provision however, makes it less likely that agreements will be reached. The incentive to game the FCC process to achieve private contractual advantages will be too great to resist. Contrary to the FCC’s assertions, a standstill is likely to increase the number of disputes that go to arbitration rather than pushing parties towards agreement.

What about the significance of the second set of conditions, relating to network affiliation and the retransmission consent process? One key point is that Comcast will not be allowed to bypass the local NBC affiliates to deliver its programming directly to advantage itself in a retransmission consent negotiation with its affiliates. If allowed, this bypass would effectively reduce Comcast’s incentive to reach an agreement. Time Warner Cable opposed imposition of that condition, and the FCC did not extend it to any other MVPDs. As a result, NBC affiliates now have added bargaining power over Comcast in their retransmission consent negotiations. In addition, the “structural separations” are enforceable conditions that also should benefit other broadcasters in a market – provided that they are Fox, ABC or CBS affiliates – by shielding Comcast’s retransmission consent negotiations with those affiliates from the influence of NBCU.  

Clearly, the FCC is sending a message that it is not willing to wait for failures in the video programming marketplace before taking steps to involve itself in private contractual arrangements.

Act Now! FCC to Auction New FM Radio Stations

Less than one month remains until the close of the filing window to participate in the Federal Communications Commission’s upcoming auction of 144 FM broadcast construction permits to the public.  The auction is scheduled to begin on April 27, 2011.  Applicants interested in participating in the auction must file an application with the FCC between January 31, 2011 and February 10, 2011.

The construction permits are associated with so-called “vacant” FM allotments. The FCC has assigned certain FM channels to certain communities via allotment, and the FCC will auction the rights to build FM radio facilities using these channels.  Of the 144 vacant FM allotments in this auction, 37 are holdovers from the last FM auction.  This means that no party placed the minimum bid for these vacant allotments before the last auction closed. The minimum bid for the majority of the allotments is $25,000 or less.  Only 14 of the allotments have minimum bids of at least $60,000. Seven allotments have minimum bids of $100,000. Three allotments have minimum bids of $60,000 and four allotments have minimum bids of $75,000.

The application must include ownership information about the applicant; identify the vacant allotments for which the applicant intends to bid, and whether the applicant has any agreements with other parties regarding the auction.  Under the FCC’s anti-collusion rules, applicants are prohibited from discussing their applications, including bidding strategies, with other applicants in the auction, unless each applicant identifies the other in their application.  This prohibition applies to each applicant until the auction is closed.

Time is of the essence.  Although the auction is more than three months away, interested parties must file their applications for the auction by February 10.  These applications are not placeholders for the auction; the application locks in the applicant’s qualifications to bid in the auction, identifies the allotments on which the applicant may bid, and any bidding arrangements applicants might have with third parties.  Applicants will not be able to amend their applications after February 10 to improve their situation in the auction.  Advance preparation now is necessary.

Hidden in Plain View: The Threat Within the FCC's Enforcement of its Net Neutrality Rules

Now that the Sturm und Drang over the FCC’s new Net Neutrality Rules is in full throat, some lurking concerns warrant more attention – namely, concerns about the FCC’s enforcement of its new rules and the administration of its complaint process.  The FCC states that it seeks “prompt and effective” enforcement of its new rules, but eyebrows are arching regarding whether the current structure will effectively promote this goal. 

"The FCC states that it seeks 'prompt and effective' enforcement of its new rules, but eyebrows are arching regarding whether the current structure will effectively promote this goal."

First, some context.  Assume for the moment that you provide fixed or mobile broadband service and that the new rules survive unscathed after the administrative, judicial and legislative battles that are almost certainly on the way.  Someone believes that you have violated these rules – for example, your subscriber believes that you have failed to adequately disclose your network management practices, or an edge provider believes that you have blocked its lawful content (if you are a fixed provider) or an end user complains that you have unreasonably discriminated in transmitting their lawful network traffic over your network.  How can this aggrieved party seek legal relief, and what relief is available? 

The FCC has retained independent enforcement authority for the net neutrality rules, but as noted in Matthew Lasar’s overview at Ars Technica, the FCC's enforcement process is overwhelmingly complaint-driven.  The new rules give the aggrieved party two “backstop mechanisms” at the FCC in the event that the interested parties cannot resolve their dispute privately: a formal complaint process and an informal complaint process. 

  • The formal complaint process imposes procedural obligations on the complainant and launches an adjudicatory proceeding.  Formal complaints will be addressed through “accelerated docket” procedures.  Before filing a formal complaint, the complainant must notify the respondent in writing that the complainant intends to file the complaint.  The complaint must comply with FCC processes, and the complainant must pay a filing fee (which may be the FCC Enforcement Bureau’s version of “paid prioritization”).  The complainant must “plead fully and with specificity the basis of its claims and to provide facts, supported when possible by documentation or affidavit, sufficient to establish a prima facie case of an open Internet violation.”  The rules set forth a timetable for answers and replies, and the FCC will issue an order “determining the lawfulness of the challenged practice.” 
  • The informal complaint process, by contrast, is more akin to tossing “paper grenades.”  Anyone with a computer may submit informal complaints (for example, via the FCC’s website or to the agency’s Consumer and Government Affairs division) in an effort to draw the FCC’s attention to challenged practices and perhaps spark an investigation.  There are no “accelerated docket” procedures.  The FCC has stated that individual informal complaints will not typically result in written Commission orders, and the potential remedies and sanctions are unclear.

As Larry Downes describes in his essay regarding the costs of enforcement of net neutrality rules, allowing “any person” to launch net neutrality complaints triggers inefficiencies and transaction costs because the filer can shift enforcement costs to the FCC or to ISPs.  Its not hard to imagine a disgruntled group campaigning and recruiting others to file loosely worded complaints that tie up the resources of broadband providers as they respond to paper grenades launched via the FCC’s electronic transom.  What is hard is running a small business or getting financing while buried in paper when an FCC decision on a complaint – even in a frivolous case – may be months away. 

"Given the FCC's lack of resources (and authority?) to police the entire Internet and its long-standing enforcement track record, we should expect the process to remain complaint-driven..."

Given the FCC’s lack of resources (and authority?) to police the entire Internet and its long-standing enforcement track record, we should expect the process to remain complaint-driven; however, reliance on a formal complaint process alone would reduce the incentive for “any person” to file complaints in bad faith.  The FCC’s decision to make available the “informal” process in addition to the “formal” process may turn out to be costly for broadband providers.  Here’s why:  

  • While the FCC has stated that “any person” may file a complaint, the formal complaint process has more mechanisms in place to deter the filing of non bona fide complaints – for example, there’s a $200 filing fee, procedural requirements and an “abuse of process” sanction against parties who file “unlawful” frivolous pleadings.  These mechanisms should make it much harder for competitors, disgruntled employees or others who suffer no actual harm to game the process. 
  • The availability of informal processes may encourage the filing of “cookie cutter” complaints, where persons or groups may seek to launch a barrage of nearly identical complaints in an effort to get the FCC staff’s attention for political purposes. 
  • The FCC does not set forth any particular remedy for an informal complaint other than saying that the FCC would “take appropriate enforcement action, including the issuance of forfeitures” for any net neutrality violation. 
  • The FCC did not adopt any specific forfeiture amounts for violations, so the penalty would likely be set on a case-by-case basis. 

Also, if what is past is prologue, broadband providers should have concerns that the mere filing of an informal complaint, even a frivolous one, would have other consequences.  Consider the case of those broadcasters who have found that meritless indecency complaints have hindered their ability to conduct legitimate business.  The reason is the “enforcement hold” that the Enforcement Bureau imposes against broadcasters’ FCC applications (e.g., license renewals, approvals for transactions) when one or more complaints are filed against their broadcast station(s).  Under FCC policy, the presence of this “red flag” can force the broadcaster to become involved in potentially protracted negotiations to get FCC clearance for their proposed transaction or license renewal.  This pressure has resulted in some broadcasters giving up legal rights by entering into consent decrees (whereby the station pays a penalty to resolve the complaint but does not admit liability for the conduct) or tolling agreements (where the broadcaster agrees to forego its rights to challenge an FCC action that takes place outside of the statute of limitations; i.e., their “shot clock” for reaching a decision) with the FCC.  Essentially, licensees often face intense pressure to agree to “voluntary” concessions and to raise the white flag in an effort to get the FCC to drop their red one.

One way for broadband providers to minimize liability is to be sure that they are complying with the FCC’s transparency requirements.  Providers that make adequate disclosure of their network management practices, performance characteristics and commercial terms of service will enjoy greater latitude in negotiating with the FCC.  And, so long as those practices are followed, a complaining party will find its burden a bit more difficult to meet. 

Nevertheless, with the broadcast indecency lesson in mind, broadband providers should be concerned.  It is reasonable to expect significant litigation over the rules, just as the FCC’s indecency policies have been heavily litigated. The FCC may hold up informal complaints for a protracted period as the legal challenges continue – recall that there is no “accelerated docket” for informal complaints and even if there was, the FCC may claim authority to waive any its internal timetables for “good cause.”  Such a litigation tangle may result in stalled FCC enforcement and delays in application processing – delays that could apply differently to different categories of service providers because some are more dependent on FCC licensing than others. 

In short, enforcing the FCC’s net neutrality rules represents a regulatory thicket for broadband providers and others – one that is worth the effort to navigate around given the uncertainty and the legal challenges to come. 

Appeals Court Rules Against FCC's Indecency Policy ... Again.

The FCC suffered another setback to its broadcast indecency policy earlier this week when the U.S. Court of Appeals for the 2nd Circuit threw out the FCC’s fine against the ABC Television Network and its affiliates for broadcast of an NYPD Blue episode.  Although the decision is not binding precedent, the willingness of the 2nd Circuit to throw out yet another FCC indecency fine on constitutional grounds raises the stakes when the U. S. Supreme Court hears this and related indecency cases in the future. 

The case involved a February 2003 broadcast by the ABC Television Network of an episode of NYPD Blue that depicted a woman’s nude buttocks for less than seven seconds.  In February 2008, the FCC determined that the depiction was indecent and fined ABC and each of its affiliates $27,500 per station for broadcasting the program.  ABC and its affiliates appealed the FCC’s decision to the 2nd Circuit.

In July 2010, in a separate case, the 2nd Circuit found the FCC’s “fleeting expletives” indecency policy unconstitutionally vague and therefore in violation of the First Amendment when applied to a Fox Television broadcast involving expletives uttered by Cher and Nicole Richie in the 2002 Billboards Music Awards Show.  Last November, the 2nd Circuit denied the FCC’s request for reconsideration of that decision.  

The Fox decision played a role in the NYPD Blue case as well.  In August 2010, ABC filed a motion for summary judgment requesting that the 2nd Circuit throw out the February 2008 forfeiture against ABC and its affiliates on grounds that the 2nd Circuit decision in the Fox case invalidates the forfeiture.  The 2nd Circuit agreed, holding that the Fox case struck down not only the FCC’s “fleeting expletive” policy but the FCC’s indecency policy in its entirety.  The court did not consider relevant that Fox broadcast a live unscripted show whereas ABC broadcast a scripted, recorded show.

The 2nd Circuit decision is not precedential (future parties may not rely on the decision); rather it is an order dismissing the petitioning broadcasters’ motion for summary judgment.  What is relevant is the 2d Circuit, the FCC and ABC agreed that the decision in the Fox case invalidated not only the FCC’s fleeting expletive policy, but the agency’s underlying indecency policy as well. 

It is unclear whether the FCC will appeal the nonbinding NYPD Blue decision.  Some expect the Supreme Court next term to hear argument on the Fox case, at which time the Supreme Court could consolidate the Fox case, today’s decision and the indecency case involving the "wardrobe malfunction" at the 2004 Super Bowl, pending before the 3rd Circuit.  The Supreme Court could rule narrowly on the issue on the constitutionality of the FCC’s fleeting expletives policy or more broadly with regard to the FCC’s entire indecency policy.

FCC Steps Up EEO Enforcement; Hands Out Fines

The FCC rang out the old year by fining two broadcasters a combined $28,000 for not complying with the FCC’s Equal Employment Opportunity (“EEO”) rules.  These two enforcement actions, announced last week, demonstrate how the FCC’s random audits and review of pending license renewal applications can impact a station’s bottom line if the station fails to conduct meaningful EEO recruitment efforts. 

These actions stem from enforcement of FCC rules requiring broadcasters with more than five full-time employees to undertake meaningful recruitment efforts.  This means they must (1) recruit for every full-time job vacancy; (2) use a variety of recruitment sources which in the licensee’s good faith judgment will widely disseminate the information to the public;  (3) analyze the licensee’s recruitment program on an ongoing basis and make changes, where necessary;  (4) document the recruitment efforts; and  (5) include EEO-related material in the station’s local public inspection file and web site. 

In the first action, FCC found after a random audit that the licensee failed to recruit for six of 24 full time vacancies in a 10-month period.  Instead, the licensee relied upon walk-ins, word of mouth and referrals to fill the positions.  The licensee did not list the job title for seven vacancies on its EEO Public File Report, listing “other” for the job title.  The FCC fined this broadcaster $8,000. 

In the second action, the FCC determined that a broadcaster failed to recruit properly for 28 of its 29 full-time positions over a six-year period, relying on walk-ins, Internet sources and on-air advertisements.  The licensee provided no records of its recruitment efforts and could not report the total number of interviewees referred by each recruitment source.  The FCC concluded that the combined lack of recruitment efforts and documentation over the period showed the licensee had not analyzed its recruitment program.  The FCC fined this broadcaster $20,000. 

These decisions reflect the FCC’s increased monitoring and enforcement of EEO rules for broadcasters in recent years.  The agency scrutinizes EEO Public File Reports carefully, looking for deficiencies and requesting supplemental information if any are discovered.  Common EEO errors include: 

  • Reliance upon only a handful of recruitment sources
  • Over reliance upon generic recruitment sources, such as walk-ins, internet and employees referrals
  • Incomplete EEO Public File Reports such as not listing job titles, recruitment sources or referrals
  • Lack of documentation of recruitment efforts
  • Not undertaking meaningful supplemental recruitment initiatives (i.e. job fairs, internships)
  • No meaningful self-assessment of EEO recruitment efforts.

These fines highlight the importance of keeping on top of EEO efforts and of undertaking annual self-assessment.  Either through random audits or at renewal time, broadcasters will submit their EEO Public File Reports to the FCC for review and approval.  That is not the time to find out there are deficiencies in a station’s EEO practices or its EEO Public File Report.

Congress to FCC: More Low Power FM ("LPFM") Stations, Please

Passage of the Local Community Radio Act of 2010 (“LCRA”) by the Congress authorizes the FCC to issue new licenses for thousands of LPFM radio stations across the country, providing new outlets for new voices in new areas. Specifically, the LCRA: 

  • Eliminates the requirement that a proposed LPFM station protect full power radio stations operating on the third adjacent channel, unless the full power station broadcasts radio reading services.
  • Allows LPFM stations to operate in closer proximity to full power stations operating on the second adjacent channel.  The LPFM station must cease operation if there is any complaint of the LPFM station causing interference to the full power station.
  • LPFM stations will remain secondary services and must cease operation if the LPFM station causes interference to public reception of a full power radio station.
  • A full power radio station may still displace a LPFM station; presumably the elimination of the third adjacent channel protection will make it easier to find a new channel for a displaced FM station. 
  • LPFM stations will have co-primary status with FM Translator and FM Booster Stations; meaning that a LPFM station must protect a previously authorized FM Translator or Booster Station and vice versa. 

This new law is important because the FCC has been given authority to grant licenses for new LPFM stations across the country in markets previously unavailable to LPFM stations. This is expected to help further the diversity goals of the FCC and the broadcast industry. The LCRA provides clarity for full power, FM Translator, FM Booster and LPFM stations by setting in stone their interference rights vis-à-vis each other.  This is a “big win” for the National Association of Broadcasters (or NAB) because it provides solace to incumbent broadcasters concerned that LPFM stations might gain priority over full power and secondary stations. 

It remains uncertain when the FCC will issue a filing window for the public to submit applications for construction permits for new LPFM stations; and whether the FCC will proceed with a new filing window before or after dealing with the backlog of thousands of FM translator applications pending before the FCC since March 2003. Early resolution of the pending FM translator stations could make it possible for the FCC to grant even more LPFM stations, thereby providing additional outlets to promote diversity.

Incentive Auctions of TV Spectrum for Broadband May End Up Not So Voluntary

The FCC has begun its long anticipated rule making proceeding to reallocate 120 MHz of TV spectrum from wireless broadcast to wireless broadband services. Just a few days ago, the Commission voted 5-0 to consider three different approaches for reclaiming this spectrum, relying mostly on voluntary participation by TV broadcasters who wonder openly how truly voluntary this process will be if not enough TV stations agree to trade spectrum for cash and possibly, a smaller slice of shared spectrum to continue broadcasting.

The first approach is to encourage broadcasters to return 120 MHz of spectrum to be auctioned for wireless broadband service, with broadcasters receiving some portion of the auction proceeds. These incentive auctions would require Congressional approval. The second approach is adoption of rules to encourage two or more television stations to share the same 6 MHz TV channel. The third approach is adoption of new engineering rules to improve the VHF band with the hope that some television broadcasters would relinquish their stations in the UHF band in exchange for stations in the VHF band. The FCC likely will order TV spectrum auction winners to pay the costs to repack the TV Band to clear contiguous blocks of spectrum to auction.

Broadcasters are less than enthusiastic about the third approach because of concerns about impulse noise from electrical power lines, signal quality issues in the VHF band and the costs associated with moving a station from the UHF to the VHF band. The Commission believes the continued growth and importance of wireless broadband services requires allocation of spectrum from other services. The Commission has identified television broadcast spectrum as the most suitable candidate, arguing that television broadcasters do not use their spectrum efficiently, that less than 10% of the nation receives broadcast television through over-the-air reception and that broadcasters will still have 300 MHz of spectrum remaining after the FCC takes away and auctions the reclaimed spectrum.

TV stations question whether the Commission’s proposals will degrade the quality of HD signals because shared spectrum is insufficient to broadcast in HD. It is unclear what costs TV stations would have to bear (and in this economy, the costs of the auction transaction itself could be daunting). There is also fear that this approach could undermine the legal basis for the must carry/retransmission regime. Fundamentally, many question the necessity of reclaiming that much spectrum, pointing out that the demand for spectrum is greatest in the largest metropolitan markets where TV stations are not likely to voluntarily participate in auctions. The quickest path to freeing up more spectrum for broadband applications would be to give broadcasters more flexibility to use their spectrum for broadband services by reforming the technical rules and allowing secondary leasing rules to govern rather than the outmoded command and control model now favored by FCC regulators only with respect to broadcasting.

In an ironic twist, broadband providers are now touting the benefits of a “broadcast type” service over broadcast spectrum. This is allegedly the most efficient use of spectrum to deliver video programming consumers are demanding in greater numbers. At the end of the day, broadcasters are expected to go along with the proposals so long as they are truly “voluntary.” As anyone who has negotiated voluntary conditions as part of an FCC merger review knows, some things in DC are more voluntary than others.


STELA! FCC Implements Satellite Television Extension and Localism Act

Following the passage by Congress earlier this year of the Satellite Television Extension and Localism Act (STELA, for short), the FCC adopted new rules to provide satellite subscribers with greater flexibility to receive certain television stations from other markets.

The FCC revised its rules to make it easier for satellite subscribers to receive a significantly viewed (SV) out-of-market station. Previously, satellite subscribers could receive an out-of-market SV station with the same network affiliation as the local in-market station only if the satellite subscribers received the local in-market network station. Now satellite subscribers need only receive the satellite carrier’s local-into-local service package.

These changes may tilt retransmission consent negotiations in favor of the satellite carriers, who could favor an out-of-market SV station to the in-market station based on the amount of retransmission consent fees that are negotiated. Many broadcasters have entered into agreements that provide for little or no compensation for out-of-market subscribers.

The FCC reasons that subscribers would prefer receiving the in-market station to the out-of-market SV station, that satellite carriers will negotiate in good faith with in-market stations, and that SV stations usually are available only in a portion of the market. Time will tell, but there is good reason to be skeptical. Satellite carriers will inevitably use SV stations as a substitute, instead of a supplement, to an in-market station if any disputes arise about compensation for retransmission consent. If this happens, broadcast localism goals of the FCC will be undermined and Congress may be called back to the table to clean up the mess.

The FCC must deliver to Congress a report on in-state broadcast programming by August 27, 2011. The FCC seeks comment and data from the public in preparing this report.


Governmental intervention to referee TV carriage disputes could lead to unintended consequences

There is nothing wrong with TV stations charging cable and satellite companies who repackage popular broadcast channels and sell subscriptions to the public. It’s sort of like saying because you can get tap water for free, bottled water should be free too. Yet there are advocates in Washington from the cable and satellite industries who are seeking governmental intervention to referee private negotiations between TV stations and cable and satellite companies when the vast majority of deals get done without any disruptions in service to the public.

So what is really going on here? Cable and satellite companies are engaged in a not-so-transparent effort to arbitrage the FCC process to involve the government in order to gain leverage in retransmission consent negotiations. At the same time, a real marketplace for broadcast programming is emerging as Congress intended. Senator Rockefeller (D-WV) appears willing to take the bait and to authorize Congress to give the FCC authority to become such a referee. He said at a Congressional Hearing yesterday that “If you fail to fix this situation, we will fix it for you.” While Congress has many priorities, it’s unclear whether imposing more governmental regulation on the marketplace for retransmission consent – a system that works -- is likely to be high on the list given the shift in the House to a Republican majority and the general mood of the country. Moreover, there are more compelling communications law issues, such as finding more spectrum for broadband or clarifying the FCC’s authority to regulate the Internet, that are in need of governmental action.

This strategy is puzzling. The unintended consequences of inviting government regulation of the marketplace, in the absence of a market failure, could lead to a-la carte pricing regulation as consumers demand to know why they are paying for cable and satellite programming services they never watch. The truth is that broadcast programming is provided to cable operators at bargain basement prices relative to cable programming services and yet remains some of the most-watched and popular programming. It is likely to remain so even in this new media era as TV stations continue to lead in providing local news, emergency information and other programming to their communities.

Congress wisely carved a narrow role for itself in 1992 when it gave TV stations the option of negotiating carriage fees or demanding mandatory carriage. Calls for the government to require mediation or interim carriage during a dispute would mean that more, not fewer, deals, would get bogged down as the players attempt to game the FCC process to their advantage. These proposals are not justified by marketplace failures, changed circumstances or any other grounds. Stripped down, it’s clear this is nothing more than one private party seeking additional unwarranted negotiating leverage against another through governmental regulation in the guise of protecting the public.