All posts by David Oxenford

Preparing for the 2020 Elections – Our Updated Political Broadcasting Guide

David Oxenford - Color
David Oxenford

By: David Oxenford, Wilkinson Barker Knauer LLP

2020 will no doubt be a very active year for political advertising. To help broadcasters sort out the confusing rules they need to follow in connection with such advertising, we have updated our Political Broadcasting Guide for Broadcasters (note that the URL for the updated version has not changed from prior versions, so your bookmarks should continue to work). The revised guide is much the same as the one that we published two years ago, formatted as Questions and Answers to cover many of the issues that come up for broadcasters in a political season. This guide is only that – a guide to the issues and not a definitive answer to any of the very fact-dependent legal issues that arise in election season. But we hope that this guide at least provides a starting point for the analysis of issues, so that station employees have a background to discuss these matters with ad buyers and their own attorneys.

In looking at the Guide that we prepared two years ago, really not much has changed. The online public inspection file has now become a reality for all broadcasters, so that adds a new layer of transparency (and scrutiny) to broadcasters’ political advertising decisions. There also has been some discussion of the disclosures necessary for issue advertising – though because this guidance is still somewhat up in the air (see our posts here and here), our Guide highlights the questions and our understanding of where the FCC appears to be heading on this topic. We have also made some clarifications and updates on other issues based on issues we have seen arise in the last year.

Again, this Guide is just a starting place for analyzing political broadcasting issues, but we hope that many broadcasters find it to be helpful in giving them some of the tools that are needed to analyze the complex questions that come up during this election year. But resolving these issues is very dependent on the facts of any particular situation, so stay in close touch with your attorneys and advisers experienced in these issues to make sure that you get the law right. In the upcoming months, I will be doing a number of seminars on these rules for various broadcast associations – watch for announcements on those in the coming months. Last week, I spoke at the Iowa Broadcasters Association annual convention, where broadcasters are already gearing up for their Presidential caucuses early in 2020. With the Democratic debates starting this week, it looks like we are about to enter this crazy season. We trust that our Guide will assist broadcasters in spotting issues in this very active political year.

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.

DOJ Starts Review of BMI and ASCAP Consent Decrees – Exploring the Background of the Issues

David Oxenford - Color
David Oxenford

By: David Oxenford, Wilkinson Barker Knauer LLP

The Department of Justice’s Antitrust Division announced on June 5 that it was starting a review of the ASCAP and BMI antitrust consent decrees that govern the United States’ two largest performing rights organizations for musical compositions (referred to as the “musical work”). The DOJ’s announcement of the initiation of the examination of the consent decrees poses a series of questions to which it invites interested parties – including users, songwriters, publishers and other interested parties – to file comments on the decrees, detailing which provisions are good and bad and, more broadly, whether there is a continuing need for the decrees at all. Comments are due on July 10.

This re-examination of the decrees has been rumored for many months. Back in March, we wrote about those rumors and the role that Congress may play in adopting replacement rules should the DOJ decide to fundamentally change the current provisions of the consent decrees. The DOJ itself just recently looked at the consent decrees, starting a review only 5 years ago with questions very similar to those it posed yesterday (see our post here on the initiation of the last review 5 years ago). That review ended with the DOJ deciding that only one issue needed attention, whether the decrees permitted “fractional licensing” of a song. We wrote about that complex issue here. That issue deals with whether, when a PRO gives a user a license to play a song, that user can perform the song without permission from other PROs when the song was co-written by songwriters who are members of different PROs. The DOJ suggested that permission from one PRO gave the user rights to the entire song, an interpretation of the decrees that was ultimately rejected by the rate courts reviewing the decrees (see our article here). So, effectively, the multi-year review of the consent decrees that was just concluded led nowhere. But apparently the DOJ feels that it is time to do it all again. To fully understand the questions being asked, let’s look at what the consent decrees are, and why they are in place.

Because ASCAP and BMI together account for over 80% of musical compositions that are publicly performed by various music services, and tie all of the compositions that they represent in one blanket license sold to music users, they have, for almost 80 years, been subject to antitrust consent decrees. By tying the sale of these diverse musical compositions into one “take it or leave it” license – a license that virtually all music users cannot do without – these organizations have substantial market power. Thus, these consent decrees were put in place to guarantee that these PROs dealt fairly with both music users who buy the licenses to use the musical works, and with the songwriters and publishers whose music they license.

While the decrees are complex with many intricate details, and the two have provisions that are slightly different, perhaps the overriding consideration in each is that they treat similarly situated parties alike. The consent decrees require that ASCAP and BMI make available licenses on the same terms to all similarly situated music users. They also require that the PROs treat all songwriters in the same way. So whether you are a small AM station in the middle of Wyoming or a monster FM in New York City, the formula used to calculate the rates that apply to commercial radio stations are the same. Similarly, ASCAP and BMI pay all songwriters at the same rate for performances of their music – they can’t offer some famous composer a higher rate than they offer the writer of a single obscure song (of course, the popular writer will be paid more as his or her song will be used more than the obscure song – but the rates at which payment will be made will be the same). For music users, the decrees also set up a rate court process where, if the PRO cannot agree with users as to an appropriate license for a particular use of music, a US District Court will act as a “rate court” and conduct a judicial proceeding to decide a fair rate for the use of the music (see our article here about the current rate court proceeding between RMLC on behalf of the commercial radio industry and BMI).

With that background, let’s look at the questions posed. The DOJ asks questions including:

  • Do the Consent Decrees continue to serve important competitive purposes today? What provisions could be changed and how would those changes improve competition?
  • Are the differences between the two consent decrees important for competition?
  • Would termination of the Consent Decrees serve the public interest?
  • If termination would be in the public interest, should there be a sunset period and what rules would provide for an efficient transition?
  • Are there differences between ASCAP/BMI and PROs that are not subject to the Consent Decrees that adversely affect competition?
  • Are existing antitrust statutes and applicable caselaw sufficient to protect competition in the absence of the Consent Decrees?

Small users in particular should carefully consider this review. While, in the absence of consent decrees, big users might have the resources and marketplace clout to be able to negotiate their own music licenses (though, as set out below, that is not guaranteed), smaller users would find that process to be much more difficult. As we wrote back in March, there are no definitive databases that exist to determine who owns what songs (though one is promised by the recent Music Modernization Act) – and with fractional licensing there may be several permissions needed to simply play one song. For any music user that uses many songs – whether that user is a radio station, a webcaster, some sort on-demand music service, or a retail outlet or bar or restaurant that plays music for its customers – there are thousand or potentially millions of permissions that they would need to obtain. Small companies are not likely to have the resources or the knowledge to even find out who to negotiate with for the use of particular songs, and even if the PROs still exist in some less-regulated format, will these small services be able to effectively negotiate the necessary licenses? Now, they can rely on the resources of the bigger companies to negotiate fair rates that will apply to the entire industry. But if the PROs are no longer required to provide the same licenses to all users, will these small users be treated fairly? There is no apparent answer to the question of who is going to be able to fairly and equally provide that service currently provided by ASCAP and BMI under the current consent decrees.

With unregulated collectives, there are always concerns about anticompetitive behavior. The radio and TV music licensing committees both took SESAC, a privately-owned performing rights organization not subject to a consent decree, to court alleging anticompetitive behavior. Both ended up with private settlements imposing a rate-review processes that in many ways mimics the review provided under the consent decrees (see our article here on radio’s final result from the SESAC rate-setting, and here on the TV settlement). A similar process is now underway trying to bring GMR under such a rule process as the radio industry alleges that GMR is seeking rates that are not competitively based given its aggregation of certain must-have songwriters (see our articles here, here and here on the GMR litigation). Why would the DOJ look to be undoing rules on the two biggest PROs, while courts have imposed similar rules on smaller PROs?

The inefficiencies of the unregulated direct negotiation process are evident from the on-demand music services. Until the passage of the Music Modernization Act, these services had to negotiate with rights holders for all of the rights needed to provide music to their customers. That process, even with these large services with lots of resources to devote to music licensing issues, ended up resulting in lawsuits against companies by artists and their representatives claiming that they were not paid for the use of their music. The complexity of the licensing process led to the adoption of the Music Modernization Act which hopes to make that process easier through a legislatively-designed and government regulated (through the Copyright Royalty Board) process (see our articles here and here). So, while the Music Modernization Act makes what was the complex world of mechanical rights licensing easier, deregulating the PROs has the potential to make public performance space more complex (as we suggested here).

There are many issues to consider in this review of the consent decrees. We will no doubt be writing about other issues in coming weeks. But all music users should carefully be watching these proceedings, and should take the opportunity to let the DOJ know how the decrees affect the way that they do business, and what would happen if the decrees were to be fundamentally altered as a result of this review.

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.

Political Broadcasting Issues to Consider Now for the 2020 Election Campaign

David Oxenford - Color
David Oxenford

By: David Oxenford, Wilkinson Barker Knauer LLP

The 2020 presidential elections already loom large, with one of the over 20 Democratic candidates for the Presidential nomination seemingly appearing on whatever TV talk show you tune into on your TV set. With the first debate among these candidates scheduled for late June, it seems like we have a real election already underway – and it is time for broadcasters to start thinking about their political broadcasting obligations under FCC rules and the Communications Act, and beginning to make plans for compliance with those rules.

Stations in Iowa and other early primary states have already been receiving buys from Presidential candidates, PACs, and other third-party groups. That spending is sure to increase in the latter part of the year as these early primaries and caucuses are scheduled early in 2020. What should stations in Iowa and in other states be thinking about now to get ready for the 2020 elections?

We have written about some of the issues that broadcasters should already be considering in our Political Broadcasting Guide (which we plan to update shortly). Obviously, one of the primary issues is lowest unit rates – as those rates become effective 45 days before the primaries (or before any caucus which is open to members of the general public). Thus, the lowest unit charge windows for Presidential campaigns will start for the political contests in Iowa and New Hampshire in December, and roll across the country early next year as the other primaries and caucuses draw near. In addition to our Political Broadcasting Guide, we wrote about other issues you should be considering in determining your lowest unit rates here.

In addition to the question of rates for political ads, stations should be thinking about access for political candidates. Especially in the early primary and caucus states, with so many candidates for the Democratic nomination, spot availability may become tight in the weeks leading up to actual voting. But, as long as a candidate does not sit on their rights, equal opportunities requires that candidates have a right to respond to their opponents in equal amounts of broadcast time, and reasonable access requires that you make available time to all Federal candidates in reasonable amounts. But reasonable access does not require that you provide a candidate with all the time that they request (see our article here). As well-funded candidates come in to stations now to request big ad buys later in the political season, stations should consider whether they really want to sell those candidates all the time that they ask for – knowing that some of the less financially secure candidates may be delaying their buys until the last days before the primary. Equal opportunities will require that you fit in spots from those late-arriving candidates, so make sure you have sufficient advertising inventory in reserve in the weeks leading up to the election to make room for commercials from these candidates whose funding may not cover ads until late in the primary period.

There are issues to consider about free time for candidates. As we’ve written before, the FCC has determined that most interview programs where the content is under station control – even those that have little news value on the normal day – are deemed “news interview programs” exempt from equal time rules if they routinely cover issues of public importance. Bona fide news programming is also exempt from equal time. Thus, equal time is normally only an issue in making sure that all candidates have equal opportunities to buy spot time, and in those rare circumstances where a candidate appears on a purely entertainment program. In these days of media overload, candidates are looking for these nontraditional means of exposure in broadcast programming. So use care if a candidate appears as a character on a scripted TV show, or walks into the announcing booth at a local football game asking to do the play by play for a few minutes, or (especially when dealing with state and local candidates, see our posts here and here) where the candidate is a host of a broadcast program – as, depending on how these situations are handled, all could give rise to equal opportunity claims.

Another area where broadcasters need to pay attention is in connection with third party ads dealing with Federal issues. Sometimes the ads are subtle digs at the positions that a potential candidate is taking (“call Congressman X and tell him that he should stop voting for bills that are bankrupting the country”), and sometimes they are more direct attacks on the potential candidate. Sometimes they don’t directly address a particular politician at all, but are instead directed at an issue being debated in Congress. In any case, if the ads are dealing with Federal candidates or other issues being considered by the US House of Representatives or Senate, then they are Federal issue ads on which the station must maintain full online public file information, similar to that which is kept for any candidate advertising – the full schedule of advertising that is to be run, the class of time sold, the sponsor of the ad, and even the price that was paid for the spots (see our post here on the public file requirements for Federal issue ads).

We have also written, here, about issues concerning the content of these third-party ads, as stations can potentially have liability for defamatory content in those ads if the station knows or has reason to believe that the ads are in fact false. Being put on notice of the falsity of the ad by a letter from a representative of the candidate being attacked can constitute that reason to believe that the ad is false that, if it contains defamatory content, could theoretically result in liability to a station. Candidates who are attacked may be calling stations asking that ads from PACs and other third-parties be pulled from the airwaves, and stations need to have plans in place to be ready to evaluate and deal with such claims. While third-party ads do not get lowest unit rates, these ads can be more problematic than candidate ads as they potentially force stations to be judges of the truth of the content of those ads. Candidate-sponsored ads, on the other hand, cannot be censored, so stations have no liability for the broadcast content of those ads.

Finally, with the election season fast approaching, even stations not in early primary states should start planning. Some stations are no doubt already selling long-term contracts that will still be in effect during the primary season. Stations should be considering how to allocate the purchase price of these long-term contracts to reflect their actual seasonal value – rather than simply booking them as having a flat rate throughout the entire year – including the pre-election lowest unit rate periods. As we wrote in our Political Broadcasting Guide, the FCC allows you, in internal station documents, to allocate for lowest unit rate purposes, the purchase price of a long-term contract in a manner different than shown on invoices given to commercial clients, as long as that allocation more accurately reflects the seasonal value of the spots sold, adds up to the total purchase price of the package, and is not done simply to avoid the lowest unit rate periods. Consult with your attorney to make sure that you properly apply this process, but it could save you money in the long term.

These are but a few of the political issues that broadcasters should be considering. So start thinking about the political issues that will arise as we enter this political season, and check out our Political Broadcasting Guide and the guides prepared by the NAB and many other organizations representing broadcasters – as you can never have enough perspective on these issues. These rules are complex, and many candidates are getting smarter about the how to use the rules to their advantage, so be prepared for the upcoming onslaught of political advertising.

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.

Video Looking at the Basics of the Online Public Inspection File and Quarterly Issues Programs Lists

David Oxenford - Color
David Oxenford

By: David Oxenford, Wilkinson Barker Knauer LLP

Looking for a brief explanation of the online public inspection file and Quarterly Issues Programs List, and how they will be viewed in connection with the upcoming license renewal cycle – including the potential fines for violations of the rules? The Indiana Broadcasters has just released this video of me discussing those issues available here.

We have written in more depth about these issues, including our discussion of the importance of the online public file for the renewal process (here and here), the importance of Quarterly Issues Programs lists (here) and the required content of the online public file (here and here). With the license renewal filing process starting for radio stations in June (see the schedule of filing for stations, which is done on a state by state basis, here) and for TV a year later, these obligations, while basic, are very important. So if you have questions about these issues, check out these resources, and contact your own legal advisor for more information.

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 Seeks Comments on Proposal to Allow All-Digital AM Radio Transmission

David Oxenford - Color
David Oxenford

By: David Oxenford, Wilkinson Barker Knauer LLP

On April 11, the FCC released a Public Notice announcing the receipt of the Petition for Rulemaking asking that the FCC allow AM stations the option to operate an all-digital facility. We wrote about that Petition here. Currently, AM digital operations are allowed only in a hybrid mode – where the station transmits both an analog and a digital signal. Proponents of the all-digital operation argue that the full digital operation allows for better reception and increased stability of the transmission, and submit that it is time for stations that are willing to transmit in this better system to be allowed to do so without having to seek experimental authority – the only way in which an all-digital AM transmission is now allowed.

Some have suggested that, in order for the FCC to move this proposal forward on a timely basis, industry support is needed. Comments on this Petition for Rulemaking, specifically seeking comments on allowing operation in the MA3 All-Digital Mode of HD Radio, are due on May 13. If you are interested in having the option to operate an all-digital AM station, comments urging the FCC to move forward on this Petition should be filed by that deadline. Once comments are received, the FCC will consider them and, if they sense enough industry support, they will issue a Notice of Proposed Rulemaking seeking additional comments on rules for implementing this proposal. FCC approval for an all-digital AM service will not happen overnight, but this Public Notice and the comments due in May are certainly the first step in this evolution of AM radio.

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.

Regulatory Issues from the NAB Convention

License Renewals, ATSC 3.0, Translator Interference, Ownership Rules, and Children’s TV

David Oxenford - Color
David Oxenford

By: David Oxenford, Wilkinson Barker Knauer LLP

Questions about regulations from Washington don’t disappear just because you are spending time in Las Vegas, and last week’s NAB Convention brought discussion of many such issues. We’ll write about the discussion of antitrust issues that occurred during several sessions at the Convention in another post. But, today, we will report on news about more imminent actions on other issues pending before the FCC.

In his address to broadcasters at the conference, FCC Chairman Pai announced that the order on resolving translator interference complaints has been written and is now circulating among the Commissioners for review. The order is likely to be adopted at the FCC’s May meeting. We wrote here about the many suggestions on how to resolve complaints from full-power stations about interference from FM translators. While the Chairman did not go into detail on how the matter will be resolved, he did indicate that one proposal was likely to be adopted – that which would allow a translator that is allegedly causing interference to the regularly used signal of a full-power broadcast station to move to any open FM channel to resolve the interference. While that ability to change channels may not resolve all issues, particularly in urban areas where there is little available spectrum, it should be helpful in many other locations.

At another session, FCC Audio Division officials talked about the upcoming license renewal cycle. They announced that the renewal forms will be filed in the FCC’s LMS database, which was first used by radio broadcasters in connection with their Biennial Ownership Reports filed last year. The forms themselves will likely be available for completion on or before May 1 for the June 3 filing deadline for radio stations in Maryland, Virginia, West Virginia and the District of Columbia. Watch for an FCC public notice next week providing more details on the forms and filing requirements. And, in the interim, make sure that your online public file is complete and up-to-date (including the Quarterly Issues Programs lists – which, for the first quarter of 2019, should have been uploaded to the online public file no later than yesterday), as the online file will likely be reviewed by the FCC during the license renewal process. See our articles here and here on these issues.

On the TV side, the FCC said that the forms for filing for ATSC 3.0 facilities should be available shortly, so that applications can be accepted before the end of the quarter. At the conference, a consortium of stations pushing the ATSC 3.0 standard announced that they will be rolling out the new standard in 60 markets early in 2020.

Revisions to the children’s television rules relating to the amount of required educational and informational programming for children are also being considered. However, no time frame for the exact date by which any changes will be adopted was given. See our article here about the FCC’s pending review of the Children’s television rules.

The FCC Commissioners also discussed the current Quadrennial Review of the ownership rules – the proposed changes to the local radio ownership rules were a particular topic of conversation. See our post here on what changes to those rules are being discussed. All three Republican Commissioners made statements that the ownership rules need to reflect current marketplace realities. But it was also pointed out, particularly by the newest FCC Commissioner, Commissioner Starks, that the FCC principles of localism, competition and diversity need to be considered in any analysis of the ownership rules. Deadline for initial comments in the new Quadrennial Review is April 29.

These were but some of the legal issues discussed at the Convention. Clearly, no one wants to gamble on their regulatory future – so pay attention to the FCC decisions on these important upcoming matters.

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.

Advertising for CBD – Safe for Broadcasters?

David Oxenford - Color
David Oxenford

By: David Oxenford, Wilkinson Barker Knauer LLP

In the last few months, we probably have had more questions about advertising for CBD products than any other topic. At this point, CBD products seem to be sold in nearly every state in the country, and discussions about CBD’s effectiveness seem to be staples on national and local television talk programs. Broadcasters naturally ask whether they can advertise these seemingly ubiquitous products. Unfortunately, the state of the law on CBD at the current time is particularly confusing, as discussed in this article.

First, a primer on terminology. CBD, short for cannabidiol, is a derivative of the Cannabis sativa plant. Industrial hemp is produced from portions of a strain of the same plant containing low concentrations of the psychoactive chemical known as THC, or tetrahydrocannabinol, and hemp can also be used to produce CBD. In contrast, recreational and medical cannabis, derived from the dried flowers, leaves, and stems of the female Cannabis plant (which we’ll call marijuana to distinguish it from hemp), contains higher concentrations of THC and lower concentrations of CBD. Preliminary clinical research has shown the potential benefits of using CBD to treat anxiety, cognition, movement disorders, and pain, and certainly these properties are attributed to the substance in popular culture. But is it legal?

Although recreational marijuana use is now legal in 10 states and the District of Columbia, and medical marijuana is legal in 33 states, it remains an illegal Schedule I drug under the federal Controlled Substances Act. Possession and distribution is a felony under federal law, as is the use of radio, TV or the Internet to facilitate that distribution. Because marijuana is still illegal under federal law, we have written repeatedly that it remains a product that broadcasters are taking significant risks in advertising – even if it is legal in a particular state for medical or recreational purposes (see, for instance, our articles here and here). But now CBD is in a different category, at least if it is hemp-derived CBD with low levels of THC.

The Farm Act, passed in late 2018, removed hemp (and thus hemp-derived CBD) from Schedule I, so its possession is no longer illegal under federal law as long as the THC level is less than 0.3%. But CBD derived from marijuana remains an illegal Schedule I drug, so it is important to know how the CBD is being produced, as it helps determine whether the CBD is legal or illegal. Making the law surrounding CBD even more confusing is that, while there is no longer a federal ban on the possession of hemp-derived CBD, there is not yet a legal mechanism for widespread commercial production of CBD, except in limited circumstances, and whether the production fits under these limited circumstances is difficult to discern when a broadcaster is approached to advertise a CBD product. Moreover, other issues must be weighed in any advertising decision.

The 2018 Farm Act sets out a process for the legalization of the production of hemp products, including CBD. But, under the Act, any industrial manufacture of CBD products can only be done through state plans to regulate the sale and distribution of these products, or pursuant to a federal plan to be adopted by the US Department of Agriculture. The state plans also must be approved by the USDA before production begins. At least two states have filed requests with the USDA for approval of their state plans. Unfortunately, the USDA has not yet adopted rules for approving these programs. It held a “listening session” earlier this month on proposed rules for processing requests for approval of state plans (see the transcript of the listening session here), but it does not seem likely that rules will be adopted until much later this year, as there was much discussion during the session of trying to have the rules ready for the 2020 growing season. But there were also calls for quicker action, and more clarity on the current state of the law, including one from a representative of a trade association for supermarkets and drug stores, which face the same issues as do broadcasters – is it really legal to sell the CBD products that are already on the market?

Until the USDA has adopted rules for processing state plans, and has approved some of those plans (as well as a federal plan for states that do not act), the only manufacturing of CBD that is permitted is production authorized under a prior Farm Act from 2014. The 2014 Act only permitted hemp production projects authorized by a state or a university as part of a research program, and no widespread commercial exploitation of CBD under the 2014 Act was supposed to happen except under pilot programs as part of a research project. From some of the testimony given at the recent USDA listening session, it appears that some of the state plans for production on an experimental basis allowed for some serious operations – one company representative talking about how it had over 200 employees producing legal hemp products pursuant to one of these supposedly experimental state projects. While federal authorities may not have envisioned such large commercial production under the 2014 Act, it does not appear that there have been any federal efforts to reign in these producers.

The reason for regulatory oversight of hemp production by the USDA and the states appears to be to make sure that consumers are actually getting what they think they are buying, and also to make sure that producers take steps to reduce the risk that marijuana products (or hemp products with greater than .3% THC) become available for public consumption. See the USDA statement of principles here. In recent years, there have been numerous articles and statements from regulators suggesting that CBD products are often not what they claim to be – some allegedly having more THC than advertised, others having little or no actual CBD. The FDA is supposed to hold hearings in April about its authority over CBD, and part of that process seems to be geared toward gathering evidence as to what products are safe and what limits to put on the purity and potency of such products, and the disclosure of their contents.

Some broadcasters, after (1) discussion with their counsel, (2) investigation with the advertiser, and (3) some degree of reasonableness (avoiding sales that are done in some dark garage or from the back of a truck on one hand, to possibly being more comfortable with products sold at a big national retailer where there is some expectation that the advertiser has done some of its own due diligence), may be able to satisfy themselves about the question of whether the CBD product that they are being asked to advertise was legally produced and is otherwise lawful. After all, there are plenty of products being advertised on the radio where the broadcaster has never thought to inquire as to whether the product was legally manufactured. But that does not end the broadcaster’s consideration as to whether to run a CBD ad. In fact, there may be far more serious questions to consider, given that a particular type of CBD may be illegal under federal law.

Even though the USDA is moving to implement the provisions of the Farm Act that legalize the production and commercial distribution of hemp products with low THC levels, the FDA retains jurisdiction to prohibit uses of any cannabis product as a pharmaceutical product or food additive. Under this authority, the FDA has made clear that it still prohibits the sale of CBD (hemp-derived or otherwise) as a food additive or oral supplement (see its statement here, issued after the adoption of the 2018 Farm Act). In fact, this year, after the adoption of the Farm Act, the FDA has raided stores selling CBD as a food additive, and health authorities in several states have followed suit. As noted above, the head of the FDA announced in recent Congressional testimony that it would hold hearings on CBD, but he soon thereafter announced his resignation, leaving that timetable up in the air. Edibles and dietary supplements containing CBD will likely be a principal topic that will be considered at the FDA hearing whenever it is finally held.

Until the FDA acts, and regardless of what the USDA does with respect to hemp production, it seems to still be a federal offense to sell any CBD product that is to be ingested – whether it is as a dietary supplement or as an additive to foods and beverages – unless the FDA has approved those products. Late last year, the FDA approved the use of a CDB-based product (sold under the brand name Epidiolex) as a drug to control epilepsy seizures, but that is a very limited exception at this point. Note, again adding to the confusion, the FDA has also approved the use of certain hemp products in food, but only where they have negligible levels of CBD and THC (see, e.g. the FDA notice here). The approval of hemp as an addition to foods confuses many in the public, as hemp is often seen as the equivalent of CBD (or marijuana) so, when they see it advertised in foods or beverages, they believe it to the be the same as CBD. The FDA, however, sees these products as legally different.

Similarly, both federal and state authorities warn about making unproven health claims about any of these substances. The FDA and FTC have informally suggested that they may be concerned about any health claims made for any CBD products not backed by academic studies. With these warnings from government agencies about CBD products that make health claims or which can be ingested, and the broadcaster’s status as a federal licensee, it would seem as if steering clear of the promotion of products that are still prohibited under federal law would make sense.

But even if a broadcaster can satisfy itself that the CBD comes from legal sources, is not to be ingested, and does not make unverifiable health claims, this does not end the inquiry. The various states have differing laws on hemp products generally and CBD specifically. Some states still have not liberalized their laws along the lines of the 2018 Farm Act, and thus are still taking a hard line on any sales of hemp or CBD. Others, even including some states that have legalized recreational or medical marijuana, have rules that appear more restrictive of hemp and CBD products than of “legal” marijuana. Others have already amended their laws to effectively legalize these products. Even then, most states restrict sales to minors (and some specifically address advertising restrictions), so it would make sense for stations to observe the same kinds of rules that they do for alcohol advertisements, by keeping ads out of programming where a high percentage of the audience may be under the legal age (see our articles here and here). Stations need to do a thorough check of their state’s laws and the regulations of their state agencies to see what other rules might apply to these sales.

After all that, we are back to where we began. There are no clear answers on CBD advertising yet. Consider these factors, consult with your own attorney and give some careful thought as to whether or not to accept CBD advertising on your station, and watch for developments as they occur 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.

FCC Sends More Warnings to Radio Stations that Are Not Compliant with Online Inspection Public File Obligations – Quarterly Issues/Programs Lists are the Biggest Target

David Oxenford - Color
David Oxenford

By: David Oxenford, Wilkinson Barker Knauer LLP

The FCC has once again started sending out email notices to broadcast stations that are not in compliance with their online public file obligations. This follows a set of notices sent in early December, where the FCC first warned specific stations that there were issues with their online public inspection files (see our article here). The new email notices seem to be sent to two classes of stations – those that have done nothing to their online public files, and those that have activated the files, but not uploaded their Quarterly Issues/Programs Lists to those files. Some of the new notices follow up on notices sent in December. Both sets of notices ask for reports to the FCC from the stations that received the notice of corrective actions that they have taken.

We have been warning of the FCC’s concern about incomplete or inactive online public files for some time, and the potential impact that noncompliance could have on license renewals, which start for radio stations in Maryland, Virginia, West Virginia, and the District of Columbia in June 2019, with pre-filing public announcements of those filings due to begin on April 1. The renewal obligation for radio moves across the country with stations in a few specific states filing every other month in this three-year renewal cycle (for more information see, for instance, our articles here and here). Clearly, this set of emails is a warning to stations that the FCC is watching their public files, and that compliance problems will bring issues, and probably fines, if the files are not complete by license renewal time. The emails that have been sent out do not target every station in noncompliance with the public file obligations – but instead seem to just be a sampling of those stations – so do not relax and assume compliance simply because you did not receive any contact from the FCC.

As we have written before (here and here), the biggest issues will likely be with stations not uploading Quarterly Issues/Programs Lists and, for stations that are part of clusters with 5 or more full-time employees, Annual EEO Public Inspection file reports. Quarterly Issues/Programs Lists were the biggest source of fines in the last license renewal window – resulting in fines of from $10,000 to $15,000 for stations missing lists for multiple quarters in the 8-year long renewal term. In the last renewal term, those fines were issued when stations self-reported violations, before the FCC staffers could check on compliance from their Washington DC offices just by looking at the online public file of renewal applicants. So we expect more fines this time around. As we wrote here, the Quarterly Issues/Programs lists are the only official documents demonstrating how a station served the public interest – so take them seriously, as the FCC certainly does.

Look at your online public file now and make sure that you are in compliance with all public file obligations to insure that you do not have issues that will cost you at renewal time – or at any other time that the FCC decides to use its enforcement authority to start issuing fines.

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.

GMR Interim Music License for Radio to be Extended – Yet Again

David Oxenford - Color
David Oxenford

By: David Oxenford, Wilkinson Barker Knauer LLP

To hear more from David Oxenford about issues coming before the FCC that impact your station attend his session at the Great Lakes Media Show.  David will be speaking Wednesday, March 6 at 9:00 a.m.  More on the #MABshow here.

This week, the Radio Music License Committee issued a press release that states that Global Music Rights (“GMR”), the new performing rights organization that collects royalties for the public performance of songs written by a number of popular songwriters (including Bruce Springsteen, members of the Eagles, Pharrell Williams and others) has agreed to extend their interim license for the performance of their music by commercial radio stations until September 30, 2019. The notice says that GMR will be contacting stations that signed their previous extension (through March 30). If you don’t hear from GMR, the RMLC suggests that you reach out to them about this extension.

As we have written before (see our articles here and here), GMR and the RMLC are in litigation over whether or not the rates set by GMR should be subject to some sort of antitrust review, as are the rates set by ASCAP, BMI and even SESAC (see our article here on the SESAC rates). In the interim, there is no license to play the GMR music outside the Interim license offered to all commercial stations, or individually negotiated licenses with the company. Commercial stations that play GMR music should either have a license or should discuss carefully with counsel their potential options and liabilities if they continue to play GMR music. Do not ignore the potential liability as, under copyright law, there are substantial “statutory damages” of up to $150,000 per song for infringement. Noncommercial stations are not covered by this license being offered by GMR to RMLC members, as public performance royalties for noncommercial broadcasting are set by the Copyright Royalty Board (see our article here for more details on the royalties for noncommercial stations). Those stations should also discuss their obligations for royalties under the CRB decision with their counsel.

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.

Ten Michigan Broadcasters Chosen for First 2019 EEO Audits

David Oxenford - Color
David Oxenford

By: David Oxenford, Wilkinson Barker Knauer LLP

5 Michigan television stations and 5 Michigan radio stations on audit list.  See the list here.

The MAB can help with your EEO compliance with Broadcast Compliance Services.  BCS sets the standard for broad outreach.  BCS drastically reduces paperwork for broadcasters while providing the truly extensive outreach that the FCC and others want.  It offers an industry-inspired solution to employee recruitment.  Best of all, its a free service to members.  Get set up by contacting Robin Cooper at (301) 998-6136 or email: [email protected].

On Friday (2/15), the FCC issued its first EEO audit of almost 300 radio and TV stations across the country (see the model audit letter and list of stations affected here), the day after announcing its intent to abolish the Form 397 EEO Mid-Term Report (see our articles here and here). In the Order announcing the forthcoming abolition of the Mid-Term Report, the FCC also noted its intent to being a proceeding in the next 90 days to reexamine the effectiveness of its EEO program – signaling that EEO remains a priority of the FCC and that this audit should be taken very seriously. While the FCC each year promises to audit 5% of all full-power broadcast stations, and this audit is likely but the first of a number of EEO audits for the coming year, this upcoming review of the effectiveness of the FCC’s EEO process highlights the continued importance of EEO enforcement to the FCC.

The response to the audit must be completed by April 1. As the response (and the audit letter itself) must be uploaded to the public file, it can be reviewed not only by the FCC, but also by anyone else anywhere, at any time, as long as they have an internet connection. The upcoming license renewal cycle adds to the importance of this audit, as a broadcaster does not want a recent compliance issue to headline the record the FCC will be reviewing with its license renewal (see our article here about the upcoming license renewal cycle). The audit requires that the broadcaster submit their last two EEO Public File Reports (which should already be in the online public file) and backing data to support all of the outreach efforts listed on those public file reports. Broadcasters subject to the audit should carefully review the audit letter to see the details of the filing.

If any station in your cluster is on the list of audited stations, all stations in that “station employment unit” (a group of commonly owned stations serving the same area with at least one common employee) must respond. If that cluster has 5 or more full-time employees, it must observe the FCC’s EEO requirements and respond to this audit. If a station that is being audited is involved in an LMA with another broadcaster, the audit may require that the broker provide employment information as well as the licensee. There are some exceptions where stations can be excused from the audit for stations audited in the recent past.

As noted above, these audits may take on added significance given the FCC’s statement in the final version of the Order abolishing the Mid-Term Report that it will issue a Further Notice in the next 90 days seeking comment on the FCC’s track record of EEO enforcement and asking for proposals on how EEO enforcement can be made more effective. The Order notes that this decision was prompted by comments in the Form 397 proceeding suggesting reform of the audit process. The Order also noted the step already taken by the FCC to strengthen EEO enforcement by transferring the EEO Branch from the Media Bureau to the Enforcement Bureau (see our article here on that transfer). This language about the upcoming review of the Commission’s EEO performance was not in the initial draft order released in January in anticipation of the consideration of the abolition of the Form 397. It appears to have been added at the request of the two Democratic commissioners, according to their statements on the Mid-Term report order.

With this renewed emphasis on EEO enforcement and the audit process, any broadcaster on the audit list needs to take special care in responding to the audit letter. Even though the FCC has allowed online recruiting to be the sole method in which a station recruits new employees (see our article here), if a station does not keep the required paperwork and submit it in response to the audit, the station can still be fined by the FCC (see the article here about recent EEO fines). So check the audit list twice to see if your station is on it, and if it is, take time and answer carefully.

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.