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January 2016

Pillsbury’s communications lawyers have published FCC Enforcement Monitor monthly since 1999 to inform our clients of notable FCC enforcement actions against FCC license holders and others. This month’s issue includes:

  • TV Licensee Agrees to Pay $18,000 for Public Inspection File Violations
  • FM Translator Licensee Faces $9,000 Fine for False Certification and Unauthorized Operation Violations
  • AM Station Licensee Pays $10,000 to End Investigation into Alleged Ownership Violations

Mistakes Over Off-Air Time in Public Inspection File Cost TV Licensee $18,000

The FCC’s Media Bureau entered into a Consent Decree with a Las Vegas Class A television licensee to resolve an investigation into whether the licensee violated the FCC’s Rules by improperly indicating  on four Children’s Television Programming Reports and TV Issues/Programs Lists that it was off-air, and failing to prepare mandatory certifications of Class A eligibility for over five years.

Section 73.3526 of the FCC’s Rules requires each commercial broadcast licensee to maintain a public inspection file containing specific information related to station operations. Subsection 73.3526(e)(11)(iii) requires TV licensees to prepare and place in their public files a Children’s Television Programming Report for each calendar quarter showing, among other things, the efforts made during that three-month period to serve the educational and informational needs of children.  In addition, Subsection 73.3526(e)(11)(i) requires TV licensees to place in their public file, on a quarterly basis, an Issues/Programs List that details programs that have provided the station’s most significant treatment of community issues during the preceding quarter.  Also, Subsection 73.3526(e)(17) requires each Class A television station to include in its public file documentation sufficient to demonstrate that it continues to meet the Class A eligibility requirements as set forth in Section 73.6001.

On May 28, 2014, the licensee filed its station’s license renewal application. In the process of evaluating the application, FCC staff found that the licensee indicated the station was off-air in its Children’s Television Reports and Issues/Programs Lists for two quarters during which it was on the air for a portion of the quarter, and for two quarters during which the station did not have Special Temporary Authorization (“STA”) to go off-air.  In addition, the station failed to prepare any Class A certifications during its license term, which began in the third quarter of 2009.

The licensee explained that it had mistakenly indicated that the station was off-air in the Children’s Television Reports and Issues/Programs Lists filed for the last three quarters of 2010 because its compliance official mistook the station’s engineering STA for an STA to go off-air. With regard to the first quarter 2012 reports, the licensee explained that the compliance official mistook another station’s STA to go off-air for this station’s STA.

To resolve the investigation, the licensee admitted to the violations and agreed to pay an $18,000 fine. The licensee also agreed to a two-year compliance plan, which directs the licensee to institute management checks, training, and other measures designed to prevent a re-occurrence of the violations.   Despite the imposition of a fine and compliance plan, the FCC renewed the station’s license, finding that the licensee met the minimum qualifications to hold an FCC license, and that grant of the license renewal application was in the public interest.

FCC Proposes $9,000 Fine for FM Translator Licensee Based on False Certification and Unauthorized Operation Violations

The FCC’s Media Bureau proposed to fine a Texas FM translator licensee $9,000 for falsely certifying in a license application that its translator was constructed as specified in its construction permit, and for operating the translator at variance from its license. The FCC also admonished the licensee for including incorrect information in a related application.

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Despite a three-hour delayed opening of the federal government courtesy of the aftermath of Winter Storm Jonas, the FCC, in today’s Open Meeting, adopted rules requiring that radio broadcast stations, as well as satellite radio (i.e., Sirius/XM), direct broadcast satellite providers (i.e., DirecTV and DISH), and most cable television systems, migrate their public inspection files to an FCC-hosted online database.

The FCC has only published a brief Public Notice describing its action, but there will be more details available when the full Report and Order is released, perhaps as soon as tomorrow.  The Public Notice does however clarify that important exemptions that appeared to have gone missing when the Chairman wrote about the proposed requirement in a blog post a few weeks ago (which we discussed here) have since been added, due in  large part to the efforts of the NAB and state broadcasters associations pushing for such exemptions.  Importantly:

  • Only commercial broadcast radio stations that are in Top 50 radio markets and that have at least five full-time employees will need to comply with the new rules when they first become effective.
  • All other radio stations will have two years to commence complying with the new rules, although they are permitted to move online earlier if they wish to do so voluntarily.

The biggest news in the FCC’s Public Notice appeared to be the statement that the FCC would “permit entities that have fully transitioned to the online public file to cease maintaining a local public file, as long as they provide online access to back-up political file material via the entity’s own website if the FCC’s online file database becomes temporarily unavailable.”  For radio stations that have had to remain on constant alert to escort random station visitors inside their facilities to review the “paper” public file (with all the attendant security risks that represents for a media outlet), this regulatory relief was welcome, and had been championed in the proceeding by all 50 state broadcasters associations.

However, the celebration turned out to be potentially premature, as later in the day, the FCC released the commissioners’ individual statements, and Commissioner O’Rielly’s separate statement lamented that:

Unlike cable and satellite operators, commercial broadcast licensees will not have the immediate option of transitioning to an online-only public file, due to the Commission’s rule pertaining to the correspondence file that arguably cannot be made available online for privacy reasons. I very much appreciate the Chairman’s attention to this important issue and commitment to move forward on a proposal to eliminate correspondence file requirements so that broadcasters, too, can have an online-only option for public file requirements.

So it will take a bit longer before radio stations can say goodbye to their paper public files, but it looks those local files’ days may be numbered.

Another spot of relief is that political file material will need to be uploaded only on a going forward basis.  Historical political information can be retained in paper format until the expiration of the two-year retention period applicable to such documents.  However, stations must have a back-up political file, either in paper or on their websites, in case the FCC’s public file database goes down and the information becomes unavailable from the FCC.

As is the case for television stations, which began moving their public inspection files online in 2012, those covered by today’s order will only need to upload items that are not already electronically filed and available on the FCC’s website.  As a result, documents like ownership reports and most facility modification applications should be automatically loaded into a station’s online public file by the FCC.

The order will apparently include some accommodations for small cable systems as well.  Systems with fewer than 1,000 subscribers will be completely exempt from the online public file requirement, and systems with 1,000-5,000 subscribers will have a two-year phase-in period for their political file material.

Unfortunately, the Public Notice does not indicate exactly when the rules will take effect—an important detail for licensees operating commercial radio stations in the Top 50 markets with five or more full-time employees.  When TV station public files went online, the FCC set the deadline at 30 days following publication of a notice in the Federal Register that the Office of Management and Budget had approved the information collection aspects of the rule.  If this order follows a similar timeline, the new rules wouldn’t likely become effective until sometime in the second quarter of this year.

Over the years, many have criticized the public file as being of little interest to the viewers and listeners it was originally meant to inform, noting that it has instead become merely a source of federal revenue due to the stiff fines imposed by the FCC for violations of the public file rule.  The FCC’s view, however, is that more members of the public will review the file if it can be accessed online, following the motto “upload it, and they will come.”  Whether that is true, the FCC commissioners clearly see the online public file requirement as an effort to move the FCC’s rules into the 21st century.  Broadcasters in particular are hoping that it is the beginning of a much broader effort to bring the FCC’s rules into the 21st century, and many would like to suggest that the FCC next move on to its multiple ownership rules.

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In a Report and Order that has been in the making since at least 1998, the FCC yesterday adopted new ownership reporting forms for both commercial and noncommercial broadcast stations. The FCC’s goal in adopting these new forms is to enhance the completeness and accuracy of its broadcast ownership data by (i) again imposing a unique identifier for each attributable interest holder—one that is tied to that individual’s Social Security Number (SSN); (ii) collecting race, gender and ethnicity data from noncommercial licensees as it has for some time now from commercial licensees; and (iii) consolidating the noncommercial biennial ownership report filing deadline with that of biennial ownership reports for commercial broadcast stations, which will now be December 1 of odd-numbered years for both commercial and noncommercial stations. In the process, the FCC has modified the reports to incorporate a number of reforms requested by broadcasters and their counsel to eliminate redundant and burdensome idiosyncrasies, glitches, and design flaws in the current commercial ownership reporting form.  This will hopefully alleviate at least some of the pain involved in filing what has been one of the FCC’s most duplicative and burdensome forms.

For the past several years, the FCC has required commercial broadcast licensees to include in their ownership reports a unique identifier, called a Federal Registration Number (FRN), for each attributable interest holder.  When first imposed, stations objected to the FRN mandate because the FCC requires individuals seeking an FRN to supply their full SSN to the Commission. In an attempt to quell that outcry, the FCC created a temporary solution called a Special Use FRN (SUFRN), that broadcasters could utilize when attributable interest holders balked at providing their SSNs.

The FCC has now introduced another alternative to obtaining a full FRN, called the Restricted Use FRN (RUFRN), available only for use in filing ownership reports. The FCC considers the RUFRN to be a superior solution to the SUFRN (had enough acronyms yet?) because the SUFRN collected no information whatsoever about the person to which it was assigned and therefore did not further the FCC’s goal of increased accuracy in the ownership data being collected. The basis for the FCC’s belief in the superiority of the RUFRN is that in order to apply for a RUFRN, an individual must supply the FCC with their full name, date of birth, home address, the last four digits of their SSN, and all of that individual’s previously used FRNs and SUFRNs. This information will not be made publicly available, but will enable the FCC to uniquely identify each attributable interest holder in a broadcast station.

Noncommercial broadcasters in particular still oppose the FCC’s efforts to collect such personal data, since the Commission’s multiple ownership rules do not even apply to them, and they worry that the data breaches and hacks that have afflicted other federal agencies will eventually affect the FCC as well.  Commissioner Pai’s separate statement is particularly worth reading in that regard.  While the FCC will allow continued use of a SUFRN, it will permit such use only where an interest holder has refused to apply for a RUFRN or to provide the broadcaster in which it holds an interest with the information needed to obtain a RUFRN for that investor.  The FCC has indicated that stations are at risk of significant enforcement actions should the SUFRN option be abused. With the new RUFRN in place, the FCC will fix its search engine so that the “search by FRN/RUFRN” function will actually return a list of the broadcast stations in which the holder of the searched FRN/RUFRN has an attributable interest.

The FCC also consolidated the ownership report filing deadline for noncommercial stations with that of commercial stations, and extended that date an extra month, from November 1 to December 1 of odd-numbered years, to allow more time for all U.S. broadcast stations to draft their reports, hit the file button, and crash the Commission’s filing system.  Here’s hoping that the FCC will make the biennial filing system available well in advance of October 1, 2017 to allow more time for the increased number of filers to draft and file their reports by the December 1 deadline.

As expected, the FCC revised the ownership report form for noncommercial licensees to collect race, gender and ethnicity information for all interest holders, just as it now does for commercial licensees. In addition, for both commercial and noncommercial filers, it will now be possible to select more than one ethnicity from the list to better report those who identify as being multiracial, a change required by OMB.

In a welcome expression of candor, the Commission conceded that the current version of the commercial station ownership report form has led to widespread errors in those reports, undermining the integrity of all ownership data reported. In light of that big admission, the FCC adopted a number of simplifications suggested by broadcasters that will hopefully ease the filing burden and increase the accuracy of the information submitted. Here are the highlights:

  • A parent company will be able to report its ownership interest in multiple licensees on the same form. Previously, each ownership report could only contain data about a single licensee. As a result, companies that held their broadcast licenses in separate licensee subsidiaries had to file multiple parent company reports, most of which were identical to one another except for the substitution of one licensee name and call sign(s) for another.  The multiple duplicative reports clogged the filing system, causing it to grind to a halt for all filers, even those with simpler reporting structures.
  • There will be no more spreadsheets.  Because the FRN search function never worked and only one licensee could be reported per ownership report, it was nearly impossible to determine whether an interest holder reported on one station’s report also had an interest in stations reported in another report.  The FCC’s fix to this was to have broadcasters prepare spreadsheets, some of which were thousands of lines long, and upload them to the ownership reports.  This again slowed the system for all filers and the spreadsheets were difficult to read, undermining the transparency the FCC was seeking.  Now, if additional stations need to reported, they can be added directly in the form itself.
  • Additional options and questions will be added to make the form itself more useful to the FCC.  These include allowing filers to indicate whether they are organized as a Limited Liability Company, and whether an ownership interest is held jointly, such as a stock interest that is held by spouses as tenants by the entirety.  The new forms will also require filers to indicate whether they are a Tribal Entity, which furthers the Commission’s diversity goals, as well as to list those that are deemed to have an attributable interest in a station due to a Local Marketing or Joint Sales agreement.

Finally, the Report and Order indicates that the FCC is also making a number of common sense changes to the functionality of the ownership report filing system, including sub-form cloning, auto-fill mechanisms, data saving and validation routines, and enhanced checking for inconsistent data.  If these terms sound like Greek to you, then you clearly have not been involved in the filing of ownership reports at the FCC.  If that is indeed the case, count yourself fortunate, and rejoice that the FCC has taken steps to alleviate that mysterious pain broadcasters experience in odd-numbered years.

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In the summer of 2014, CommLawCenter broke the news that the FCC was considering moving radio public inspection files online, following in the footsteps of the FCC’s earlier creation of an online public file requirement for TV stations.  Television stations have been required to upload all newly created public file documents to their online public inspection files since August 2012, and to upload public file documents created before that time by February 2013.  In adopting the TV online public file requirement, the FCC said that it would serve as something of a “test run” for radio station public inspection files.

Four months later, I wrote here about the FCC’s release of a Notice of Proposed Rulemaking calling the TV online public file effort a success, and a “significant achievement in the Commission’s ongoing effort to modernize disclosure procedures to improve access to public file material.”  The NPRM proposed moving forward with an online public file for radio stations, as well as for cable, DBS and satellite radio.  The FCC acknowledged that the online public file might represent a burden for at least some radio stations and, as a result, proposed to phase in the requirement beginning with stations that are located in the top 50 markets having five or more full-time employees.  In addition, the NPRM proposed giving non-commercial educational stations and stations with fewer than five full-time employees two years to make the transition.  While the NPRM was not directed at revamping the content of the public file, the Commission did suggest that some types of documents might be exempted to lessen the burden both on stations and on the Commission’s servers.

The NPRM attracted numerous comments, many focused on ensuring that any online public file requirement would contain sufficiently broad exemptions for small radio stations and an adequately long phase-in period for other types of stations to ensure that the requirement would not be unduly burdensome.  As a filing on behalf of all 50 state broadcasters associations noted, radio stations tend to have smaller staffs than TV stations, and the norm is to have multiple local radio stations operated jointly, meaning that those smaller staffs need to maintain multiple public inspection files.

After the comments were filed, the proceeding went silent, and many wondered if the FCC had begun to have second thoughts as to whether its servers could handle the substantial increase in traffic that a radio public inspection file requirement would generate.  In the past few weeks, however, the FCC let it be known that an order was circulating among the five commissioners for a vote on the online public file NPRM.  If there was any doubt where it was headed, that ended today when FCC Chairman Wheeler announced in a blog post that the order being circulated will implement online public inspection files for radio stations.  He did not, however, give any hints as to what exemptions or phase-in periods the order might contain.

Broadcasters won’t, however, have to wait long to find out.  The FCC also announced today the agenda for its January 28, 2016 Open Meeting, and the radio online public file order is right at the top.  As a result, radio stations will soon know what changes 2016 will be bringing to their public files.

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December 2015

Pillsbury’s communications lawyers have published FCC Enforcement Monitor monthly since 1999 to inform our clients of notable FCC enforcement actions against FCC license holders and others. This month’s issue includes:

  • FM Licensee and Prospective Buyer Agree to Jointly Pay $8,000 for Unauthorized Transfer of Control
  • TV Licensee Faces $13,000 Fine for Children’s Programming and Public Inspection File Violations
  • Late License Renewal Applicant Escapes With $1,500 Fine

Licensee Admits Time Brokerage Agreement Improperly Ceded Control of Station

The FCC’s Media Bureau entered into a Consent Decree with a Colorado FM broadcast licensee and a company seeking to acquire the station. The decree resolved an investigation into whether the licensee violated the FCC’s Rules by ceding control of key station responsibilities to a company through a Time Brokerage Agreement (“TBA”).

Section 310(d) of the Communications Act and Section 73.3540 of the FCC’s Rules prohibit voluntary assignments or transfers of control of broadcast licenses without the consent of the FCC. The Consent Decree noted that TBAs are not precluded by any FCC rule or policy, provided that licensees remain in compliance with the ownership rules and maintain ultimate control over their facilities. The Consent Decree explained that a licensee maintains such control when it holds ultimate responsibility for essential station matters such as programming, personnel, and finances.

The licensee and company entered into a TBA in 1992, and in 2006 the company assigned its rights under the agreement to an affiliated corporate entity. On April 23, 2015, the licensee and company jointly filed an application to assign the station’s license to the company, initiating the FCC’s investigation into the TBA.

The FCC concluded that the TBA effected an unauthorized transfer of control of the station license. Specifically, the TBA improperly delegated core licensee financial responsibilities by allowing an affiliated corporate entity of the broker to directly pay for certain station obligations and expenses, including a debt owed to a third party, site rent, and the bill for the station’s telephone service.

To resolve the investigation, the licensee and the company stipulated that they had each violated Section 310(d) of the Communications Act and Section 73.3540 of the FCC’s Rules, and agreed to collectively pay an $8,000 fine. In exchange, the FCC indicated it would grant the assignment application subject to full and timely payment of the fine and the absence of any other violations that would preclude such a grant.

FCC Proposes $13,000 Fine for Children’s Programming and Public Inspection File Violations

The FCC’s Media Bureau proposed a $13,000 fine for a Texas TV station for failing to properly identify children’s programming with an “E/I” symbol onscreen, and for several public inspection file violations. Additionally, the FCC admonished the licensee for its failure to upload required documents to the online public inspection file.

The Children’s Television Act requires TV stations to offer programming that meets the educational and informational needs of children, which the FCC calls “Core Programming.” Section 73.671 of the FCC’s Rules requires licensees to, among other things, display an “E/I” symbol to identify such content. Continue reading →

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In a decision long awaited by webcasters, the Copyright Royalty Board (CRB) has released its new webcasting royalty rates.  These royalties are paid by non-interactive streaming services on which listeners cannot choose the specific songs they listen to, such as Pandora and radio stations that stream their programming.  The royalties are paid to SoundExchange, a performing rights organization which collects the payments on behalf of record labels and other holders of copyrights in sound recordings.  Services such as Spotify and Apple Music, which allow listeners to choose individual songs to listen to, negotiate licensing arrangements privately with record labels and are not affected by these rates.  The new rates will become effective on January 1, 2016 and will remain in effect until December 31, 2020.

Under the new rate structure, subscription services will pay 22 cents per hundred performances streamed in 2016, with an adjustment based on the Consumer Price Index for subsequent years through 2020. Non-subscription services such as broadcast radio stations will pay 17 cents per hundred performances streamed (with the same CPI adjustment).

For commercial radio stations, the 17 cent rate is a substantial decrease from the 25 cent streaming rate currently paid.  In contrast, pure play (non-broadcast) non-subscription streaming services saw their royalty increase from 14 cents per hundred performances to the new 17 cent rate.  Pandora had argued for a new rate equal to the greater of (i) 11 cents per hundred performances and (ii) 25% of the webcaster’s revenues, while the National Association of Broadcasters and iHeart Media had argued for a rate of 5 cents per hundred performances.  SoundExchange, on the other hand, had proposed a rate for commercial webcasters equal to the greater of (i) 25-29 cents per hundred performances, and (ii) 55% of the webcaster’s revenues.  A “performance” generally consists of the delivery of a song to a single device such as a smartphone.

The royalties are paid for a statutory license allowing webcasters to perform the song by delivering it to listeners’ devices, and to make any ephemeral copies of the song necessary for the streaming process. The CRB is required by statute to adjust royalty rates every five years based on rates which hypothetically would prevail in an open market free from government intervention.

The higher rates will make it tougher for pure play webcasters to make a profit, but Pandora CEO Brian McAndrews focused on the bright side, saying: “This decision provides much–needed certainty for both Pandora and the music industry.”  While pure play webcasters obviously were hoping that their streaming rates would go down, having the new rates at least sets a benchmark against which they can seek to negotiate private deals with record labels.

The National Association of Broadcasters applauded the new rates, with NAB Executive Vice President Dennis Wharton stating that the NAB was “pleased that streaming rates have begun to move in the right direction.”  SoundExchange, on the other hand, announced that “it is deeply disappointing to see that [terrestrial] broadcasters are being given another unfair advantage.”  Webcasters had argued that the rates set in the previous rate-setting proceeding were artificially high and were based on a flawed analysis, including the use of rates paid by interactive services as a basis for setting rates for non-interactive services.  SoundExchange asserted that interactive and non-interactive services were “converging,” and that higher rates were necessary to adequately compensate performers and copyright owners.

The precise reasoning behind the CRB’s decision will not be publically available until after the parties to the proceeding have had an opportunity to review the CRB’s written opinion to determine whether any confidential information should be redacted before it is released to the public.  While the parties will have the right to petition the CRB for reconsideration, and to appeal the decision to the U.S. Court of Appeals, such appeals generally are an uphill battle.  As a result, webcasters and record labels are likely to have to live with the result of today’s decision for the next five years.

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October has come and gone, and now the season is upon us—filing season, that is!  Though winter is coming, December will be a hot month for radio and television FCC filings. Failure to meet any of these filing deadlines could result in fines or lost opportunities, putting a real damper on the holidays.  With that in mind, we’ve compiled a summary of some of the major upcoming filing obligations and deadlines.

  • December 1: Annual DTV Ancillary/Supplementary Services Reports (FCC Form 2100 Schedule G)

Commercial television, digital Class A television, and digital LPTV stations must electronically file by December 1, 2015 FCC Form 2100 Schedule G, the Annual DTV Ancillary/Supplementary Services Report for Commercial Digital Television Stations, regardless of whether they have received any income from transmitting ancillary or supplementary services. If a digital station provided ancillary or supplementary services during the 12-month time period ending September 30, 2015, and received compensation for doing so, that station is required to pay to the FCC five percent of the gross revenue from such services concurrently with the filing of Form 2100 Schedule G.

Note that this Report was formerly known as FCC Form 317.  With the introduction of the FCC’s new Licensing and Management System, it is now FCC Form 2100 Schedule G.

For a more detailed summery of this filing requirement, you can review our Annual DTV Ancillary/Supplementary Services Report Client Advisory.

  • December 1: Annual EEO Public File Reports for AL, CO, CT, GA, MA, ME, MN, MT, ND, NH, RI, SD, and VT

Station Employment Units (“SEUs”) that have five or more full-time employees and are comprised of radio and/or television stations licensed to communities in Alabama, Colorado, Connecticut, Georgia, Maine, Massachusetts, Minnesota, Montana, New Hampshire, North Dakota, Rhode Island, South Dakota, or Vermont must by this date place in their public inspection file and post on their station website a report regarding station compliance with the FCC’s EEO Rule during the period December 1, 2014 through November 30, 2015.

December 1 is also the mid-point in the license renewal term of radio stations licensed to communities in Alabama and Georgia; therefore, by this date radio SEUs with 11 or more full-time employees in these states must electronically file the FCC Form 397 Broadcast Mid-Term Report along with copies of the SEU’s two most recent Annual EEO Public File Reports.

We’ve prepared an Annual EEO Public File Report Client Advisory with more information regarding these obligations.

  • December 1:  Biennial Ownership Reports for Noncommercial  Stations in AL, CO, CT, GA, MA, ME, MN, MT, ND, NH, RI, SD, and VT (FCC Form 323-E)

In addition to their Annual EEO Public File Reports, noncommercial television stations licensed to communities in Colorado, Minnesota, Montana, North Dakota, or South Dakota, and noncommercial radio stations licensed to communities in Alabama, Connecticut, Georgia, Maine, Massachusetts, New Hampshire, Rhode Island, or Vermont (other than sole proprietorships or partnerships composed entirely of natural persons) must electronically file by December 1, 2015 their biennial ownership reports on FCC Form 323-E, unless they have consolidated this filing date with that of other commonly owned stations licensed to communities in other states. The FCC Form 323-E does not require a filing fee.

Note that the Commission’s August 6, 2015 Order extending the biennial ownership report filing deadline for commercial television and radio stations to December 2 does not apply to these Form 323-E filings for noncommercial stations.

Our Noncommercial Station Biennial Ownership Report Client Advisory has more information on this filing requirement.

  • December 2: Biennial Ownership Reports for Commercial Stations (FCC Form 323)

All commercial radio, full-power television, low-power television, and Class A television stations must electronically file by December 2, 2015 their biennial ownership reports on FCC Form 323 and pay the required FCC filing fee. This year, the fee is $65.00 per station. As a reminder, the FCC extended the usual November filing deadline to December through an Order released this summer, giving commercial licensees an additional month to prepare their reports while maintaining the “as of” reporting date of October 1, 2015.

For a more detailed summary of this filing requirement, check out our Commercial Station Biennial Ownership Report Client Advisory.

  • December 18: Spectrum Auction Applications (FCC Form 177)

As we posted last month, the FCC released its Auction Application Procedures Public Notice, announcing the filing window and application procedures to be used for broadcast stations wishing to participate in the spectrum auction. The auction application form, FCC Form 177, must be filed by each licensee interested in participating in the auction.  The application filing window opens at 12 p.m. Eastern Time on December 1, 2015 and runs until 6 p.m. Eastern Time on December 18, 2015.

After the December 18 deadline for filing Form 177, (1) no major changes may be made to the application (e.g., changing the bid options or licenses offered in the auction, or, except in certain circumstances, making major ownership changes), and (2) the Form 177 must be updated within five days of the applicant learning that information in the form is no longer accurate.

FCC staff will send letters to individual applicants indicating that the applicant’s form is (1) complete, (2) rejected, or (3) incomplete or deficient in a minor way that may be corrected. In the case of the third option, the letter will specify a deadline for submitting a corrected application, and applications that are not corrected by that time will be dismissed with no opportunity to refile.

With so many FCC deadlines stacking up in December, we recommend broadcasters start preparing their reports and applications sooner rather than later.  As Dr. Seuss reminded us:

How did it get so late so soon?
It’s night before its afternoon.
December is here before its June.
My goodness how the time has flewn.
How did it get so late so soon?

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October 2015

Pillsbury’s communications lawyers have published FCC Enforcement Monitor monthly since 1999 to inform our clients of notable FCC enforcement actions against FCC license holders and others. This month’s issue includes:

  • Time Brokerage Agreement Costs Station and Broker/Buyer $10,000
  • Telecom Provider Agrees to Pay $620,500 to Resolve Investigation of Cell Tower Registration and Lighting Violations
  • FCC Admonishes TV Station Licensee for Failing to Upload Past Issues/Programs Lists to Online Public Inspection File

Brokering Bad: Non-Compliant Time Brokerage Agreement Ends With $10,000 Consent Decree

The FCC’s Media Bureau entered into a Consent Decree with a North Carolina noncommercial educational FM broadcast licensee and a company seeking to acquire the station’s license. The decree resolved an investigation into whether the licensee violated the FCC’s Rules by receiving improper payments from, and ceding control of key station responsibilities to, the proposed buyer.

Under Section 73.503(c) of the FCC’s Rules, a noncommercial educational FM broadcast station may broadcast programs produced by, or whose creation was paid for by, other parties. However, the station can receive compensation from the other party only in the form of the radio program itself and costs incidental to the program’s production and broadcast.

In addition, the FCC requires a station licensee to staff its main studio with at least two employees, one of whom must be a manager (the “main studio rule”). The FCC has clarified that, while a licensee may delegate some functions to an agent or employee on a day-to-day basis, “ultimate responsibility for essential station matters, such as personnel, programming and finances, is nondelegable.”

In March 2013, the station licensee and the company jointly filed an application to assign the station’s license to the company, which had been brokering time on the station for a number of years. The application included a copy of the Time Brokerage Agreement (“TBA”) the parties executed in 2003. In return for airing the broker’s programming, the TBA provided for a series of escalating payments to the station, including initial monthly payments of $6,750 for the first year of the TBA, increasing to $8,614 per month in 2008, and then increasing five percent per year thereafter.

Upon investigating the TBA, the FCC found that the payments were unrelated to “costs incidental to the program’s production and broadcast.” Additionally, the FCC concluded that the TBA violated the main studio rule and resulted in an improper transfer of control of the station license by improperly delegating staffing responsibilities to the broker.

To resolve the investigation into these violations, the licensee and the broker/buyer agreed to jointly pay a $10,000 fine. In exchange, the FCC agreed to grant their assignment application provided that the following conditions are met: (1) full and timely payment of the fine; and (2) “there are no issues other than the Violations that would preclude grant of the Application.”

Telecommunications Provider Settles FCC Investigation of Unregistered and Unlit Cell Towers for $620,500

An Alaskan telecommunications provider entered into a Consent Decree with the FCC’s Enforcement Bureau to resolve an investigation into whether the provider failed to properly register and light its cell towers in violation of the FCC’s Rules. With few exceptions, Section 17.4(a) of the FCC’s Rules requires cell tower owners to register their towers in the FCC’s Antenna Structure Registration (“ASR”) system. In addition, Section 17.21(a) requires that cell towers be lit where their height may pose an obstruction to air traffic, such as towers taller than 200 feet and towers in the flight path of an airport. The FCC’s antenna structure registration and lighting rules operate in conjunction with Federal Aviation Administration regulations to ensure cell towers do not pose hazards to air traffic.

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While relief won’t come as soon as radio broadcasters had hoped, the FCC gave AM stations a shot in the arm with the release of an Order designed to provide assistance to the struggling AM radio service.

The Order, released on October 23, 2015, comes a full two years after the October 2013 Notice of Proposed Rulemaking (“NPRM”) that launched the effort.  In the Order, the FCC adopted a number of proposals (with some modifications) from the NPRM.  The most significant of these are exclusive AM filing windows in 2016 to allow AM stations to move an FM translator up to 250 miles to rebroadcast that AM station’s signal, and 2017 windows exclusively for AM stations to apply for a new FM translator construction permit.

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September 2015

The next Children’s Television Programming Report must be filed with the FCC and placed in stations’ public inspection files by October 10, 2015, reflecting programming aired during the months of July, August, and September 2015.

Statutory and Regulatory Requirements

As a result of the Children’s Television Act of 1990 (“Act”) and the FCC rules adopted under the Act, full power and Class A television stations are required, among other things, to: (1) limit the amount of commercial matter aired during programs originally produced and broadcast for an audience of children 12 years of age and under, and (2) air programming responsive to the educational and informational needs of children 16 years of age and under.

These two obligations, in turn, require broadcasters to comply with two paperwork requirements. Specifically, stations must: (1) place in their online public inspection file one of four prescribed types of documentation demonstrating compliance with the commercial limits in children’s television, and (2) submit FCC Form 398, which requests information regarding the educational and informational programming the station has aired for children 16 years of age and under. Form 398 must be filed electronically with the FCC. The FCC automatically places the electronically filed Form 398 filings into the respective station’s online public inspection file. However, each station should confirm that has occurred to ensure that its online public inspection file is complete. The base fine for noncompliance with the requirements of the FCC’s Children’s Television Programming Rule is $10,000.

Noncommercial Educational Television Stations

Because noncommercial educational television stations are precluded from airing commercials, the commercial limitation rules do not apply to such stations. Accordingly, noncommercial television stations have no obligation to place commercial limits documentation in their public inspection files. Similarly, though noncommercial stations are required to air programming responsive to the educational and informational needs of children 16 years of age and under, they do not need to complete FCC Form 398. They must, however, maintain records of their own in the event their performance is challenged at license renewal time. In the face of such a challenge, a noncommercial station will be required to have documentation available that demonstrates its efforts to meet the needs of children.

Commercial Television Stations

Commercial Limitations

The Commission’s rules require that stations limit the amount of “commercial matter” appearing in children’s programs to 12 minutes per clock hour on weekdays and 10.5 minutes per clock hour on the weekend. In addition to commercial spots, website addresses displayed during children’s programming and promotional material must comply with a four-part test or they will be considered “commercial matter” and counted against the commercial time limits. In addition, the content of some websites whose addresses are displayed during programming or promotional material are subject to host-selling limitations. Program promos also qualify as “commercial matter” unless they promote children’s educational/informational programming or other age-appropriate programming appearing on the same channel. Licensees must prepare supporting documents to demonstrate compliance with these limits on a quarterly basis.

For commercial stations, proof of compliance with these commercial limitations must be placed in the online public inspection file by the tenth day of the calendar quarter following the quarter during which the commercials were aired. Consequently, this proof of compliance should be placed in your online public inspection file by October 10, 2015, covering programming aired during the months of July, August, and September 2015.

Documentation to show that the station has been complying with this requirement can be maintained in several different forms:

  • Stations may, but are not obligated to, keep program logs in order to comply with the commercial limits rules. If the logs are kept to satisfy the documentation requirement, they must be placed in the station’s public inspection file. The logs should be reviewed by responsible station officials to be sure they reflect compliance with both the numerical and content requirements contained in the rules.
  • Tapes of children’s programs will also satisfy the rules, provided they are placed in the station’s public inspection file and are available for viewing by those who visit the station to examine the public inspection file. The FCC has not addressed how this approach can be utilized since the advent of online public inspection files.
  • A station may create lists of the number of commercial minutes per hour aired during identified children’s programs. The lists should be reviewed on a routine basis by responsible station officials to be sure they reflect compliance with both the numerical and content requirements contained in the rule.
  • The station and its network/syndicators may certify that as a standard practice, they format and air the identified children’s programs so as to comply with the statutory limit on commercial matter, and provide a detailed listing of any instances of noncompliance. Again, the certification should be reviewed on a routine basis by responsible station officials to ensure that it is accurate and that the station did not preempt programming or take other action that might affect the accuracy of the network/syndicator certification.

Regardless of the method a station uses to show compliance with the commercial limits, it must identify the specific programs that it believes are subject to the rules, and must list any instances of noncompliance. As noted above, commercial limits apply only to programs originally produced and broadcast primarily for an audience of children ages 12 and under.

Programming Requirements

To assist stations in identifying which programs qualify as “educational and informational” for children 16 years of age and under, and determining how much of that programming they must air to comply with the Act, the Commission has adopted a definition of “core” educational and informational programming, as well as license renewal processing guidelines regarding the amount of core educational programming aired.

The FCC defines “core programming” as television programming that has as a significant purpose serving the educational and informational needs of children 16 years old or under, which is at least 30 minutes in length, and which is aired weekly on a regular basis between 7:00 a.m. and 10:00 p.m. Each core program must be identified by an E/I symbol displayed throughout the program. In addition, the licensee must provide information identifying each core program that it airs, including an indication of the program’s target child audience, to publishers of program guides. The licensee must also publicize the existence and location of the station’s children’s television reports in the public inspection file. The FCC has not prescribed a specific manner of publicizing this information, but enforcement actions indicate that the FCC expects the effort to include an on-air component. We suggest placing an announcement on the station website and periodically running on-air announcements.

Under the current license renewal processing guidelines, stations must air an average of at least three hours of “core programming” each week during the quarter in order to receive staff-level approval of the children’s programming portion of the station’s license renewal application. Stations that air “somewhat less” than an average of three hours per week of “core programming,” i.e., two and one-half hours, may still receive staff-level approval of their renewals if they show that they aired a package of programming that demonstrates a commitment at least equivalent to airing three hours of “core programming” per week. Stations failing to meet one of these guidelines will have their license renewal applications reviewed by the full Commission for compliance with the Children’s Television Act.

FCC Form 398 is designed to provide the public and the Commission with the information necessary to determine compliance with the license renewal processing guidelines. The report captures information regarding the preemption of children’s programming, and requires stations to create an addendum to the form called a “Preemption Report” which provides information on: (1) the date of each preemption; (2) if the program was rescheduled, the date and time the rescheduled program aired; (3) the reason for the preemption; and (4) whether promotional efforts were made to notify the public of the time and date that the rescheduled program would air.

Filing of FCC Form 398

Form 398 must be filed electronically on a quarterly basis. As a result, full power and Class A television stations should file a Form 398 electronically with the FCC by October 10, 2015.

Preparation of the Programming Documentation

In preparing the necessary documentation to demonstrate compliance with the children’s television rules, a station should keep the following in mind:

  • FCC Form 398 and documentation concerning commercialization will be very important “evidence” of the station’s compliance when the station’s license renewal application is filed; preparation of these documents should be done carefully.
  • Accurate and complete records of what programs were used to meet the educational and informational needs of children and what programs aired that were specifically designed for particular age groups should be preserved so that the job of completing the FCC Form 398 and creating documentation concerning commercialization is made easier.
  • A station should prepare all documentation in time for it to be placed in the public inspection file by the due date. If the deadline is not met, the station should give the true date when the information was placed in the file and explain its lateness. A station should avoid creating the appearance that it was timely filed when it was not.

These are only a few ideas as to how stations can make complying with the children’s television requirements easier. Please do not hesitate to contact the attorneys in the Communications Practice for specific advice on compliance with these rules or for assistance in preparing any of this documentation.

Class A Television Stations Only

Although not directly related to the requirement that Class A stations file children’s programming reports, it is important to note that Class A stations must certify that they continue to meet the FCC’s eligibility and service requirements for Class A television status under Section 73.6001 of the FCC’s Rules. While the relevant subsection of the public inspection file rule, Section 73.3526(e)(17), does not specifically state when this certification should be prepared and placed in the public inspection file, we believe that since Section 73.6001 assesses compliance on a quarterly basis, the prudent course for Class A television stations is to place the Class A certification in the public inspection file on a quarterly basis as well.

A PDF of this article can be found at 2015 Third Quarter Children’s Television Programming Documentation.