Category Archives: Legislative Update

September FCC Open Meeting Items

via Rick Kaplan, General Counsel and Executive Vice President, Legal and Regulatory Affairs, National Association of Broadcasters

There are two items of particular note for broadcasters from the September 29 FCC open meeting. The first, the FCC’s proposal designed to open up the MVPD set-top box marketplace, actually did not result in a vote. While the Chairman had adjusted his initial proposal substantially to meet a number of objections (including from NAB), Commissioner Rosenworcel apparently was still not comfortable with where the draft order was at the time of the meeting, so the Chairman was forced to pull it from the agenda. Commissioner Clyburn supports the Chairman and the two Republican Commissioners whom oppose his plan. The item remains under consideration, although it’s not clear if it will be voted soon or if it will linger for some time.

One proposal that did come to fruition that is a “plus” for broadcasters is the FCC’s order modifying its broadcast foreign ownership rules and policies. While the full text of the order has not yet been released, the meeting presentation and press release indicate that the changes adopted today will permit broadcasters to seek approval for foreign investment using the streamlined processes that are in place for other communications outlets and also will simplify the requirements for compliance with the foreign ownership limits. Below are some of the key modifications adopted:

Foreign Ownership Approval Process

  • Broadcasters can use the same procedures for obtaining approval for foreign investment that have been available to wireless licensees since 2013. The approval process involves the filing of a “Petition for Declaratory Ruling” under Section 310(b)(4).
  • Broadcasters can now file Petitions seeking Commission approval for:
    • up to and including 100 percent aggregate foreign ownership of its controlling U.S. parent;
    • a proposed, controlling foreign investor to increase its equity and/or voting interests in the U.S. parent up to and including 100 percent at some future time without filing a new petition—this applies where the foreign investor would acquire an initial controlling interest of less than 100 percent; and
    • a non-controlling foreign investor named in the petition to increase its equity and/or voting interests in the U.S. parent at some future time, up to and including a non-controlling 49.99 percent equity and/or voting interest.
  • Broadcasters are only required to disclose in their in Petitions for Declaratory Ruling those parties that hold attributable interests.

Calculating Compliance

  • Publicly traded broadcasters are no longer expected to conduct shareholder surveys.
  • Publicly traded broadcasters are now expected to use “reasonable” measures to assess the citizenship of reasonably identifiable shareholders.
  • The Commission has eliminated its existing presumption that all unidentifiable shareholders are wholly foreign. Rather, where citizenship is not and cannot reasonably be known, the Commission’s new standard effectively applies the citizenship ratio of identifiable shareholders.

Judge Rejects DOJ Ruling on Music Licensing

The judge for the U.S. District Court in Manhattan rejected a music licensing ruling made last month by the Justice Department, writing that the interpretation of the consent decree was inaccurate. In his decision, Judge Louis L. Stanton ruled that the Justice Department (DOJ) erred when it issued a detailed interpretation of a regulatory document known as a consent decree. The document has long governed Broadcast Music Inc. (BMI).

After a two-year investigation, the antitrust division of the Justice Department decided that BMI and the American Society of Composers, Authors and Publishers (ASCAP) were required to issue ‘100 percent licenses’ for the songs in their catalogs. The DOJ decision was seen as a victory for broadcasters and for digital music providers like Google and Pandora.

100% licensing means that, if a song was licensed as part of the repertoire of ASCAP or BMI, the licensee would get rights to all of that song, even if there were multiple songwriters, some of whom were not affiliated with ASCAP or BMI. This interpretation was rejected by Judge Stanton, the Judge who oversees the BMI consent decree. His decision can be found on the BMI website here.

The music industry welcomed the court ruling, but the Justice Department is reviewing the order and an appeal is possible.

U.S. Senate Commerce Committee: FCC Oversight Hearing Recap

Last week, the Senate Commerce Committee held a three-hour oversight hearing of the Federal Communications Commission (FCC) with all five Commissioners present. Below is a quick recap from the NAB of the broadcast-relevant issues that arose during the committee.

Set Top Box (STB):  Chairman John Thune (R-SD) and Ranking Member Bill Nelson (D-FL) criticized the current FCC proposal. Specifically, Senator Nelson urged the agency to proceed with caution and to allow for appropriate time to reach industry consensus on the outstanding copyright and contractual concerns with the current proposal. Chairman Thune voiced concerns with previously ‘misleading’ statements from Chairman Wheeler insisting that MVPD programming contracts would be left alone from Commission scrutiny.

Cross-Ownership Rules:  Chairman Thune voiced concern with the Commission’s failure to eliminate the newspaper-broadcast cross-ownership rules in its recent Quadrennial Review order. Senator Roy Blunt (R-MO) expressed ongoing concern with the FCC’s treatment of both JSAs and SSAs in the recent order. In response to Senator Blunt, both Commissioner’s Pai and O’Reilly shared concerns with the Senator that they perceive these actions from the Commission as the first step to prohibiting future sharing arrangements.

ATSC 3.0:  Commissioner Ajit Pai urged the Commission to initiate a rulemaking on ATSC 3.0 before the end of the year.

Retransmission Consent:  Senator Claire McCaskill (D-MO), whose Permanent Subcommittee on Investigations held a hearing and issued a comprehensive report earlier this year that was highly critical of MVPD billing practices, confirmed her intent to hold a successor hearing on the consumer impact of programming contracts.

AM Radio:  Senator Steve Daines (R-MT) expressed concern with AM radio power issues, and urged the Commission to work on measures to protect the medium.

House Votes to Open Legislative, Governor Records

Legislation expanding the Freedom of Information Act to mostly open up legislative and the governor’s documents passed the Michigan House of Representatives. The 10-bill package mostly ended the exemption the governor has always had from the Freedom of Information Act and created the Legislative Open Records Act (LORA) that declares what records of the Legislature would become newly public and what would remain exempt.

In terms of the governor’s office, exemptions include materials regarding appointments until after the person was appointed, materials regarding the suspension or removal of a public officer until after the person was removed or suspended, pardons and commutations, budget recommendations, executive order budget cuts or special messages to the Legislature.

Under LORA, constituent communications are exempt along with personnel records that are personal in nature, such as human resources files; records relating to an ongoing internal or legislative investigation or litigation; advisory communications within the public body or between public bodies; trade, commercial or financial records provided confidentially to assist in public policy; communications regarding bill drafting; sergeant-at-arms security issues and auditor general records; and records exclusively maintained by legislative caucuses.

Senate Transportation Committee Passes Drone Legislation

capitol3The State of Michigan Senate Transportation Committee unanimously passed Senate Bill 992 last week. The legislation allows a person authorized by the Federal Aviation Administration (FAA) to operate unmanned aerial systems (aka drones) for commercial purposes in a manner consistent with the authorization. The legislation also bars local municipalities from enacting ordinances that regulate drone ownership or operation. The bill leaves some flexibility for the local government entities to regulate how the drones may be operated within their own municipality.

The MAB, along with the Michigan State Police, Michigan Telecommunication and Cable Association and Michigan Association of Realtors supported this legislation. The MAB believes that this legislation is a balanced approach to regulating drone use. The bills recognize the growing economic and commercial use of the unmanned aerial vehicles across a wide variety of industries including, in our case, broadcasting. The legislation also balances the need for privacy and other considerations by prohibiting knowing and intentional harassment-type practices that interfere with the official duties of the first responders.

SB 992 recognizes the Federal Aviation Administration as the governing agency when it comes to regulating the use of the nation’s airspace.

September Regulatory Dates for Broadcasters

According to the Broadcast Law Blog, several dates in September are of particular importance to broadcasters. The lowest unit rate window started on September 9. This means that commercial broadcasters should be offering the lowest unit charges to political candidates because of the 60-day window before the November election. Annual regulatory fees for all commercial broadcasters are due by September 27. Any commercial broadcaster that cumulatively owes more than $500 must file its fees by that date. On September 28, the FCC will conduct its second nationwide test of the EAS system. This is the first test that will use, not only the over-the-air “daisy chain” system of transmitting alerts by passing them through over-the-air station-to-station transmissions, but also will test the Internet-based CAPS system. The FCC open meeting is scheduled for September 29, and the agenda includes set-top boxes, ways to promote independent video programming and relaxing foreign ownership rules.

FCC Reverse Auction – Stage 2

fcc-logo_dark-blueSeptember 13 marked the beginning of the second stage of the television incentive auction. The FCC is now trying to clear 114 MHz of TV spectrum to repurpose for wireless uses. If the auction is successful in clearing this target, channels 31 and below will remain in the TV band. Adding more channels to the TV band allows more stations to be repacked in their pre-auction band, the FCC explained in the public notice. This means that stations that were provisionally winning after Stage 1 will become “unfrozen” in Stage 2, and will be presented decreasing price offers during the bidding rounds. This process will result in lowering the overall costs of clearing spectrum for wireless use. The Public Notice also includes a warning that any broadcaster who filed an application to potentially participate in the auction is still bound by the rules against prohibited communications.

Committee Votes to Amend FOIA

capitol3The Michigan House Oversight and Ethics Committee unanimously voted in support of HB 5826. This legislation amends the Freedom of Information Act (FOIA) to prohibit a public body, that receives a request for information, from commencing a civic action under the act, against the requesting person or entity.

The intent of the bill is to address the chilling affect that may occur if public bodies are allowed to sue citizens, or news organizations, for exercising the right to seek information about the actions of publicly elected officials. The bill now moves to the House Floor for a vote.

FCC Votes to Eliminate UHF Discount

According to a new NAB press release, the FCC released an order, approved by a 3-2 vote, eliminating the UHF discount portion of the national TV ownership cap. The agency found that the digital transition had removed the justification for the discount.

Also, as proposed, the FCC’s order provides certain grandfathering for TV station groups that will exceed the 39% national audience cap without the UHF discount. Specifically, the following combinations will be grandfathered: (1) those in existence on September 26, 2013 (i.e., the date of release of the FCC’s proposal to eliminate the UHF discount); (2) those created by a transaction that had received FCC approval on or before September 26, 2013; and (3) those proposed in applications pending before the FCC on September 26, 2013. Any grandfathered ownership combination that is subsequently sold must comply with the national cap in existence at the time of the transaction.

Michigan Listed as Key Presidential State

According to a report by The Hill, Michigan is listed as one of 11 states that will decide the presidential election.

The analysis observes that Trump is spending a “modest sum” on TV advertising in Michigan, while Democratic nominee Hillary Clinton has 29 field offices in Michigan. Michigan contains 16 electoral college votes. At least 271 are needed to win the presidency.