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 Broadcaster Faces $150,000 Fine for Failure to Negotiate Retransmission Consent in Good Faith
- Sponsorship ID and Political File Violations Lead to $500,000 Consent Decree for Radio Broadcaster
- $26,000 Fine for Georgia Radio Station EEO Rule Violations
FCC Finds That TV Broadcaster Failed to Negotiate Retransmission Consent in Good Faith
Responding to a complaint by a cable TV provider, the Federal Communications Commission found that a broadcaster failed to negotiate retransmission consent for its New York TV station in good faith. The enforcement action involves a Notice of Apparent Liability for Forfeiture (NAL) proposing a $150,000 fine against the broadcast licensee. The licensee was represented in the negotiations by another broadcaster who provides services to the station at issue.
Under Section 325 of the Communications Act of 1934, as amended (the Act), TV stations and multichannel video programming distributors (i.e., cable and satellite TV providers) have a duty to negotiate retransmission consent agreements in good faith. In a 2000 Order, the FCC adopted rules relating to good faith negotiations, setting out procedures for parties to allege violations of the rules. The Order established a two-part good faith negotiation test. Part one of the test is a list of objective negotiation standards, the violation of any of which is deemed to be a per se violation of a party’s duty to negotiate in good faith. Part two of the test is a subjective “totality of the circumstances” test in which the FCC reviews the facts presented in a complaint to determine if the combined facts establish an overall failure to negotiate in good faith.
In this case, the cable provider complained that the broadcaster, through its negotiator, proposed terms for renewal of the parties’ agreement that would have prohibited either party from filing certain complaints with the FCC after execution of the agreement. For its part, the broadcaster did not dispute that it proposed the terms in question, but argued that (1) “releasing FCC-related claims or withdrawing FCC complaints is not novel,” (2) “parties typically agree to withdraw good faith negotiation complaints once retransmission consent agreements have been reached,” and (3) no violation could have occurred since the proposed term was not included in the final agreement reached.
The FCC disagreed, stating that its 2000 Order made clear that proposing terms which foreclose the filing of FCC complaints is a presumptive violation of the good faith negotiation rules. The FCC also disagreed with the broadcaster’s contention that terms not included in a final agreement could not violate the good faith rules. Finally, while the licensee argued that it was not responsible for actions taken by the party negotiating on its behalf, the FCC reiterated that licensees are responsible for the actions of their agents, and the licensee in this case delegated negotiation of the agreement to its agent.
Relying upon statutory authority and its Forfeiture Policy Statement, the FCC arrived at a proposed fine of $150,000. The Forfeiture Policy Statement establishes a base fine of $7,500 for violating the cable broadcast carriage rules, and the FCC asserted that the alleged violations continued for 10 days (the time period from first proposing the terms at issue and the signing of the agreement without them), yielding a base fine of $75,000. The FCC then exercised its discretion to upwardly adjust the proposed fine to $150,000, asserting that the increase was justified based on the licensee’s financial relationship with a large TV company, its prior rule violations, and the FCC’s view that a larger fine was necessary to serve as a meaningful deterrent against future violations.
Repeated Violations of Sponsorship ID and Political File Rules Lead to $500,000 Consent Decree
A large radio station group entered into a consent decree with the FCC’s Media Bureau, agreeing to pay a $500,000 civil penalty for two of its stations’ violations of sponsorship identification laws and the Political File rule.
Section 317(a)(1) of the Act and Section 73.1212(a) of the FCC’s Rules require broadcast stations to identify the sponsor of any sponsored content broadcast on the station. This requirement applies to all advertising, music, and any other broadcast content if the station or its employees received something of value for airing it. The FCC has said that the sponsorship identification laws are “grounded in the principle that listeners and viewers are entitled to know who seeks to persuade them . . . .” Continue reading →