Category Archives: Legislative Update

FCC Updates Foreign Ownership Compliance Rules

At the FCC’s open meeting on September 29, the agency adopted new policies for computing foreign ownership of broadcast companies. The Commission’s Report and Order on this subject deals with how companies assess compliance with the rules, which limit foreign ownership to 20% of a broadcast licensee and 25% of a holding company, unless there is a finding by the FCC that the public interest is not harmed by a greater foreign ownership interest.

Under the new rules, rather than assuming that there was a compliance issue because a company cannot prove that its foreign ownership was less than 25%, the FCC will now conclude that there is an issue only where a company, based on knowledge either that it has or should have, actually knows that there it has a foreign ownership compliance problem.

Tell us what you think about the FCC action and easing up on the calculation of foreign ownership with your comments below.

FCC Announces Phased TV Repack Plan

According to a report in RBR-TVBR, the FCC released a public notice announcing that the agency’s Media Bureau is developing a plan for a “phased” post-incentive auction repacking transition schedule. The Media Bureau is tasked with the creation of construction deadlines within the 39-month post-broadcast incentive auction transition period for TV stations assigned new channels in the repacking process.

The proposal calls for stations to be assigned to “a limited number of transition phases.” The phases will all begin at the same time, but will have sequential end dates.

The key highlights of the phased transition include:

    • A station cannot cause more than 2% new interference to another station during the transition.
    • There will be no more than 10 transition phases. The phase completion date will be the date listed in each station’s construction permit as its construction deadline and will be the last day that a station may operate on its pre-auction channel. This approach takes into account international obligations and an agreement to undertake in a joint repacking with Canada.
    • All stations within a DMA will be assigned to no more than two different transition phases.
    • The difference in the number of stations in the largest transition phase and the smallest transition phase will be no more than 30 stations.
    • No phase can have more than 125 linked-stations.

Comments on the Public Notice are due October 31. Reply comments are due November 15.

Congress Amends Communications Act and Passes FCC Reform Bills

According to a report in AllAccess, Congress has passed an amended Communications Act, which includes two FCC reform bills. These are: the FCC Process Reform Act (H.R. 2583), and the FCC Consolidated Reporting Act (H.R. 734).

House Communications and Technology Subcommittee Chairman Greg Walden (R-OR) said, “This legislation is further evidence of our dedication to advancing thoughtful solutions that empower consumers and small businesses, make the FCC more transparent and enhance our public safety communications networks. The Communication Act Update of 2016 lays an important foundation as we work to update our laws for the innovation era.”

AG Schuette Joins Lawsuit Against Department of Labor Overtime Rules

Attorney General Bill Schuette has joined a lawsuit challenging new federal regulations on overtime for workers. The regulations, which go into effect on December 1, would raise the annual salary threshold at which professional employees are eligible for overtime, from $23,660 to $47,476 a year. Nineteen other states joined the lawsuit filed in a U.S. District Court in Texas.

The U.S. Department of Labor has said increasing the threshold would make another 4.2 million workers eligible for overtime. In Michigan, this means 101,000 employees, or 2.5 percent, of all workers, would be eligible for overtime under the new rule.

The AG’s office released a statement saying that “the attorney general is suing on behalf of the people of the state of Michigan because this rule could have a significant impact on taxpayers and job creation.”

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.