All posts by David Oxenford

Hey, Alexa, How Much Did You Raise My SoundExchange Royalties?

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David Oxenford

By: David Oxenford, Wilkinson Barker Knauer LLP,

In the last year, the popularity of Alexa, Google Home and similar “smart speaker” devices has led to discussions at almost every broadcast conference of how radio broadcasters should embrace the technology as the new way for listeners to access radio programming in their homes. Broadcasters are urged to adopt strategies to take advantage of the technology to keep listeners listening to their radio stations through these new devices. Obviously, broadcasters want their content where the listeners are, and they have to take advantage of new platforms like the smart speaker. But in doing so, they also need to be cognizant that the technology imposes new costs on their operations – in particular increased fees payable to SoundExchange.

Never mentioned at these broadcast conferences that urge broadcasters to take advantage of these smart speakers is the fact that these speakers, when asked to play a radio station, end up playing that station’s stream, not its over-the-air signal. For the most part, these devices are not equipped with FM chips or any other technology to receive over-the-air signals. So, when you ask Alexa or Google to play your station, you are calling up a digital stream, and each digital stream gives rise to the same royalties to SoundExchange that a station pays for its webcast stream on its app or through a platform like TuneIn or the iHeartRadio. For 2018, those royalties are $.0018 per song per listener (see our article here). In other words, for each song you play, you pay SoundExchange about one-fifth of a cent for each listener who hears it. These royalties are in addition to the royalties paid to ASCAP, BMI, SESAC and, for most commercial stations, GMR.

In addition, if the station provides other content through these smart speakers, other royalty issues can arise. When a listener can ask for a certain DJ’s program at any time, the tendency for stations is to want to make it available on demand. Before doing that, stations need to get legal advice as to whether their royalties to SoundExchange cover such uses. As we have written before, podcasts and other on-demand media for the most part are not covered by these royalties. Instead, to use music in podcasts, you need to directly negotiate with the publishing company that own the rights to the underlying musical composition and the record company that owns the song as recorded by a particular artist – or find some musician who owns both the words and the recording who will give you rights to their music. The same would be true for on-demand streams delivered through a smart speaker unless the program segments are at least 3 hours long and accessible only at random points within a 3 hour loop, or if the program is at least 5 hours long and made accessible for less than 2 weeks. There are nuances in these rules that need to be observed to avoid going beyond the limits of the SoundExchange license and potentially incurring significant liability for copyright infringement.

In essence, as these smart speakers grow in popularity, the business of the broadcaster providing its programming through these speakers will change. Unlike programming received over-the-air which bears no SoundExchange royalty (see our articles here and here), broadcasters growing a smart-speaker based audience need to budget to meet the costs of the sound recording performance royalty paid to SoundExchange. As the aggregate fee grow right along with the audience size, the broadcaster faces the conundrum that many pure webcasters face – that the royalties grow faster than the additional income generated from the streams as audiences increase.

Is there a solution? For talk and sports radio, there are far fewer issues as, just as long as a station has the digital rights to stream the programming that it airs, the SoundExchange royalties are generally low. But for music-intensive stations, the royalties grow and need to be dealt with. The vast majority of all digital audio services have thus far been unprofitable primarily because of royalties they have to pay. Perhaps, as broadcasters end up more and more reliant on digitally-delivered streams like those heard on Alexa and Google Home, it is time for broadcasters to consider discussions with the record labels about royalties that would perhaps include a “piece of the action” from over-the-air broadcasting in exchange for dramatically lower digital royalties at a level that would allow for a profitable operation. Something to think about next time you ask Alexa to play your favorite radio station.

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.

Dealing with a Local Political Candidate Who Appears in a Spot Advertisement for a Commercial Business

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David Oxenford

By: David Oxenford, Wilkinson Barker Knauer LLP,

With election season upon us again, I’ve had one question that has come up repeatedly in the last few weeks about local candidates – usually running for state or municipal offices – who appear in advertisements for local businesses that they own or manage. Often times, these individuals will routinely appear in a business’ ads outside of election season, and the candidate simply wants to continue to appear on their businesses’ ads during the election as well. We wrote about this question in an article published two years ago, and since the question has been coming up again, it is worth revisiting the subject. What is a station to do when a local advertiser decides to run for office?

While we have many times written about what happens when a broadcast station’s on-air employee runs for office (see, for instance, our articles here, here and here), we have addressed the question less often about the advertiser who is also a candidate. If a candidate’s recognizable voice or, for TV, image appears on a broadcast station in a way that is not negative (e.g. it is not in an ad attacking that candidate), outside of an exempt program (in other words, outside of a news or news interview program which, as we wrote here, is a very broad category of programming exempt from the equal time rules) that appearance is a “use” by the political candidate. “Uses” can arise well outside the political sphere, so Arnold Schwarzenegger movies were pulled from TV when he was running for office, as were any re-runs of The Apprentice and The Celebrity Apprentice featuring Donald Trump. An appearance by a candidate in a commercial for his or her local business is a “use” which needs to be included in a station’s political file (providing all the information about the sponsor, schedule and price of the ad that you would for any pure political buy). But that does not necessarily mean that a station needs to pull the ad from the air.

As a commercial for a business is usually a paid spot, where the station is receiving money to air the ad (and not an unpaid one like the appearance in an entertainment program where the station does not get paid to air its comedy program or movie in which a candidate appears), a “use” arising in a paid commercial gives rise to equal opportunities for other opposing candidates to buy time on the station. The station will not usually be required to provide free time to opposing candidates (but watch for candidate appearances in PSAs, as that might give rise to free time for opposing candidates). If the station has plenty of commercial inventory and does not mind selling spots to the opposing candidate for the lowest unit rates that apply during the political windows (45 days before a primary and 60 days before a general election) to spots purchased by a candidate’s authorized campaign committee (the opposing candidate gets lowest unit rate for a spot run in connection with his or her campaign, even if the commercial business bought the spot featuring their employee-candidate at regular commercial rates), a station may decide to continue to air the business spots with the candidate’s appearance. But if inventory is tight, or the station is not selling political ads to candidates in a particular state or local race, the station may want to tell the business that the candidate can’t appear in the business’ spots once the candidate becomes legally qualified, as the running of those spots with the candidates would require the station to provide equal time to the opposing candidates.

Note that the “no censorship” provision of the Communications Act and the lowest unit rate provisions likely do not apply to the business spots even though they contain the voice or image of a candidate. That is because these spots are not uses by the candidate or the candidate’s authorized campaign committee which are covered by the rules providing for lowest unit rates and the “no censorship” provisions of the law. As the commercial spots are not by the candidate or his or her political committee, but instead they are commercials by a business that happen to be “uses,” normal commercial rates can be applied.

Note, also, that business spots that advertise a business in which the candidate’s name appears, but where the candidate him or herself do not appear by voice or picture, do not trigger any equal opportunity issues. It is the recognizable voice or picture of the candidate that triggers the equal opportunity and public file issues. For those of us here in the DC area, we are accustomed to seeing ads for the local Volvo dealer even during election season, even though that dealership is named after a politician currently serving in Congress.

As in all areas of political broadcasting, any analysis of the implications of any on-air appearance of a candidate can be a very nuanced matter, and small changes in the facts can result in big changes in the legal conclusions that apply. So if these situations arise, consult with the station’s legal counsel before making any decision as to how to treat these kinds of ads. This article is just meant to note that there may be options for dealing with the candidate-advertiser if he or she wants to stay on their business’ spots during an election period, depending on the station’s circumstances. For more general information about the rules that apply to political broadcasting, see our Guide to Political Broadcasting, here.

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.

Supreme Court Strikes Down Law against Sports Betting – But Broadcasters Need to Proceed with Caution

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David Oxenford

By: David Oxenford, Wilkinson Barker Knauer LLP,

On May 14, the US Supreme Court issued an opinion striking down a Federal law (the Professional and Amateur Sports Protection Act or “PASPA”) which prohibited state legislatures from taking any action to legalize betting on sports. PASPA also contained a restriction on advertising sports betting. The state of New Jersey challenged that law, arguing that it improperly limited the authority of state legislatures to act. The Supreme Court agreed, and invalidated the entire Act, including the restriction on advertising sports betting. Some trade press articles have suggested that this signals a boom for broadcasters and other ad-supported media companies as companies rush to start advertising legal sports betting now that the prohibition is gone. While in the long run that may be true, and there may be immediate benefits to stations in certain states, there are numerous caveats for broadcasters to consider before they recognize an advertising boom from sports betting companies.

The entire decision was not based on any analysis of whether or not betting on sports is a good thing, but instead it was a decision based exclusively on a question of state’s rights. The Supreme Court determined that Congress cannot tell state legislatures what they can and cannot do. While Congress may have the authority to ban or otherwise regulate sports betting, if they wanted to regulate it, they should have done so directly. Instead, as the law prohibited state legislatures from taking action to legalize sports betting and other actions predicated on that limitation on states rights, the Supreme Court determined that this was an exercise of authority that Congress does not have – Congress can’t tell state legislatures what to do. Based on the Court’s analysis that all parts of the act were premised on this ban on state legislative actions, the entire law was struck down. That means that there is no blanket federal ban on sports betting, and it leaves each state to regulate as it may wish. For companies ready to take bets on sporting events, and media companies who want to take advertising from sports betting companies, in most cases they need to wait for the states to make decisions on how to proceed.

As the Court noted, at the time of the passage of the legislation, three states (including Nevada) already had laws allowing betting on sports. Apparently, in addition to New Jersey, several other states have already passed laws allowing sports betting if the Supreme Court permitted it. And bills are pending to legalize sports betting in many other states. But there are many states in which there is no clear law permitting sports betting. As DraftKings and FanDuel found out in recent years as they attempted to establish their fantasy sports business, in many states local authorities were ready to challenge their authority to do so under state laws banning sports betting. While some of these laws were amended to allow for fantasy games, many still prohibit straight-on sports betting. Thus, as long as there are prohibitions in state law against sports betting, media companies in those states need to be restrained in their advertising for this activity.

Even in states where the concept of sports betting has been adopted, the state may still need to adopt regulations to implement the law, and licenses may need to be issued to companies who want to take advantage of the change in the law. And, in the days since the Supreme Court’s ruling, there have even been suggestions that Congress could step in and adopt some sort of legislation limiting sports betting, or that it could legislate some royalty to the sports leagues in connection with permissible betting. In short, broadcasters need to consult local counsel to carefully analyze the laws in their states in making decisions on whether or not they can take ads for sports betting.

Once permitted, there will also be questions of whether stations can take ads for legalized betting in other states. There was a Supreme Court case, Edge Broadcasting, upholding a federal law that restricts stations in a state that has no state lottery from advertising the state lottery in an adjacent state. See our post here about an FCC decision fining a station for violating this law by running an ad for an adjacent state’s lottery. But there is also a Supreme Court ruling in the Greater New Orleans case that has been considered to permit truthful advertising for legal casino gambling. How sports betting will be treated remains to be seen. Note, too, that there may well be further litigation to decide these issues.

Also, broadcasters should consider restrictions that may exist in various program contracts that can restrict specific types of advertising. As we wrote here, many sports leagues have restrictions in their contracts as to the type of ads that can be run when their games are being shown. Sports betting is likely to be included among the categories of impermissible advertising in many such contracts. Broadcasters should also consider the age of the audience for programs in which any advertising is being run to make sure that that audience is appropriate for receiving messages about legalized betting on sports.

All in all, the decision this week was a good one for media companies. But whether it will mean, in the short term, a big new source of advertising revenue for stations across the country remains to be seen.

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.

License Renewal Cycle Starts in a Year – Crackdown on Silent Stations and Online Public File Signal Warnings to Broadcasters

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David Oxenford

By: David Oxenford, Wilkinson Barker Knauer LLP,

Starting June 1, 2019, just over a year from now, the next broadcast license renewal cycle will begin. By that date, radio stations in DC, Maryland, Virginia and West Virginia must file their renewal applications. Every other month for the next 3 years will bring the filing of radio license renewals in another set of states. And television stations will begin their renewal cycle a year later (June 1, 2020). The FCC’s schedule for radio license renewals can be found here and here. For TV stations, the schedule of renewal filings by state is in the same – just one year later than for radio. Every eight years, broadcast stations have to seek the renewal of their licenses by the FCC by demonstrating their continuing qualifications to be a licensee, including showing that they have not had a history of FCC violations and that they have otherwise served the public interest.

We have already written several times about how, with all broadcasters – both radio and TV – now required to have an online public file, it is important for stations to make sure that those files are complete and are kept up to date on a regular basis (see our articles here, here and here). Given that the contents of the online public file can be viewed by anyone, anywhere, just by launching an Internet browser, we would expect more complaints about incomplete files, and more scrutiny by the FCC of the contents of files that rarely were subject to FCC review in the past. FCC staffers can review public file compliance from their offices or homes, and do not have to rely on the rare field inspection to discover a violation. Thus, stations should be reviewing the contents of their files now to be sure that they are ready for the scrutiny that they will receive in the upcoming renewal cycle. But that is not the only issue about which stations need to be concerned, as illustrated by a decision released by the FCC yesterday, deciding to hold an evidentiary hearing as to whether the license renewal of a broadcast station that had been silent much of the last license renewal term should be granted.

In the Hearing Designation Order released May 7, the FCC went through the history of a Wyoming radio station that had operated for only days during its last license term, and since then had each year operated for only a few days each year to avoid forfeiting its license under Section 312(g) of the Communications Act (which says that the license of a station that is off the air for more than a year is forfeited unless the FCC finds that the public interest calls for an exception – see our articles here and here). Only since last August, well past the end of the license renewal term under review, did the station come back on the air on a full-time basis. The FCC asks the station’s licensee to produce all records of how it served the public interest during the renewal term (including all logs and records of EAS tests) and otherwise provide evidence as to why its renewal should be granted.

We wrote here about the FCC launching a similar hearing proceeding for another station last year, and about a number of other cases where the FCC has imposed short-term renewals or other penalties on stations that had a history of long periods of silence during the license term (see our articles here and here). While the FCC’s dividing line between stations that get a short-term renewal and those that get designated for hearing and possible loss of license is not entirely clear, yesterday’s decision reinforces the warning to broadcasters who currently have silent stations that they need to get those stations operational as soon as possible so as to be able to demonstrate a record of public service during the current license term so as to justify a renewal when their applications are filed during this upcoming renewal cycle.

The renewal cycle starts next year. The time for getting into compliance is now, as last minute fixes may not solve all problems – and that last minute may already be upon or be imminent for many stations.

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.

May Regulatory Dates for Broadcasters – FCC Meeting, FM Translator and LPTV Filing Windows, Political Windows and More Consideration of Music Reforms

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David Oxenford

By: David Oxenford, Wilkinson Barker Knauer LLP,
BroadcastLawBlog.com

May is one of those months where there are neither deadlines for EEO Public File Reports nor for any of the quarterly filings of issues/programs lists and children’s television reports. But the lack of these routine filing deadlines does not mean that there are no dates of interest in the coming month to broadcasters and other media companies. As seemingly is the case every month, there are never times when Washington is ignoring legal issues potentially affecting the industry.

May 10 brings an FCC meeting where two items of interest to broadcasters will be considered. One is a proposal to abolish the requirement for posting licenses and other operating authorizations at a broadcaster’s control point and to eliminate the requirement that FM translators post information about the station’s licensee and a contact phone number at their transmitter sites (see our post here for more details). The second is a proposal to modify the processing of complaints about new or modified FM translators causing interference to existing stations. See our summary of that proposal here. If adopted at the May 10 meeting, these proposals will be available for public comment after they are published in the Federal Register.

The process that will lead to the issuance of construction permits to some of those new FM translators is still underway, as the window runs from May 24 through June 14 for filing settlements or engineering resolutions for mutually exclusive applications filed in the second window for AM stations to obtain authorizations for new FM translators (see our article here). Translator applications that cannot resolve their mutual exclusivity during this window will end up in an auction. Applications that were not mutually exclusive with any other application filed in this second window have until May 9 to file their “long-form” applications detailing the technical facilities that they plan to build out once their construction permit is granted (see our article here).

TV translators and Low Power TV stations also are in the middle of their own window for submitting displacement applications by those stations that either operate on TV channels above Channel 37 (which will no longer be part of the TV band after the repacking following last year’s incentive auction) or on channels subject to new interference from full-power and Class A TV stations that were repacked onto new channels. That window is now open, and TV translators and LPTV stations have until June 1 to find new channels and submit applications for those channels to the FCC. See our articles here, here, and here for more information.

Comments in another FCC rulemaking, the one looking to do away with the requirement for the filing with the FCC of the Form 397 EEO Mid-Term Report were due April 30, with replies due on May 15. The FCC suggested that this is no longer necessary, as all the information required by the Commission is already in station’s online public file. See our article here summarizing that proposal.

In May, there will also be activity at other government agencies that broadcasters and other media companies should be watching. We summarized here the Music Modernization Act passed by the House of Representatives last week. That bill is supposed to get a hearing in the Senate on or about May 16 looking toward the possible passage of that legislation by the Senate.

The Federal Election Commission, in a rulemaking that it is conducting, is looking at requiring sponsorship identification on online audio and video political ads in the same format as those found on radio and TV ads (including the “I’m John Smith and I approved this message”). Comments on proposals made in that rulemaking are due May 26. We’ll have more on that proceeding later this week. Speaking of political broadcasting, stations in many states will soon be in lowest unit rate windows, if they are not already, for primary elections occurring this summer (see our article here on your LUC obligations). Watch for those windows as they come up in your state, and remember all of the political obligations that arise not only during the window, but as soon as you have legally qualified candidates (see our article here). For more information on the FCC’s rules on political broadcasting, you can check out our Political Broadcasting Guide here.

For a month without any of the “standard” FCC obligations, there are still lots of issues for broadcasters to consider. Make sure you pay attention to any of these issues that may affect you, and to any that are unique to your own station.

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.

With April Fools’ Day Coming Up, Plan Your On-Air Pranks with Care – Remember the FCC Hoax Rule

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David Oxenford

By: David Oxenford, Wilkinson Barker Knauer LLP,
BroadcastLawBlog.com

With April Fools’ Day falling on a Sunday this year, perhaps the potential for on-air pranks is lessened. But, then again, who knows what weekend talent may be planning? So, as we do every year about this time, we need to play our role as attorneys and ruin the fun by repeating our reminder that broadcasters need to be careful with any on-air pranks, jokes or other bits prepared especially for the day. While a little fun is OK, remember that the FCC does have a rule against on-air hoaxes. While issues under this rule can arise at any time, broadcaster’s temptation to go over the line is probably highest on April 1. The FCC’s rule against broadcast hoaxes, Section 73.1217, prevents stations from running any information about a “crime or catastrophe” on the air, if the broadcaster (1) knows the information to be false, (2) it is reasonably foreseeable that the broadcast of the material will cause substantial public harm and (3) public harm is in fact caused. Public harm is defined as “direct and actual damage to property or to the health or safety of the general public, or diversion of law enforcement or other public health and safety authorities from their duties.” Air a program that fits within this definition and causes a public harm, and expect to be fined by the FCC.

This rule was adopted in the early 1990s after several incidents that were well-publicized in the broadcast industry, including one case where the on-air personalities at a station falsely claimed that they had been taken hostage, and another case where a station broadcast bulletins reporting that a local trash dump had exploded like a volcano and was spewing burning trash. In both cases, first responders were notified about the non-existent emergencies, actually responded to the notices that listeners called in, and were prevented from responding to real emergencies. In light of this sort of incident, the FCC adopted its prohibition against broadcast hoaxes. But, as we’ve reminded broadcasters before, the FCC hoax rule is not the only reason to be wary on April 1.

Beyond potential FCC liability, any station activity that could present the risk of bodily harm to a participant also raises the potential for civil liability. In cases where people are injured because first responders had been responding to the hoaxes instead of to real emergencies, stations could have faced potential liability. If some April Fools’ stunt by a station goes wrong, and someone is injured either because police, fire or paramedics are tied up responding to a false alarm, or if someone is hurt rushing to or from the scene of the non-existent calamity that was reported on a radio station, the victim will be looking for a deep pocket to sue – and broadcasters may become the target. Even a case that doesn’t result in liability can be expensive to defend and subject the station to unwanted negative publicity. So, have fun, but be careful how you do it.

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 Ending Form 397 EEO Mid-Term Report

By: David Oxenford, Wilkinson Barker Knauer LLP,
BroadcastLawBlog.com

At its meeting February 22, the FCC adopted a Notice of Proposed Rulemaking suggesting the abolition of the EEO Mid-Term Report, FCC Form 397. That form is filed at the mid-point of the renewal term of TV stations with 5 or more full-time employees and radio clusters with 11 or more full-time employees (see our post here about the form). As the content of the report is principally made up of the broadcaster’s last two EEO Public Inspection File Reports, and those reports are available in a broadcasters online public inspection file (which should be in place for virtually all broadcast stations when the final radio stations covert to the online public file next week, see our post here), the FCC concluded that there is no real reason that these reports need to be separately submitted, and thus proposed its elimination.

The Notice of Proposed Rulemaking did suggest that there were issues on which comments would be appropriate. The one bit of information that would not be readily available without the filing of the Form 397 would be which TV stations have 5 full-time employees and which radio clusters have more than 11 full-timers. That is important as Congress required the mid-term review of the EEO performance of stations meeting these employment thresholds. So the FCC asks how that information should be tracked. It is also noteworthy that the FCC will continue to conduct the EEO mid-term review of stations meeting these employment thresholds even without the filing of the Form 397 reports.

As the FCC says that they will continue to conduct that mid-term review, it is interesting that the FCC also asks in the NPRM what other EEO review should be conducted to assess the EEO performance of stations, seemingly at the insistence of Commissioner Clyburn who feared that the abolition of the Form 397 might send the wrong message about the FCC’s commitment to EEO even if its retention served no useful purpose. Commissioner Clyburn’s comments are available here. Seemingly, as the Commission will continue to do the EEO mid-term review, and continue audits and complaint-based reviews, many methods of assessment are already in place.

Comment dates on this proposal will be set when it is published in the Federal Register. This is one more proposal for procedural reform advanced as part of Chairman Pai’s Modernization of Media Regulation Initiative. As we wrote earlier, we are looking forward to more substantive proposals in the months to come.

The First EEO Audit of 2018 With a New Wrinkle – Notifications by Email and Responses Submitted Through the Online Public File

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David Oxenford

By: David Oxenford, Wilkinson Barker Knauer LLP,
BroadcastLawBlog.com

Eight Michigan Stations on the FCC Audit List, including 2 commercial FM stations, 3 non-commercial FMs, 2 commercial TV stations and 1 non-commercial TV.

On Friday, the FCC issued a Public Notice announcing its first EEO audit of 2018. The Notice lists the almost 300 radio and television stations that will be subject to the review as well as the rules that apply to that audit. And those rules are somewhat new. First, the notice itself was not sent by mail, but instead by email – the first time that email has been used to deliver the notice of an EEO audit. Some broadcasters who received the email seemed surprised and wondered if the email really was an official FCC communication, so the FCC included verification methods in the letter including a link to the Public Notice. So, if you are listed on the Public Notice, you are subject to the audit.

Second, the procedure for responding to the audit is different. No longer does the broadcaster subject to the audit have to submit paper copies of all of its documents to the FCC through the FCC Secretary’s office. Instead, the response will be filed in the station’s online public file. The response must be uploaded to the online public file by April 12. There, the FCC can review that response (as can anyone else anywhere, at any time, as long as they have an internet connection). 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 the outreach efforts. 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 renewed or audited in the recent past.

Be sure to take care in responding to the EEO audit as the FCC will be reviewing it carefully, and issues with the audit can lead to fines. 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 your 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.

Starting Small on Media Regulation Modernization – Rule Requiring Hard Copy of FCC Rules Repealed

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David Oxenford

By: David Oxenford, Wilkinson Barker Knauer LLP,
BroadcastLawBlog.com

One of the first proposals in Chairman Pai’s initiative for the modernization of media regulation (see our post here from when the Chairman announced the initiative) was to repeal an FCC rule that many did not even know was a rule – one requiring that broadcasters who have secondary licenses maintain a paper copy of the FCC rules (surprisingly, the rule did not apply to licensees without secondary licenses for things such as boosters and translators). We wrote about the proposal to abolish this rule here. Not even waiting for the Commission meeting tomorrow at which this proposal was to be considered, the FCC issued its Report and Order February 20, repealing the rule. The Commission notes that station operators have a general obligation to be familiar with the rules that apply to their service, but there is no need to mandate a hard copy of the rules when rules can be accessed from other sources, in more current versions, electronically.

This is but one small step in removing unnecessary FCC regulation – but it is one in the right direction. We look forward to more such actions on more substantive topics 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.

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Comment Dates set on FCC Contract Filings
In an effort to modernize the rules applied to broadcasters, the FCC initiated another proceeding seeking comment on whether and how to update the requirement that licensees file paper copies of certain contracts and other documents with the agency within 30 days of their execution.  As a result of the publication of the notice of proposed rulemaking in the Federal Register, comments are due on March 19 and reply comments are due on April 2.

 

With the March 1 Deadline Looming, What Should Radio Stations Be Doing to Prepare Their Online Public File?

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David Oxenford

By: David Oxenford, Wilkinson Barker Knauer LLP,
BroadcastLawBlog.com

Many radio stations need to be considering the FCC requirement that their public inspection file be made available online in a system hosted by the FCC. From the calls I have received in the last few days, it appears that, even though the FCC adopted the requirements two years ago (see our post here), and station groups with 5 or more employees in the Top 50 markets had to covert to the online file soon thereafter, many smaller stations are only now realizing that the March 1 mandatory conversion date for all stations – commercial and noncommercial – is fast approaching.

We recently conducted a series of seminars for state broadcast associations on the online public file obligation. See the Michigan webinar here. The slides from the last of these, conducted for the Iowa and Indiana Broadcasters, are available here. In addition to those slides which provide an outline of the online public file obligations, there are many resources on the FCC’s own website about the public file. To summarize some of the last minute issues being faced by broadcasters, the Indiana Broadcasters posed 5 questions about the requirements – and our answers are shared below.

  1. If a station is starting from ‘square one’ in preparing for the Online Public File requirement that kicks in for all radio stations on March 1, what are the first couple of steps one should do immediately?
    With the March 1 deadline fast approaching for having your online file up and activated , stations should now be actively uploading the required material to the FCC file, and making sure that the information automatically uploaded by the FCC is accurate. We have already heard reports that the FCC system for hosting the online public file is running slowly, especially during business hours, making uploads difficult. That is likely to get even worse as we get closer to the March 1 deadline. So if a station has not started to get its online public file ready, it needs to do so immediately.For a station that has done nothing, it needs to start by registering to get a password for the FCC’s site that hosts the file. A station first needs to go to the “Owner Sign In” page here. Using the station’s FCC Registration Number (FRN) and password will allow it to log in and set up a passcode for the public file. If a station doesn’t know its FRN or has forgotten its password, it can call the FCC’s FRN Help Line: 877-480-3201 (Mon.-Fri. 8 a.m.-6 p.m. ET). Once the station has its passcode, a station uses that passcode to log into the FCC-hosted platform, here, and start uploading its documents.

    The FCC has a good set of Frequently Asked Questions about the online public file process here.

  2. Are all radio stations now going to be required to use an online Public File?The online public inspection file is required for all stations, commercial and noncommercial, unless the station has obtained a waiver. Few if any waivers have been granted. Unless you are a very small station with real provable issues with Internet access, I would not expect waivers at this point, so late in the game.
  3. What are the most important uploading obligations?The FCC has already uploaded many of the required documents, and those documents should be found already in the folders when you first log into the FCC’s hosting platform. The information already uploaded by the FCC includes pending applications, ownership reports, a contour map showing the stations coverage, The Public and Broadcasting procedure manual, and copies of the station’s license and renewal authorization. Look these over carefully and determine which of the FCC-uploaded documents need to be made available to the public. The FCC will upload all applications filed for your station going back many years – when only pending applications need to be made visible to the public. So you need to select which ones will be made available to the public by keeping them in the “On” position and toggling the rest to the “Off” position so that the public can’t see them. We have also heard reports that there have been instances where the FCC has not uploaded the most recent license into the authorization folder, so you should check to make sure that what has been uploaded reflects accurately your current operations.

    A station will have two sets of documents that will take a significant amount of time to manually upload. Any station that is part of a Station Employment Unit with 5 or more full-time employees needs to upload all of its Annual EEO Public Inspection File Reports, back to the start of the current renewal term for the state in which the station is located. There will likely be 4-6 of these reports, depending on the license term for the state in which the station is located.

    In addition, stations need to upload all of their Quarterly Issues Programs lists going back to the start of the license term. All stations, commercial and noncommercial, should have these reports. These are the only documents that the FCC requires to show how your station met the needs and interests of its community of license. As all of the Quarterly Issues Programs lists going back to the start of the license term need to be uploaded, you are looking at uploading more than 20 of these quarterly reports. Because there are so many, these will likely take more time than anything else to upload.

    Unlike the EEO Reports and Quarterly Issues Programs lists referenced above, the FCC has said that you only need to upload “new” political file documents (i.e. those created after the file goes live to the public). If you decide not to upload the old political documents, you must maintain all “old” political file documents in a paper public inspection file for two years from the date that the document was created. If you are thinking of no longer maintaining a main studio open during normal business hours, you may want to consider uploading all political documents now so you no longer need to maintain a paper file available to local residents.

    There are other documents commonly to be included in the file that station employees will need to manually upload. These include licensee organizational documents, contracts relating to ownership rights (e.g. options, pledges or voting proxies), and other contracts that restrict a licensee’s control over station operations (all of which are supposed to be listed on your ownership report) either need to be uploaded or included on a list of documents available for inspection upon request (with information as to how to contact someone at the station that can provide the documents within 7 days). Time brokerage or joint sales agreements need to be uploaded. And, for noncommercial stations, a list of donors contributing to support the broadcast of a specific program (as opposed to general station donors) is to be included in the public file.

    The FCC has published a complete list of all of the documents that you need to have in your file here.

  4. After uploading the documents, how long do I need to keep copies of these files? Retention periods vary for the various documents that need to be in the file. As noted above, EEO Public Inspection File Reports and Quarterly Issues Programs lists for the entire license term need to remain in the file until your next license renewal is granted. Applications need to be in the public file only until the application is granted and the grant is final (no longer subject to any appeal or review). Only the most recent ownership report needs to be in the file (as a reminder, the next biennial ownership report is due by March 2, 2018). Documents in the political file need to be maintained for two years from the date of their creation. Certain contracts and agreements (like time brokerage agreements) need to be maintained for the life of the agreement. So review the FCC’s rules on the retention of documents. In the slide deck we prepared here, many of the retention periods are provided.
  5. What advantages and disadvantages of the online file?
    The obvious advantage is that you no longer have to maintain a paper file and give physical access to your studio to anyone who wants to see the file. Of course, by putting the file online, you make the contents of the file available for review by anyone, anywhere, any time. So public interest groups and the FCC itself can use it to assess your compliance – including looking at electronic date stamps on documents to determine whether documents were timely included in the file. Late filings could become a real issue for documents like Quarterly Issues Programs lists which were rarely, if ever, reviewed by the FCC when they were kept in the paper public file. Remember, on the next renewal application, you will likely be asked to confirm that you placed all required materials in the public file on time. The FCC and the public will now know whether your response is accurate or not.

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The March 1 deadline is fast approaching. If you have not already completed the process and made your file available to the public, start working on that file soon. It will take longer than you think, so don’t run out of time to comply.

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.