Category Archives: Legislative Update

Demands to Pull Attack Ads in the Closing Days of the Election – What is a Station to Do?

David Oxenford - Color
David Oxenford

By: David Oxenford, Wilkinson Barker Knauer LLP

As we approach Election Day, the political ads seem to be getting more and more frequent, and often more and more nasty. We provided an overview of what a station should do when it gets an attack ad two years ago, and the ads have not become kinder in the intervening period, so we will publish it again (with a few revisions). With the rise in the number of attack ads in this last week before the election, stations are facing more and more demands from candidates who are being attacked, asking that the ads be pulled from the airwaves because the content is not truthful or otherwise presents a distorted picture of reality. What do stations do when confronted with these claims?

We have written about this issue several times before (see, for instance, our articles here and here). In some cases, the stations can do nothing – if the attack is contained in an ad by a candidate or the candidate’s authorized campaign committee. If a candidate in his or her own ads attacks another candidate, the station cannot pull the ad based on its content. Ads by candidates and their authorized campaign committees are covered by the Communication Act’s “no censorship” provision, meaning that the station cannot (except in very limited circumstances) pull the ad based on its content (see more on the “no censorship” provision here). Because the station cannot pull the ad based on its content, the station has no liability if the candidate’s attack ad defames their opponent. In fact, we have heard of cases where a non-candidate group runs an attack ad containing claims that the target of the ad claims are untrue, where stations pull the ad, and where the claims soon reappear in the ads of the candidate who the third-party supported. When they objectionable claims are in a candidate’s own ads, the only remedy of the candidate that is being attacked is to sue the candidate who ran the ad. But what about allegedly false claims made in ads by third parties – like PACs, unions, political parties or other non-candidate groups?

Stations must take seriously any claim that a political ad that they are running is false, particularly where there is legal action threatened if the ad is not pulled from the airwaves. The Communications Act’s “no censorship rule” does not apply to third-party ads, only to candidate ads. Thus stations can pull a third-party ad because of its content. While stations need not fact- check every ad they receive, if an ad is defamatory – spreading falsehoods about a recognizable individual – it could result in civil liability to the station. Under Supreme Court precedent, statements made about public figures (such as political candidates) can be found defamatory only if the person or entity that is distributing them either knew that they were false or distributes them with “negligence,” e.g., where they had notice that the ads were false, yet they continued to distribute the false material anyway. Thus, if a station does not know that a claim in a third-party ad is false, but it is put on notice about the falsity (e.g., by a letter from an attorney representing the party being attacked), the station needs to take steps to investigate the truth of the ad.

If the station ignores a demand letter claiming that an ad is false, and keeps running the allegedly false ad anyway, and the ad is in fact false and defamatory, there is potential liability to the station. Stations should ask the sponsor of any attack ad for documentation backing up their claims, review the supporting material to see if it in fact backs up the claims made, and consult with their attorneys to determine if it is likely actionable. There are often no clear answers, so broadcast companies need to talk to their attorneys and make their own assessment of the risk of liability for continuing to run a third-party ad claimed to be untrue. Typical political claims (e.g. “candidate X is a big-spending liberal” or “candidate Y doesn’t care about our kids as he has voted against school funding increases 12 times”) are less likely to be actionable than are claims about the character, integrity and similar personal qualities of a candidate (e.g., a claim that a candidate did something illegal).

The FCC itself is not a fact checker of claims made in political ads. Many times letters demanding that attack ads be removed from the air suggest that running these ads somehow violates the FCC rules about stations operating in the public interest. Sometimes the demand letters even claim that the ads violate FCC rules against false and deceptive advertising – even though it is the FTC, not the FCC, which deals with deceptive ads. But even the FTC is not routinely involved with the political advertising process, given that the involvement of any government agency is assessing the truth or falsity of any political ad is so fraught with First Amendment issues. Generally, we don’t want a government agency deciding what is true in political ads and what is not. Thus, these questions are left to private actions for defamation.

While defamation actions against broadcasters for not pulling an attack ad are not common, there have been a few broadcast stations sued. These are stations that kept running an allegedly false political ad which they had been told was false. You don’t necessarily want to go to the time and expense involved in any such litigation, so assess these claims with your attorney once they come in. Many of these demand letters seem to be sent more to intimidate stations into pulling ads in the last few days before an election than to advance real legal claims, but you need to carefully review all the demands to make sure that the ones that you receive don’t have merit. Consult your attorney, as these are sometimes not easy calls to make.

For more on various political broadcasting issues, see our Political Broadcasting Guide, 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.

C-Band Filing Window Extended

The FCC has announced that it is extending the C-Band earth station filing window by two weeks to October 31 because the “large influx of earth station applications filed near the deadline” is causing “intermittent difficulties” that have prevented some stations from filing.  The FCC is trying to determine what users are in the C-Band (aka the 3.7-4.2 GHz band) as it is trying to maximize its use and may want to consolidate or otherwise modify protections afforded to existing users. Any user not registered by the deadline may not be protected against any future users of the spectrum.

Opposition Campaign to Redistricting Measures Finally Takes to the Airwaves

With over two weeks left before the November general election, opponents of the redistricting Proposal 18-2 put out the first radio ad in opposition to the measure. The ad calls Proposal 2 a “complicated confusing mess” that “will cost you an insane amount of money.”

Proposal 2 would create a citizen’s commission to draw district lines for the Legislature and the Congress. The one minute ad was released to go statewide on radio stations.

A recent analysis from the Senate Fiscal Agency (SFA) estimated the cost for the commission to complete its tasks at $4 million. The proposal also says the commissioners will be paid at least 25 percent of the governor’s salary, which the SFA estimated to be slightly less than $40,000. The proposal also requires that once a districting map is completed the commission expires.

FCC Seeks Comments on Reimbursable Repacking Expenses for LPTV, TV Translators, and FM Radio

David Oxenford - Color
David Oxenford

By: David Oxenford, Wilkinson Barker Knauer LLP

On October 22, the FCC released a Public Notice asking for comments on a “Catalog of Expenses” that would be reimbursed to licensees of LPTV and TV translator stations, as well as FM broadcasters, who are impacted by the repacking of the TV spectrum following the TV incentive auction. We wrote here about the FCC’s Notice of Proposed Rulemaking looking to establish rules for that reimbursement process (note that reply comments in that proceeding are due October 26). What this Notice does is put out for review the FCC’s best guess as to what it would cost to accomplish certain tasks caused by the repacking – whether it would be for replacement equipment or necessary professional services. The Catalog sets out an expected price range. If a licensee’s costs fall outside the estimated price range, before any reimbursement could be made, additional documentation and justification would be required.

Thus, these estimates are important to ease the reimbursement process. Any licensees who are likely to have to rely on this reimbursement should review the estimates and comment if they think that the FCC has missed the mark. Comments are due by November 21, with replies due December 6.

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.

NAB Lobbies Against STELAR

The National Association of Broadcasters (NAB) circulated a policy paper on Capitol Hill advocating for not renewing the STELAR law (Satellite Television Extension and Localism Act) when it expires at the end of 2019. STELAR, which was last renewed in 2014, reauthorizes the satellite compulsory distant signal license for five years. The 2014 version contained cable-friendly changes to retransmission consent, including renewing the FCC’s enforcement of good faith retransmission negotiations and extending the agency’s prohibition on coordinated retrans negotiations among non-commonly owned TV stations in a market from the top four to all stations.

NAB says it expects MVPDs to push for renewal, but contends there is no justification for compelling the out-or-market carriage to broadcast affiliate-unserved homes given that that number is dropping and in all 210 markets DISH and DirecTV are providing local-into-local TV station carriage.

State Wants Study on Health Insurance Market

State Officials at the Department of Insurance and Financial Services (DIFS) are calling for bids on a study of Michigan’s health insurance market with the goal of both stabilizing the market and lowering overall costs. In a statement, DIFS Director Patrick McPharlin said the “goal is to study options that could have a meaningful impact on reducing health insurance premiums while ensuring coverage is comprehensive and accessible.”

The study will affect Michigan’s decision on seeking a Section 1332 waiver allowed under the Affordable Care Act (ACA). A waiver under that section allows a state to be exempted from ACA requirements if it can show the state can do a better job of meeting the ACA’s goals and not cost the federal government any more money. Several states, including Wisconsin and Minnesota, are operating under Section 1332 waivers.

Michigan Gubernatorial Race Ranks 6th In TV Spending

Democrat Gretchen Whitmer/Republican Bill Schuette

Michigan’s governor race has generated $18 million in broadcast television spending, according to Advertising Analytics.

Michigan ranks sixth among the states for most money spent in a gubernatorial race.  Illinois takes the top spot at $50 million, which is far and above the rest of the nation by $21 million.

Second place at $29 million is Florida, followed by Ohio ($27 million), Wisconsin ($24 million) and Nevada ($20 million) with three weeks of spending to go.

Overall, broadcasting stations have enjoyed a $168 million windfall in advertising revenue.

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

David Oxenford - Color
David Oxenford

By: David Oxenford, Wilkinson Barker Knauer LLP

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

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

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

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

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

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

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

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

FCC Extends C-Band Registration Deadline to October 31

On October 17, the FCC, at the last minute, extended the deadline for those who wish to register their C-Band satellite receive dishes.  Tom Taylor, in his daily news mailing, writes: “the Commission acknowledges ‘intermittent difficulties.’ It says ‘due to the large influx of earth-station applications filed near the deadline, the IBFS [International Bureau Filing System] has experienced intermittent difficulties that have prevented some applicants from filing for a license or registration.” The new deadline – this is its second extension – will be October 31.

Taylor also notes: “The urgency here is that syndicators and other suppliers who send content to affiliates via satellites using the 3.7 GHz to 4.2 GHz spectrum worry that sharing it with wireless carriers will mess up reception. Once that happens, there’s no fixing it. Syndicators (and stations) hope that demonstrating the large number of current users will make the FCC cautious about changes. See the “Two week extension” notice  here.”

FCC Releases Draft Order to Eliminate Broadcasters’ Obligations to File Contracts

According to the Broadcast Law Blog, the FCC released its draft order proposing to eliminate the requirement that broadcasters file certain contracts relating to ownership and control with the Commission. The disclosure of the documents can be made by either (1) uploading the documents to the station’s online public file, or (2) making available a list of the required documents in the online public file with the documents themselves provided within 7 days to anyone who requests them, including the FCC.

Among the documents that are required to be in the public file are those showing the governance of the license entity (e.g., articles of incorporation and bylaws); options and other documents related to future ownership rights; joint sales and time brokerage agreements; and television network affiliation agreements.

In the draft order, the FCC requires that such documents be included in the online public file (either in full or by inclusion on the list) within 30 days of execution, or within 30 days of any amendment or other modification of the agreement. If only a list of the documents is provided in the file, all the information that is required on an Ownership Report, where such documents are listed, would be required – including the name of the parties involved and the execution and expiration dates of the agreements.