All posts by David Oxenford

Music Modernization Act Becomes Law – Mechanical Rights To Become Easier Just As Performance Rights May Become More Difficult

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David Oxenford

Last week, after passage by both chambers of Congress and signature by the President, the ‘‘Orrin G. Hatch–Bob Goodlatte Music Modernization Act’’ became law. The law underwent a few changes on its journey to approval, adding new provisions in the Senate to those which we summarized here upon its initial passage by the House. The Act retained its same principal purposes. The driving force behind the Act was the desire to simplify the payment of “mechanical royalties” by digital music services for the reproduction and distribution of the millions of musical compositions that they use in the songs that they serve up to more and more consumers across the country. That simplification was accomplished through the creation of a new collective through which these royalties will be paid – essentially a one-stop shop where the statutory royalty will be paid. The collective will have the responsibility for finding the copyright holders and songwriters who share in the royalties – removing the need for the music services to have to identify and pay all of the appropriate rightsholders, a process that has resulted in legal claims for hundreds of millions of dollars against these services for not being able to find all the parties who are supposed to be paid for the mechanical royalties.

The general layout of the system for dealing with the payment of these royalties, through a collective to be established, remains essentially the same as in the initial House Bill. Other provisions were added in the Senate (and then approved again by the House) dealing with matters including pre-1972 sound recordings, Sirius-XM royalties, and the ability of existing music organizations to continue to do direct licenses for mechanical and other rights outside the new statutory system. We may write about those issues later. But the Senate addition likely to have the most significance for the most music users was one having nothing to do with mechanical royalties, but instead with the performance royalty for music works (musical compositions) that is paid by music services, radio stations, bars and restaurants and any other location that plays music that is heard by the public at large. The new language added by the Senate requires that, before the Department of Justice recommends any changes to the consent decrees governing ASCAP and BMI, the DOJ must first notify Congress of any changes that it will be suggesting to the courts that administer the decrees, so that Congress can decide if it wants to take action to block or modify any such changes. Why is that significant?

Performance rights in the United States, until a few years ago, were relatively straightforward. Music users paid royalties to ASCAP, BMI and SESAC, and then pretty much were free to play almost any song that they wanted to. Sure, there were occasional issues over whether the royalties charged by these performing rights organizations (PROs) were fair, and having three PROs in the United States was two more than existed in most other major countries, but nevertheless the system generally worked especially as ASCAP and BMI, by far the two largest organizations, were governed by antitrust consent decrees overseen by U.S. District Court Judges in the Southern District of New York. These two PROs could not raise rates without the prospect of a rate court proceeding to determine if their proposed rates were fair. So, while there was no one-stop shop to which royalties were paid for the public performance of musical compositions, the three legacy PROs effectively provided a statutory license system without any statute having been adopted.

But, as we have written many times, that system is beginning to break down, as major publishing companies have threatened to withdraw their catalog from ASCAP and BMI to license it themselves (see our articles here and here), or as new PROs, like GMR, have been established to try to get higher royalties for the musical works to which they have rights. While there has been one lawsuit against GMR to try to bring it under some antitrust regime (and similar successful suits against SESAC which had never previously been subject to antitrust constraints, see our articles here, here and here), the pressures to splinter the performing rights licensing in the US has continued to grow. We wrote about some of the concerns that could arise with the splintering of performing rights organizations, especially given the often fractured nature of the ownership of copyright in musical works, here.

Further increasing the concerns about changes to the performing rights marketplace have been the numerous statements from the current head of the Antitrust Division of the Department of Justice that he does not believe that the Department should be setting regulations for industries through long-term antitrust consent decrees – that such regulations should be the role of Congress or administrative agencies. It has been made clear that these statements specifically include the ASCAP and BMI consent decrees, as they are among the consent decrees that have been in place for the longest period of time.

It would certainly be ironic for the Music Modernization Act to fix mechanical royalties by creating a one-stop shop for royalty payments, just as the performing rights licensing process was splintering. One complicated long-term problem would have been fixed, just as what was a relatively stable marketplace appears to be becoming more unstable. It was therefore important that Congress put this check on the DOJ taking action to further free the PROs from their current restraints. Of course, were Congress notified of the desire of the DOJ to make changes, it is an open question whether Congress could adopt a new statute to take the place of the current consent decrees in the time-frames set under the new Act. Given that many of the last-minute changes that were necessary to assure passage of the Music Modernization Act to relieve concerns of specific companies in the music industry, any reform of the performing rights process is likely to include even bigger players in the industry with even more entrenched interests that could take a long time to resolve. But at least Congress has the ability to put a check on the action – and these issues may well need to be resolved in the Music Modernization Act, Part II.

David Oxenford is MAB’s Washington Legal Counsel and provides members with answers to their legal questions with the MAB Legal Hotline. Access information here. (Members only access).

There are no additional costs for the call; the advice is free as part of your MAB membership.

FCC Proposes Lessened Interference Protections for Class A “Clear Channel” AM Stations

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David Oxenford

What Does This Proposal Mean for AM Revitalization?

By: David Oxenford, Wilkinson Barker Knauer LLP

Late last week, the FCC issued a “Second Further Notice of Proposed Rulemaking” in its AM Revitalization Proceeding. The FCC has been taking steps over the last several years to attempt to restore AM radio to health. In last week’s Further Notice, the FCC followed up on ideas that it floated in 2016 in a prior order in the AM revitalization proceeding (see our articles here and here) suggesting that protections afforded to Class A AM stations be lessened in order to allow increased power by other more localized AM stations. Class A stations, often referred to as “clear channel” stations, are those 50 kW AM stations that are currently given interference protections both during the day and to their nighttime “skywave” signals (the signals heard hundreds and sometimes thousands of miles from the station’s transmitter site after bouncing off the atmosphere). These protections allow these stations to cover large geographic areas, and were particularly important in the early days of radio when these stations provided the only radio services to vast portions of the country that did not have local radio stations. In the Further Notice released last week, the FCC questions whether such protections are still necessary given the proliferation of other sources of audio programming (including radio stations, satellite radio and the Internet), and advances specific proposals that would reduce the protections accorded to these stations to allow some power increases by local AM stations.

This proposal is not without controversy. Obviously, station owners who hold Class A licenses do not believe that the service provided by these stations should be impeded. In fact, they note that many of these stations are among the few profitable AM stations in the country, often providing unique programming and substantial programming diversity to rural residents. These stations have also always been a favorite of long-haul truckers and others driving at night for providing uninterrupted service over vast distances. Perhaps even more importantly, and a question specifically raised for comment by the FCC, is the impact that any loss of service from these stations would have on the EAS network. Many of these stations serve as the primary stations for relaying national emergency messages to the EAS network. In fact, many of these stations have been provided funds by FEMA to improve their facilities to insure that they are available to provide uninterrupted service in the event of a national emergency.

The specific proposals set out by the FCC are likely going to be most easily understood by those with technical backgrounds. They are set forth below:

Daytime hours proposal:

  • During daytime hours, Class A AM stations would protected to their 0.5 mV/m daytime groundwave contour, from both co-channel and first-adjacent channel stations;

Critical hours (two hours before sunset and sunrise) proposals:

  • Alternative 1: During critical hours, Class A AM stations would be afforded no protection from other AM stations, or
  • Alternative 2: During critical hours, Class A AM stations would be protected to their 0.5 mV/m groundwave contour.

Nighttime hours proposals:

  • Alternative 1: During nighttime hours, there would be allowed no overlap between a Class A AM station’s 0.5 mV/m nighttime groundwave contour and any interfering AM station’s 0.025 mV/m 10 percent skywave contour (calculated using the single station method); or
  • Alternative 2: During nighttime hours, Class A AM stations would be protected from other AM stations in the same manner as Class B AM stations are protected, that is, interference may not be increased above the greater of the 0.5 mV/m nighttime groundwave contour or the 50 percent exclusion Root Sum Squared Nighttime Interference-Free (“RSS NIF”) level (calculated using the multiple station method).
  • Currently, Class A stations are protected during the day to their 0.1 mV/m groundwave contour by co-channel stations (and to their 0.5 mV/m contour by adjacent channel stations) during the daytime; to their 0.5 mV/m-50 percent skywave contour by co-channel stations (and to their 0.5 mv/m groundwave contour by adjacent channel stations) at night; and to their 0.1 mV/m groundwave contour during critical hours. The FCC proposals set out above would, in some cases, result in a significant decrease in interference protections accorded to these stations.

The FCC notes that there are differing opinions, even among engineers, as to when a Class A station’s service can reliably be heard by listeners, and the extent to which distant listeners still rely on these services. Because of these differences in opinion, and the natural split between local station owners and those that hold licenses for Class A stations, this proceeding is likely to be controversial. And it may well implicate many of the issues about the future of AM radio more generally (see, for instance, our article here).

The FCC is not proposing at this time changes in the protections of other classes of AM stations, though that possibility had also been raised in earlier proceedings. But the FCC does ask for comments as to whether it should move ahead in a future proceeding with that idea – potentially increasing interference in areas further from some stations in exchange for the potential for other stations to increase power and service to more local areas. That, too, is likely to be a controversial issue – one that will be debated in more detail at a later date.

Comments on the Further Notice will be due 60 days after the document is published in the Federal Register, with replies due 30 days later.

David Oxenford is MAB’s Washington Legal Counsel and provides members with answers to their legal questions with the MAB Legal Hotline. Access information here. (Members only access).

There are no additional costs for the call; the advice is free as part of your MAB membership.

Beware of the Political File Obligations in this Hot Political Advertising Year

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David Oxenford

By: David Oxenford, Wilkinson Barker Knauer LLP

In this “political” year with Congressional mid-term elections in November, including many hotly contested races for seats in the U.S. House of Representatives and the Senate, as well as many state and local elections, I receive many questions from broadcasters across the country. Perhaps the area in which most questions are received deals with the “political file,” particularly because these files are now available online. The fact that this file can now be viewed by anyone anywhere across the country has raised many questions that were perhaps less top-of-mind when the file was available only by physically visiting the main studio of a broadcast station. So, with the election just over a month away, meaning that the busiest advertising period will be coming up between now and the election, I thought that it would be worth taking a look at some of the online public file issues.

As an initial matter, it is worth mentioning that the political file has two main purposes. First, it is designed to provide information to the public about who is trying to convince them to vote in a certain way or to take action on other political issues that may be facing their country or community. Second, the file is to inform one candidate of what uses of broadcast stations his or her opponents are making. Thus, the documents placed in the file must be kept in the file for only two years from the date that they were created – perhaps on the assumption that at that point, we will be on to the next election cycle and old documents really won’t matter to the public or to competing candidates in the last election. But what needs to go into the file?

For any request for advertising made by any legally qualified candidate for any public office (Federal, state or local), the following information needs to be maintained in the file:

  • Whether the request to purchase time was accepted or rejected;
  • If accepted, the rate charged for the ads in the advertising schedule;
  • The date and time that the ads are to be aired, with the exact times that they were aired to be added to the file after they run;
  • The class of advertising time purchased (which will be determined by the rights associated with the spots, e.g. whether they are fixed or preemptible, the daypart or rotation in which the spots will run, etc.)
  • The name of the candidate and his or her authorized committee, and the treasurer of the committee.

All information should go into the file as soon as an order is received – certainly within 24 hours. The only exception is for the details of the exact times that the spots ran, which can be inserted into the file when your traffic system generates those reports – provided that they must be provided sooner on request.

That same information as provided for a candidate ad needs to be put into the file for any advertising relating to a “political matter of national importance.” That would include any ad by a non-candidate group (e.g., a PAC, labor union, corporation or other interested individual) dealing with any issue likely to be dealt with here in Washington. Such issues would include:

  • Any ad dealing with a legally qualified candidate for Federal office (either attacking or supporting a candidate); or
  • Any national legislative issue of public importance (e.g., an ad saying “write your Congressman and tell him to vote” for or against some issue being dealt with by the Federal government).

In the political file for these Federal issue ads, in addition to all of the information for candidate ads, the file also needs to include a description of the issue that the ad addresses. That can be the name of the candidate that the ad supports or attacks, or the name of a Federal issue that the ad addresses. In some cases the ad can address both a candidate and an issue. In that case, it is probably safest for the political file to list both the candidate and the issues addressed. The FCC’s Media Bureau issued a decision in January 2017 requiring that dual identification (see our article here), but that decision was withdrawn when the current FCC Chairman came into office with a promise that the FCC would reexamine the issue and release a new decision (see our article here). While that new order has apparently been drafted and has been on circulation among the Commissioners for a vote since May 2018, the decision has not yet been released. Watch for a clarification that could come at any time.

All issue ads, whether dealing with Federal, state or local issues (state and local issues could include state ballot initiatives, local zoning or school bond issues, or attacks on state or local candidates), also require information about the sponsor of the ads. The information includes the following:

  • The name of the person or entity purchasing the time, and
  • A list of the chief executive officers, members of the executive committee or of the board of directors of such entity.

In the decision referenced above on which we are awaiting a final FCC ruling, the Media Bureau had required that stations, if they are given only a single name of an officer or director of an entity buying issue ads, ask the ad buyer for the names of additional officers or directors – on the assumption that it is unlikely that any organization has but a single officer or director. While that responsibility has not yet been clarified, it is probably advisable that stations make such inquiries.

We note that many stations use forms to gather the information necessary to respond to these questions – often forms generated by a group owner or one of the “PB” forms created by the NAB. These are good models to use to gather the information for the file, but the station still needs to make sure that the information provided by the political buyer fully responds to the questions on the form. We have heard of many cases where non-candidate groups do not want to say on the form that they are buying ads on a Federal issue, even when they are clearly attacking a candidate for Federal office, perhaps because they do not want all the information about the advertising buy (including the price and schedule) to be revealed in the public file. Stations need to inquire if the information provided is not complete, as the burden is on the station, not the ad buyer, for this information to be complete and accurate and timely placed in the online public file.

Also, do not put information into the file about the method of payment for the ads. We have seen cases where checks from advertisers, or worse yet, information about their electronic payment methods, have been included in the public file, potentially revealing sensitive information that could compromise bank accounts. Do not place this information into the file.

Finally, be alert to state record-keeping requirements. States including Washington and New York have recently enacted state laws that may impose different or additional paperwork obligations on political advertising (see our article here). If your station is in one of those states, be sure to not only observe the FCC’s rules, but also those of the state in which you are located.

Good luck in keeping all these rules straight in the last weeks before the election. For more information about political advertising obligations, see our Guide to Political Broadcasting, here. And, of course, ask your own lawyer as these issues arise, as they raise many tricky issues that may depend on the specific facts of your case to get the right answer.

David Oxenford is MAB’s Washington Legal Counsel and provides members with answers to their legal questions with the MAB Legal Hotline. Access information here. (Members only access).

There are no additional costs for the call; the advice is free as part of your MAB membership.

Court of Appeals Upholds Copyright Royalty Board’s 2015 Webcasting Rate Decision

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David Oxenford

By: David Oxenford, Wilkinson Barker Knauer LLP

On September 18, The US Court of Appeals released a decision upholding the Copyright Royalty Board’s 2015 decision setting the SoundExchange royalty rates for 2016-2020. We wrote about that decision here, and provided more details here. In any appeal of an agency decision, the Court routinely affords the agency deference in reaching its decision. The Court will not overturn that decision unless it has no basis in the record developed on the matter before the agency, or unless the agency decision was arbitrary and capricious – in plain English, the agency did not reach a logical conclusion based on the facts before it. That means that the Courts will not overturn a decision just because the agency might have logically reached another decision – but instead it will only intervene where the agency came to a conclusion that could not be logically supported. In this case, no reason to overturn the CRB decision was found.

SoundExchange on appeal had attacked the CRB decision on several grounds – arguing that several defects led to an inappropriate decision as to the rates that would have been determined by a “willing buyer and willing seller” in a marketplace, the standard to be used by the CRB in setting rates. SoundExchange attacked the benchmarks that were relied on by the CRB to set the rates (the direct licensing deals on royalties arrived at between webcasters Pandora and iHeart Media and various record companies) arguing that these rates were too low as they were negotiated in the “shadow of the statutory license.” They argued that the only direct deals that could have been done were ones that were lower than the rates established by the CRB during the prior rate term, as no music service would agree to higher rates. Arguments were also raised that these rates relied on “steering” – the prospect that labels who agreed to the rates had songs played more frequently than those that did not agree to lower rates. SoundExchange argued that not all labels could take advantage of steering (as a label can only get the benefit of steering when a service is playing less of the music of labels that did not pay for steering). The appeals also challenged the determination that a qualified auditor to check royalty compliance had to be a CPA licensed in the state where the audit was conducted.

The Court looked at all of these arguments and a few related claims, and found that the CRB had adequately justified its decision. The direct deals were the only negotiated benchmarks that existed for noninteractive webcasting services, so they were appropriate to use in setting the royalties. The Court found that there was nothing wrong with relying on agreements that did exist, rather than trying to determine what agreements might exist in some hypothetical situation where a statutory royalty did not exist. The rejection of the steering argument was also appropriate, as the CRB had found that the royalties approximated what would happen in a competitive market were there no statutory royalties where labels were competing to get their product played on music services. The Court also found that the decision as the auditors had a basis in the record.

With this decision, any lingering doubts (see our article here about the appeal being filed) about the current royalties have been resolved, and the rates will (absent an unlikely further appeal) stay in place though the end of 2020. Of course, that is not far away, and next year, the process will begin again, as the CRB starts its proceeding to determine the rates for 2021-2025. The process that seemingly never ends…..

David Oxenford is MAB’s Washington Legal Counsel and provides members with answers to their legal questions with the MAB Legal Hotline. Access information here. (Members only access).

There are no additional costs for the call; the advice is free as part of your MAB membership.

Reminder: Lowest Unit Rate Period Now in Effect

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David Oxenford

By: David Oxenford, Wilkinson Barker Knauer LLP

With the lowest unit charge window for the November elections now in effect (as of September 7), we thought that it was a good idea to review the basics FCC rules and policies affecting those charges. With this election, where control of Congress may well be hotly contested and may result in competitive elections across the country, your station needs to be ready to comply with all of the FCC’s political advertising rules. Lowest unit charges (or “Lowest Unit Rates”) guarantee that, in the 45 days before a primary and the 60 days before a general election, legally qualified candidates get the lowest rate for a spot that is then running on the station within any class of advertising time and particular daypart. Candidates get the benefit of all volume discounts without having to buy in volume – i.e., the candidate gets the same rate for buying one spot as your most favored advertiser gets for buying hundreds of spots of the same class. But there are many other aspects to the lowest unit rates, and stations need to be sure that they get these rules right.

It is a common misperception that a station has one lowest unit rate, when in fact almost every station will have several – if not dozens of lowest unit rates – one lowest unit rate for each class of time in each daypart. Even at the smallest radio station, there are probably several different classes of advertising spots. For instance, there will be different rates for spots running in morning drive than for those spots that run in the middle of the night. Each time period for which the station charges a differing rate is a class of time that has its own lowest unit rate. On television stations, there are often classes based not only on daypart, but on the individual program. Similarly, if a station sells different rotations, each rotation on the station is its own class, with its own lowest unit rates (e.g., a 6 a.m. to Noon rotation is a different class than a 6 a.m. to 6 p.m rotation, and both are a different class from a 24-hour rotator – and each can have its own lowest unit rate). Even in the same time period, there can be preemptible and non-preemptible time, each with its own set of charges resulting in different classes of time, each with its own lowest unit rate. Any class of spots that run in a unique time period, with a unique rotation or unique rights attached to it (e.g., different levels of preemptibility, different make-good rights, etc.), will have a different lowest unit rate. Stations need to review each class of time sold on their station, find the lowest rate charged to a commercial advertiser for a spot of the same class that is running at the same time that the candidate wants to buy a spot, and that lowest rate will be what the candidate is charged.

One question that still comes up with surprising regularity is whether these rates apply to state and local candidates, as well as Federal candidates. Indeed they do – so if your station is running advertising for candidates for mayor or city council; or for governor or the state senate; or even for the board of education, municipal court judge, or state attorney general – they and any other candidate in any public election for which your station chooses to accept advertising gets lowest unit rates. See our past articles on this topic here and here.

In modern political elections, where PACs, Super PACs and other non-candidate interest groups are buying much political advertising time, broadcasters need to remember that these spots don’t require lowest unit rates. Even if the picture or recognizable voice of the candidate that the PAC is supporting appears in the ad, spots that are sponsored by an independent organization not authorized by the candidate do not get lowest unit rates (note, however, that spots purchased by independent groups featuring the voice or picture of the candidate may trigger public file and equal opportunities obligations for the station if the station decides to run those spots). Stations can charge these advertisers anything that the station wants for non-candidate ads – no need to stick to lowest unit rates.

From time to time stations may face the one exception to the above paragraph, where political parties are requesting lowest unit charges. In some cases, parties may in fact be entitled to these rates – but only where the spot features the recognizable voice or picture of the candidate and the party is using specific types of donations to pay for the ad. These donations are ones that are subject to political campaign donation limitations (known as “hard money”). To get lowest unit rates, the advertising purchases must be authorized and “coordinated” with a candidate (and, in Federal races (and in several states that have adopted laws on the subject), the spots should make that coordination clear with the “I approved this message tag” or, under some state laws, some variant of the tag that discloses the coordination. Not all party spots are entitled to this treatment – only this special class of coordinated expenditures – and stations are entitled to get written confirmation from the party or the candidate that the expenditures are coordinated under the election laws. If not coordinated, the parties get charged the same as any other third-party organization.

Various advertising sales packages, and how they are factored into lowest unit rate calculations, also seem to lead to many questions by broadcasters. Candidates cannot be forced to buy single-station packages to get low unit rates. Instead, the package must be broken down by the station into a price per spot for each class of spot that is contained in the package. That is done by allocating the package price to the various spots of each class that are contained in the package. Then the allocated rates, on a unit basis, are compared to other spots of the same class that have been sold on the station either on their own or in other packages to determine if the spots from this package have any impact on the station’s lowest unit rates. This allocation is done in an internal station record, which does not need to go into the public file, and does not need to be revealed to the candidate. Other than the station, only the FCC will see this allocation if they decide to conduct some sort of audit. We wrote more about this process of allocating spots in a package here.

And these are just some of the myriad issues that arise in computing lowest unit rates. Stations need to be familiar with these rules, and apply them accurately through the lowest unit rate window. Check with your own legal advisor to discuss the specifics of these issues as they arise as they are often very difficult to apply in the real world. Some of the other situations that arise with lowest unit rates, and with other political issues that come up in any election season, are covered in our Political Broadcasting Guide, available here. This article is in an update of an article from a series that we did several years ago on Political Broadcasting Basics, which we may update from time to time over the next few weeks. But until we post the updates, you can find the original articles on our blog by clicking on these links: equal opportunities, reasonable access, the no-censorship provision that governs candidate ads, and the potential for station liability for untruthful statements made in third party ads.

David Oxenford is MAB’s Washington Legal Counsel and provides members with answers to their legal questions with the MAB Legal Hotline. Access information here. (Members only access).

There are no additional costs for the call; the advice is free as part of your MAB membership.

September Regulatory Dates for Broadcasters

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David Oxenford

By: David Oxenford, Wilkinson Barker Knauer LLP

Annual Regulatory Fees; Nationwide EAS Test; Comment Dates on FM Translator Interference, Audio Competition, Children’s Television Requirements, and Reimbursement for LPTV and FM Repacking Costs; and More

While September is one of those months with neither EEO reports nor Quarterly Issues Programs or Children’s Television Reports, that does not mean that there are no regulatory matters of importance to broadcasters. Quite the contrary – as there are many deadlines to which broadcasters should be paying attention. The one regulatory obligation that in recent years has come to regularly fall in September is the requirement for commercial broadcasters to pay their regulatory fees – the fees that they pay to the U.S. Treasury to reimburse the government for the costs of the FCC’s operations. We don’t know the specific window for filing those fees yet, nor do we know the exact amount of the fees. But we do know that the FCC will require that the fees be paid before the October 1 start of the next fiscal year, so be on the alert for the announcement of the filing deadline which should be released any day now.

September 20 brings the next Nationwide Test of the EAS system, and the obligations to submit information about that test to the FCC. As we have written before (here and here), the first of those forms, ETRS Form One, providing basic information about each station’s EAS status was due August 27. Form Two is due the day of the test – reporting as to whether or not the alert was received and transmitted. More detailed information about a station’s participation in the test is due by November 5 with the filing of ETRS Form Three. Also on the EAS front, comments are due by September 10 on the FCC’s proposal to require stations to report on any false or inaccurate EAS reports originated from their stations. See our articles here and here.

September also brings comment deadlines in numerous other important FCC proceedings. September 5 is the date for reply comments on the FCC’s Notice of Proposed Rulemaking on how to simplify the resolution of complaints about interference from new FM translators (see our summaries here and here). One of the most debated issues in the initial comments is whether to ignore complaints from full-power FM licensees and other existing FM broadcasters if those complaints originate outside of the complaining station’s 54 dBu contour. Many FM licensees, as well as the licensees of LPFM stations who are also protected from interference from new translators, contend that a substantial portion of their listening audience resides outside that contour and should not be left unprotected from new translators who interfere with such listening.

Reply comments are due September 10 on the FCC’s Notice of Inquiry as to whether to create a new class of C4 FM stations, and to make changes to allow for more short-spaced FM stations using Section 73.215. See our articles here and here on that proceeding.

Congress has also requested that the FCC provide it with a report on the state of competition in the Audio Marketplace. As we wrote here and here, we expect that, while this report is directed to Congress so that it can use this information in assessing statutory changes, as the report will be prepared at the same time as the FCC is working on the Notice of Proposed Rulemaking in its next Quadrennial Review which will likely review the radio ownership rules, the facts gathered in preparing the report to Congress are likely to be important in the Quadrennial review. Comments on this report to Congress are due September 24.

The potential for changes in the Children’s Television rules, particularly the rules mandating three hours of weekly educational and informational programming directed to children on each programming stream broadcast by a TV station, are being reviewed by the FCC. Comments on the FCC’s Notice of Proposed Rulemaking looking at potential changes in these rules (about which we wrote here) are also due September 24.

As the Incentive Auction repacking marches on (with the testing period for repacked stations in Phase 1 of the repacking starting in September), the FCC is also considering the reimbursement of expenses incurred by LPTV stations, TV translators and FM broadcasters whose operations are affected by the repacking. Comments are due September 26 on the FCC’s proposals on eligibility and administration of the finds to reimburse these stations. See our article here for more details on these proposals.

Commercial radio stations that have been paying the newest Performing Rights Organization, GMR, under an interim license while litigation continues between GMR and the Radio Music License Committee (RMLC) to determine if GMR should be subject to any sort of antitrust regulation, have an interim license that expires at the end of September (see our article here). As the litigation is unlikely to be resolved in the next few months, GMR is reportedly offering yet another extension of its interim license through March 31, 2019. Look out for notice of that extension directly from GMR but, if you have not received it, you may want to reach out to them before the end of the month.

And watch for the agenda of the FCC meeting on September 26. That agenda should be released next week, and we will see what broadcast items may be on it just in time for the Radio Show at the end of the month. Plenty of issues to keep broadcasters busy. As always, check with your legal advisor to make sure that there are no other legal issues that may affect your station’s operations.

More September Regulatory Dates – Effective Date of New Application Fees, Filing Deadline for TV Shared Services Agreements, Lowest Unit Rate For September Election and Reminder on Repacking Requirements

And, here are a few more issues to consider in September. Plus, the FCC on August 27, reminded repacked TV stations of all of the requirements for TV stations involved in the repacking of the TV band following the Incentive Auction which, as we noted in our post yesterday, formally begins this month.

Another date is the effective date for a general increase in FCC application fees – those fees that commercial broadcasters pay every time they file an application for a construction permit, approval of a purchase or sale of a station, a license renewal, an STA or many other requests for FCC action. As we wrote here, the FCC recently announced that the fees were going up to reflect inflation. Last week, the FCC issued a Public Notice announcing that those new fees are effective on September 4. So commercial stations filing applications on September 4 or afterward need to remember to pay the new fees, or risk having their applications returned.

Another obvious date is the first day of the Lowest Unit Rate window for the November election. 45 days before a primary or 60 days before a general election, political candidates (whether Federal, state or local – see our post here) can only be charged the lowest unit rate that any commercial advertiser is paying for advertising spots of the same class that are running during the same time period. See our articles here and here for more information about the lowest unit charge window which, for the November election, starts on September 7. For more information about political broadcasting rules generally, see our Political Broadcasting Guide.

A somewhat less obvious date is the deadline for filing TV shared services agreements. In its 2017 order reconsidering the FCC’s decision in its last Quadrennial Review of the ownership rules, the FCC decided to retain the previously announced requirement that TV stations file shared services agreements with the FCC. We wrote about that obligation here, addressing the broad definition that the FCC gave to a shared services agreement. The FCC gave stations 180 days to comply for any agreements that were already in effect at the time the new rule became effective (new agreements being required to be filed “in a timely fashion” once entered into). Time flies, and that 180-day deadline is now upon us, on September 19.

Finally, the FCC on Monday released a Public Notice setting out all the deadlines that must be met by TV stations that are being repacked following the Incentive Auction. With September 14 starting the testing period for TV stations assigned to move to their new channels in Phase 1 of the repacking, this notice is very timely. The notice talks about the deadlines in the transition and the various notices and public education requirements that stations early in the repacking schedule should be contemplating right now. The Public Notice also notes that any Phase 1 station that is unlikely to meet the required November 30 deadline for completion of their transition to their new channel must file an extension by September 4.

So add these to the list of September dates that we gave you yesterday, as well as any other specific deadline that may apply to your own station, and you can see that the academic year will begin with a bang. Get ready for a busy month ahead!

 

David Oxenford is MAB’s Washington Legal Counsel and provides members with answers to their legal questions with the MAB Legal Hotline. Access information here. (Members only access).

There are no additional costs for the call; the advice is free as part of your MAB membership.

More Action Appears to be Coming on AM Revitalization

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David Oxenford

By: David Oxenford, Wilkinson Barker Knauer LLP

Looking at Revising Interference Protection for Class A Clear Channel Stations

FCC Chairman Ajit Pai, in a speech last week at the Michigan Association of Broadcasters Summer Convention (the text of the speech is available here), announced that he has circulated to the other Commissioners for review and approval a Notice of Proposed Rulemaking looking to make changes to AM interference standards. Specifically, he said that the NPRM would look at Class A AM interference standards. I was in the audience for the Chairman’s remarks, and audience reaction was muted – perhaps because so few people regularly use the term “Class A AM” when referring to what many call the “clear channel” stations – those big 50 kW AM stations that can often be heard halfway across the country at night because of their “skywave” service bouncing off the atmosphere to be received hundreds and sometimes thousands of miles from where the signal originates.

What to do about Class A AM stations was an issue teed up by the FCC in the AM Revitalization proceeding initiated several years ago (see our post here summarizing the issued raised by the FCC back in 2013). While these clear channel stations are enjoyed by listeners far from their own city of license (often bringing sports broadcasts to distant fans, or programs like the Grand Ole Opry that have become national institutions), the huge service areas of these stations does come at a cost to local service – as many lower powered AM stations operating on the same channel as these Class A stations have to either drastically reduce their power or cease operations all together during nighttime hours. While some AM licensees have received FM translators to fill in those service gaps, those translators do not bring listeners back to the AM band itself. So, in the Revitalization proceeding, the FCC asked for ideas as to what it should do with these stations – e.g. if it should advance proposals to reduce protection to the clear channel stations in order to allow more local AMs to increase their nighttime power. It appears that the NPRM announced by the Chairman on Tuesday will crystalize the comments received in response to the 2013 Notice into more specific proposals for action.

In his comments in Michigan, the Chairman said “our rules should reflect the reality of the current noise floor and appropriately balance the interests of Americans who want to listen to smaller local stations in their communities with those who enjoy listening to Class A stations.” Exactly how the FCC proposes to achieve that balance may not be clear until we see the release of the new NPRM. This is a controversial issue, as many owners of clear channel AMs argue that these stations are what keep listeners tuned to the AM dial and allowing more interference could weaken their ability to provide the attractive programming that many of them do. Of course, owners of the weaker AM stations want to serve their communities during all hours, not just during daylight hours. This further NPRM will no doubt be carefully watched, and we will see the arguments raised on both sides in the coming months.

David Oxenford is MAB’s Washington Legal Counsel and provides members with answers to their legal questions with the MAB Legal Hotline. Access information here. (Members only access).

There are no additional costs for the call; the advice is free as part of your MAB membership.

A Presentation on Legal Issues for Podcasters – Who Owns What?

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David Oxenford

By: David Oxenford, Wilkinson Barker Knauer LLP

On July 25, I spoke at Podcast Movement 2018 – a large conference of podcasters held in Philadelphia. My presentation, Legal Issues In Podcasting – What Broadcasters Need to Know, was part of the Broadcasters Meet Podcasters Track. The slides from my presentation are available here. In the presentation, I discussed copyright issues, including some of the music rights issues discussed in my articles here and here, making clear that broadcaster’s current music licenses from ASCAP, BMI, SESAC and even SoundExchange don’t provide them the rights to use music in podcasts. Instead, those rights need to be cleared directly with the holders of the copyrights in both the underlying musical compositions as well as in any sound recording of the song used in the podcast.

I also discussed how, when podcasters are delivering advertising messages, they need to make clear that the messages are sponsored. We have written about the FTC’s requirements that when someone is paid to promote a product online, they need to disclose that the promotion was sponsored. See our articles here and here. Also discussed, and covered in the slides, were issues about defamation and invasion of privacy (and how concerns like these can become more serious in a podcast than in a broadcast as a broadcast is ephemeral – once the broadcast is over, it is gone – but a podcast tends to be permanent, providing evidence of any content that may be of legal concern). I also touched on privacy and security issues. One topic not covered in the slides, but suggested to me by a podcaster at a reception earlier at the conference, was the question of who owns the podcast.

This is a topic that I have discussed before in various presentations about digital media issues for broadcasters (see, for example, the presentations linked to in my articles here and here). But it seems that it is likely to be one that comes up more and more as traditional media companies expand their digital offerings, and employ independent contractors to prepare the new podcast content, or use employees in ways that were not previously part of the scope of their employment. This may become a particular concern if a podcast takes off, and the content becomes valuable. As we wrote here, independent contractors normally own the rights to the content that they create, unless it is specifically assigned in a written agreement to the company that hired them. So if you are using contractors to create podcasts or any other content, make sure that you explicitly get the rights to that content.

Employees, on the other hand, traditionally create content for their employer – particularly where that content is part of the employee’s job description. But, where the content creation is not part of the employee’s job description, things could potentially become murky. Employers are always best advised to make clear with employees, just as they do with any contractor, who owns the content that the employee creates.

We will write more about podcasting legal issues in future posts. Podcast Movement was an exciting conference where there seemed to be much interest in the legal issues about which these creators should be thinking. There is no FCC that establishes a legal framework setting out the restrictions on the podcaster’s operations, so the law needs to be pieced together from general legal principals and those established by other agencies. More to come on these topics in future posts.

David Oxenford is MAB’s Washington Legal Counsel and provides members with answers to their legal questions with the MAB Legal Hotline. Access information here. (Members only access).

There are no additional costs for the call; the advice is free as part of your MAB membership.

EAS Updates – Nationwide Test, Filing Deadline for Revised Form 1, and New Rules for Use of EAS Tones and Reporting of False Alerts

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David Oxenford

By: David Oxenford, Wilkinson Barker Knauer LLP

The last month has been one where there has been lots of activity dealing with EAS. The FCC announced that it will be conducting a Nationwide EAS Test on September 20, 2018. The FCC has been conducting these Nationwide tests routinely over the last few years (see, for instance, our articles here and here on past tests). This test will include wireless carriers as well as broadcasters. To be prepared for this test, the FCC reminded EAS participants to file their updated ETRS Form One by August 27 (see our article here), and to be prepared to file the post-test Forms Two (filed on the day of the test) and Three (due by November 5) to report on the results of the test at their stations.

At its July meeting (as we briefly noted here), the FCC adopted an Order making some changes to the EAS rules, as well as asking further questions in an included Further Notice of Proposed Rulemaking. The changes included:

  • New rules allowing “live code testing” – using actual EAS alert tones in practice alerts, but only after providing lots of publicity that the tones are being used only as part of a test.
  • Allowing the use of the EAS attention signal in PSAs and other informational announcements from FEMA and other public interest organizations – but only where simulated tones developed by FEMA are used, as these simulated tones will not trigger other station’s EAS alerts, and only where the tones used are specifically identified as not being a real notice of an emergency.
  • Use of the alert tones like this have been approved in the past by the FCC, but only by use of a waiver process. The FCC actions allow for more testing and more public information without having to request FCC approval for each such use.

The FCC also adopted a requirement for stations to notify the FCC when they broadcast a false EAS alert – requiring that notification be provided within 24 hours of becoming aware of such a broadcast. Right now, only a simple email to the FCC Ops Center will be required, but the Further Notice asks whether a more detailed reporting system should be created, allowing for the reporting of false alerts not just by the EAS participants, but also by the public and other interested organizations.

The order also adopted certain technical validation requirements for EAS systems, requiring new codes in the EAS test messages limiting the period in which those messages are valid, to avoid having outdated emergency messages popping up on stations after the emergency is over. Other technical changes dealing with the authentication of EAS alerts are postponed while the industry works out appropriate protocols for that authentication.

Watch for the effective dates of the requirements to notify the FCC of false EAS tests, and look for updates to your EAS receivers to include the new validation limiter (to become effective within a year). And be sure to file the required ETRS Form One by the August 27 deadline, and be ready for this year’s national test of the EAS system.

David Oxenford is MAB’s Washington Legal Counsel and provides members with answers to their legal questions with the MAB Legal Hotline. Access information here. (Members only access).

There are no additional costs for the call; the advice is free as part of your MAB membership.

Moving FCC EEO Enforcement from the Media to the Enforcement Bureau – What Does It Mean?

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David Oxenford

By: David Oxenford, Wilkinson Barker Knauer LLP

On July 24, The FCC adopted an order moving broadcast EEO enforcement from the FCC’s Media Bureau to its Enforcement Bureau. The change will be effective later, after certain procedural approvals are obtained and after notice is published in the Federal Register. As EEO enforcement is primarily aimed at broadcasters and cable companies, and has been part of the Media Bureau responsibilities since the Bureau existed, why was this change made and what does it mean?

The FCC makes clear in its order that the reason for the move is that the Enforcement Bureau is for better enforcement of the EEO rules. Specifically, the FCC said this about the transfer of authority from the Media Bureau to the Enforcement Bureau:

“The Enforcement Bureau’s staff has extensive experience conducting investigations and pursuing enforcement in a wide range of areas. They therefore are well positioned to provide assistance and guidance with EEO review, audit, and enforcement work. Further, the Enforcement Bureau has expertise in, and maintains tools and databases to aid with, the tracking of statutory deadlines, including those relevant to EEO audits and investigations, that the Media Bureau does not.”

Thus, broadcasters need to be ready for more rigorous enforcement of the EEO rules.

As is evident from recent FCC decisions fining broadcasters for EEO rule violations, while EEO compliance is somewhat simpler since last year’s decision allowing broadcasters to rely solely on online recruitment sources for their wide dissemination of information about job openings, the rules are still being enforced. While EEO enforcement can arise through complaints or FCC investigations, it is much more common for it to come up in three ways: (1) through EEO audits, (2) in connection with license renewal (which will begin its three-year cycle again next year), and, (3) to a lesser extent, through EEO model programs filed with applications for new stations and in connection with assignments and transfers. As two of those three sources of EEO enforcement are tied to Media Bureau applications, there will have to be cross-Bureau cooperation now in assessing the applications where these issues arise.

We will see how this all plays out in the future. But, for now, watch for the notices on the effective date of this change, and be sure to make sure that your EEO program complies with the FCC’s requirements as there is now a new cop on the beat.

David Oxenford is MAB’s Washington Legal Counsel and provides members with answers to their legal questions with the MAB Legal Hotline. Access information here. (Members only access).

There are no additional costs for the call; the advice is free as part of your MAB membership.