The NAB has negotiated a waiver agreement with Sony Music Entertainment that will once again enable radio stations to stream Sony-licensed music unhindered by certain restrictions established by the statutory music streaming license. Stations wishing to take advantage of the Sony waiver need to opt in on the NAB website, and (depending on the amount of streaming they do) may need to place a button on their websites or apps to enable listeners to click through to purchase Sony song downloads. A previous waiver agreement with Sony, as extended, expired on July 31, 2016, leaving stations without a waiver for the past few months. NAB’s new agreement with Sony will last until December 31, 2020.
The era of newsgathering drones is upon us. Since new Federal Aviation Administration rules allowing limited commercial operation of drones (also known as unmanned aircraft systems or UAS) weighing 55 lbs. or less took effect a little over a month ago, media organizations have moved quickly to utilize the technology.
Sinclair Broadcast Group, which operates or provides services to 173 television stations across the country, recently announced it was going “all in” on newsgathering drones. It plans to have 80 trained and certified UAS pilots working in 40 markets by the end of 2017, and already has launched UAS teams for newsgathering in Washington, DC; Baltimore, MD; Green Bay, WI; Columbus, OH; Little Rock, AR; and Tulsa, OK. Providing an example of the benefits drones can bring to newsgathering, Sinclair released footage taken over the Cedar River in Cedar Rapids, IA, showing an aerial perspective of a newly constructed flood wall as the city braced for flooding.
Sinclair’s announcement comes on the heels of CNN’s launch of CNN Aerial Imagery and Reporting (CNN AIR), a unit with two full-time drone operators dedicated to integrating aerial imagery and reporting across CNN networks.
Broadcasters and other organizations with newsgathering operations are increasingly taking advantage of the FAA’s new “Part 107” rules, which took effect on August 29, 2016. The small drones authorized under the rules offer broadcasters and other news organizations a cost-effective way to gather aerial footage, especially as compared to the cost of using helicopters. While the Part 107 rules have paved the way for widespread use of newsgathering drones, broadcasters and other potential UAS operators should keep in mind that some requirements must be met before UAS operations can commence.
To protect the public, the Part 107 rules come with a number of operational limitations on UAS operation. However, if a party can demonstrate the ability to operate safely while deviating from a specific limitation, the FAA may grant a waiver of one or more of the specific limitations found in its rules. With regard to newsgathering operations, the most relevant limitations (and therefore good candidates for waiver requests) include the prohibitions on flights above people not participating in the UAS operation, flights beyond visual line of sight, flights above 400 feet (or more than 400 feet above a building or other structure), and nighttime flights. The FAA has added a portal to its website for waiver applications, and has recorded a standard-issue government YouTube video on the subject. For an example of a waiver that has been granted, take a look at CNN’s waiver for flights over non-participants.
In addition, the Part 107 rules require those operating small drones to either hold a “remote pilot certificate” or be under the supervision of a person who holds such a certificate. To qualify for a certificate, the applicant must be at least 16 years old, be vetted by the Transportation Security Administration, and pass an aeronautical knowledge test at an FAA-approved testing center. The FAA offers a free online preparation course for the knowledge test. In addition to pilot certification, Part 107 requires that all drones used for commercial purposes be marked and registered. Drones can be registered through the FAA’s website.
Pillsbury launched one of the nation’s first UAS legal teams long before commercial operations were possible, and being a part of these developments has been fascinating. Because of the myriad issues UAS operations involve, Pillsbury’s UAS practice consists of an interdisciplinary team of lawyers from our Aviation, Communications, Privacy, and Transportation practices. Those contemplating entering the world of UAS operations for newsgathering or other purposes will find the UAS team’s blog and advisories an excellent place to start.
It’s time to stop reading about drones in the news, and start reading news brought to us by drones.
The FCC has sent an email to those registered in the EAS Test Reporting System (“ETRS”) for tomorrow’s nationwide test, asking them to (1) stagger the filing of their EAS Form Two based on their time zone, and (2) not file Form Three until the day after the test. The FCC explained that the request—the staggered filing times are not mandatory—is meant to “maximize the resources available to process Form Two filings.”
Specifically, the FCC would like EAS participants to file Form Two, “Day of Test Reporting,” in the ETRS as follows:
- Facilities in Eastern Time Zone – 2:30 pm to 5:00 pm EDT
- Facilities in Central Time Zone – 5:00 pm to 7:00 pm EDT (4:00 pm to 6:00 pm CDT)
- Facilities in Mountain Time Zone – 7:00 pm to 8:00 pm EDT (5:00 pm to 6:00 pm MDT)
- Facilities in Pacific Time Zone – 8:00 pm to 9:30 pm EDT (5:00 pm to 6:30 pm PDT)
- Facilities in all other time zones – 9:30 pm to 11:59 pm EDT
The request seemed last-minute, coming so soon before the test, which is scheduled to take place tomorrow, Wednesday, September 28, 2016, at 2:20 pm Eastern Time (if necessary, the back-up test date will be October 5, 2016, at 2:20 pm Eastern Time). As we previously discussed, it raised some eyebrows when the FCC announced that EAS participants are required to file Form Two by 11:59 pm Eastern Time on the same day as the test itself, leaving less than 10 hours after the test for all EAS participants to file. The relevant FCC rule says that participants must file “within 24 hours . . . or as otherwise directed” by the FCC. As for Form Three, “Detailed Test Reporting,” it must be filed “within 45 days following a nationwide EAS test,” which makes it due on or before November 14, 2016.
There are also new details available on what the test itself will look and sound like. According to senior FEMA staff, the audio portion of the test, including attention signals, will last approximately 50 seconds. In addition, FEMA was asked to delete a previously included statement in the text scroll—“No action is needed. This is only a test”—to avoid creating a difference between the aural and visual presentations, which had the potential to generate confusion among those with hearing or vision issues.
The test will start when FEMA sends the alert message, which will be in both English and Spanish. The alert will use a new nationwide test event code, NPT, and a new nationwide geographic zone code, 000000. As of July 30, 2016, all EAS Participants were required to have equipment in place capable of receiving and passing these codes. If you want to see what the 2011 test looked like for TV viewers, YouTube can help you there.
It will be interesting to see if the 2016 nationwide EAS test improves on the 2011 edition. As we previously wrote, the FCC found a number of technical areas where the system could be improved in the 2011 test. Let’s hope that the capacity of ETRS to process filings, or a lack thereof, is not a lesson learned from the 2016 national test.
Just before the Labor Day weekend, the FCC issued its Report and Order launching the annual regulatory fee payment process for Fiscal Year 2016. The FCC has also opened the “Fee Filer” system that must be used to pay regulatory fees. More information and FAQs about the FY 2016 regulatory fees can be found here.
Payment in full of regulatory fees must be made by 11:59 p.m. Eastern Time on September 27, 2016. Late payment of regulatory fees will result in a 25% penalty and “red light” status, which restricts the FCC’s processing of a late payer’s applications until payment of the fees and penalties has been made. The FCC specifically reminded participants in the ongoing TV broadcast Incentive Auction that they must pay regulatory fees for FY 2016 if they held a license or construction permit as of October 1, 2015 (and will be liable for next year’s fees if they hold a license or CP as of October 1, 2016). The FCC also noted that payment of regulatory fees is required before Incentive Auction participants can receive any proceeds resulting from the auction, although given the pace at which the auction is proceeding, that seems unlikely to be an issue until well into next year.
As expected, regulatory fees for broadcast stations generally increased over last year, and the total fees assessed rose from $339,844,000 in FY 2015 to $384,012,497 in FY 2016. Although the fees assessed for “operational expenses” remained the same as last year, the FCC (in a move which some might find ironic) assessed an additional $44,168,497 to offset FCC “facilities reduction costs.” According to the FCC, those costs reflect the one-time expense of reducing the FCC’s office footprint and/or moving the FCC to a new location, and are required by Congress to be collected.
Despite the increase in total fees, middle market TV stations caught a break, with fees for stations in markets 51-100 falling from $16,275 last year to $15,200 this year. Fees for TV stations in markets 1-10, on the other hand, took the biggest jump — going from $46,825 to $60,675.
As for radio, rates increased over last year for most, but not all, stations. In light of comments asserting that the regulatory fees proposed by the FCC last May were too burdensome for small independent radio stations, the FCC reduced the fees in the two lowest population tiers for AM and FM broadcasters. Stations located in markets with populations of more than 3 million, previously the highest of the radio fee tiers, have been split into two groups by the FCC: (1) markets of 3,000,000-6,000,000, and (2) markets over 6,000,000. Charts showing the regulatory fees for the various TV and radio groups are below:
Broadcast Television and TV/FM Translators and Boosters
|Satellite TV Stations (all markets)||$1,750|
|Low Power TV, Class A TV, TV/FM Translators & Boosters||$455|
Broadcast Radio (AM and Full Power FM)
|Population||AM Class A||AM Class B||AM Class C||AM Class D||FM Classes A, B1 & C3||FM Classes B, C, C0, C1 & C2|
|25,000 or fewer||$990||$715||$620||$685||$1,075||$1,250|
|Greater than 6,000,000||$13,750||$9,950||$8,625||$9,500||$15,000||$17,175|
In addition, initial AM Construction Permits were assessed a $620 regulatory fee per station for FY 2016, with initial FM Construction Permits drawing a regulatory fee of $1,075 per station.
Finally, the FCC rejected a proposal by the Puerto Rico Broadcasters Association to reduce regulatory fees for stations located in Puerto Rico by 30% to reflect the economic hardships being experienced there. The FCC responded that individual stations in Puerto Rico may request waivers of regulatory fees if they believe their conditions warrant such relief, but the Commission was unwilling to reduce the fees on a blanket basis.
As we previously reported, the FCC last year adopted a number of changes to its rules and policies aimed at revitalizing the AM radio service, which for many years has lived in the shadow of the more robust FM service. One of these changes was to expand the ability of AM broadcasters to use FM translators to rebroadcast their AM signals, thereby improving coverage, particularly at night. To accomplish this, the FCC gave each AM station the right to file one, and only one, application to move an FM translator up to 250 miles and change the translator’s frequency, provided that it is used to rebroadcast the designated AM station for the next four years. If that application does not make it through the FCC process for any reason, the broadcaster is barred from filing another.
The FCC gave smaller Class C and D AM stations first crack at its new policy by opening a window on January 29, 2016, during which Class C and D licensees could file modification applications on a first-come, first-served basis. In other words, if you filed your application on January 29, you trumped anyone who filed a conflicting application after that date. If parties file mutually exclusive applications on the same day, the applicants need to resolve the mutual exclusivity through settlement negotiations and/or technical amendments (e.g., one or both parties move to a different frequency).
The first window, limited to Class C and D AM stations, closes on July 28, 2016. On the next day, July 29, a second window opens during which Class A and B AM stations (as well as Class C and D stations that did not file in the first window) may file modification applications to relocate FM translators to be used for AM station rebroadcasts.
AM stations that have not yet filed should keep in mind that:
- If you have a Class A or B AM station and plan to relocate an FM translator for AM rebroadcast purposes, you should get your modification application filed on July 29 in order to give yourself the maximum protection against being bumped by an earlier-filed mutually exclusive application. If you are planning to buy a translator but haven’t actually acquired it yet, there are still ways to get the modification application on file before closing the acquisition.
- If you have a Class C or D AM station and plan to relocate an FM translator for rebroadcasts (and haven’t filed a modification application yet), file by July 28. While Class C and D stations will not be precluded from filing in the second window, July 29 is sure to bring a wave of new modification applications that will change the translator landscape significantly.
But even having these deadlines circled on your calendar won’t help if your modification application is dismissed. When it comes to modification applications filed in either of these windows, the FCC has made clear that its policy is one and done. A dismissed application means that you not only lose your place in the processing line, but cannot file again in the windows. Such a dismissal could occur due not only to deficiencies in the application itself, but also if your deal to acquire the translator falls through. AM broadcasters buying a translator are therefore well advised to pay careful attention to the due diligence process, the closing conditions in the acquisition agreement, the compliance of the proposed move with FCC technical rules, and their financing for the acquisition. If a deal falls through, the reason is irrelevant. You’ll be sitting out the filing window watching your competitors get their FM translators.
On a day when a major broadcast ownership decision from the U.S. Court of Appeals for the Third Circuit garnered most of the attention, the FCC worked on more prosaic matters, issuing a Notice of Proposed Rulemaking to eliminate the requirement that commercial broadcast stations maintain letters and e-mails from the public in their public file. This requirement is one of the only vestiges of the physical public file that remained after the FCC’s decisions to move television and radio public files online.
The FCC based its proposal to eliminate the requirement in part upon the increase in communication between the public and broadcast stations on social media platforms, and the corresponding decrease in communication by letter and e-mail. The NPRM also proposes to eliminate a requirement that cable television operators maintain the location of their cable system’s principal headend in their public file.
Initial comments on the FCC’s proposals will be due 30 days after the NPRM is published in the Federal Register, with reply comments due 60 days after Federal Register publication.
As we wrote recently, eliminating the requirement to maintain correspondence from the public in a physical file would free stations from the need to provide free and unfettered access to their offices, and to maintain staff at all times during business hours ready to handle public file requests.
The NPRM enjoyed support from all five Commissioners, each of whom issued a separate statement in support of the proposal—a somewhat rare display of unanimity by the current Commission. Of particular interest was Chairman Wheeler’s statement that today’s proposal, if adopted, would enable broadcasters to “lock their doors and redeploy resources once used to help the public access the file at the studio.” Many in the TV and radio community may find themselves quietly nodding in agreement.
In a long-anticipated move towards commencement of the spectrum auction, the FCC today released a Public Notice and related Appendix providing an initial clearing target of 126 Megahertz of spectrum in what is currently the broadcast television band. The 126 MHz figure represents the targeted amount of spectrum to be repurposed from broadcast television to mobile wireless uses. The FCC also announced that bidding in the reverse auction will commence on May 31, 2016.
The 126 MHz target is the highest the FCC was contemplating, and indicates that a large number of television stations have chosen to participate in the auction. By setting a high clearing target, the FCC is maximizing the amount of broadcast spectrum purchased, but increasing the risk that if there is insufficient interest in the forward auction for this amount of spectrum (at the prices the FCC needs to pay selling broadcasters and cover other costs), the auction may have to be redone with a lower clearing target.
In the forward auction, the FCC will offer 10 paired blocks of spectrum, each block comprised of 10 MHz, to mobile wireless bidders. The remaining 26 MHz of spectrum to be cleared will be used for guard band and duplex gap purposes; i.e., to protect adjacent users from interference. If the auction is completed with the 126 MHz clearing target, the post-auction television broadcast band will consist of VHF channels 2-13 and UHF channels 14-29. The process of repacking stations into channels 2-29 would commence following completion of the auction, and is estimated by the FCC to take approximately three years, although many have questioned whether that is sufficient time for the repack.
With the release of the clearing target information, the FCC has locked in all of the following dates for auction-related events:
May 4, 2016, noon: Date by which each television broadcast licensee that made an initial commitment in the reverse auction must receive a third confidential status letter from the FCC. That letter will inform the applicant whether its station(s) will be qualified to participate in the reverse auction. Applicants who have not received this letter by noon (Eastern Time) on May 4 should contact the FCC Auctions Hotline at (717)338-2868.
May 5, 2016: FCC Incentive Auction Reverse Auction Bidding System User Guide available on Auctions webpage.
May 18, 2016: Online Bidding Tutorial available on Auctions webpage.
May 23, 2016, 10 a.m.: Bidding Preview Period begins.
May 24, 2016, 10 a.m.: Clock Phase Workshop.
May 24, 2016, 6 p.m.: Bidding Review Period ends.
May 25, 2016, 10 a.m.: Mock Auction Bidding Round 1. Additional Mock Auction Rounds occur throughout May 25 and May 26.
May 31, 2016: Bidding in the reverse auction commences for qualified applicants, with a single round of bidding on May 31 and June 1, and two rounds per day starting on June 2.
While it is unclear how many rounds of bidding will be required before the auction closes, or whether the 126 MHz target might lead to a repeat of the reverse auction, today’s news brings a palpable sense that the auction has really begun. How successful the auction will be for broadcasters, mobile wireless companies, and the FCC will be a developing story. Stay tuned for more updates.
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.
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.
As we reported here, the FCC released its proposals regarding 2015 regulatory fees last May. As August turned into September, licensees were getting anxious as to when the FCC would get around to issuing an order setting the fees and opening the “Fee Filer” online payment system. That happened today with the release of this Public Notice and this Report and Order and Further Notice of Proposed Rulemaking (note that for the reasons discussed below, these FCC website links will not function correctly until the FCC’s website resumes normal operation on September 8th).