RSS FCC Headlines
Published on:

By

According to the The Sign of Four, Sir Arthur Conan Doyle’s second Sherlock Holmes novel, Holmes preferred a seven-percent solution (a reference that would serve as the basis for another Holmes novel and movie some seventy years later). The FCC, on the other hand, has shown a regulatory fondness for relying on a five-percent solution. For example, a five-percent voting interest triggers application of the FCC’s multiple ownership rules, and when the FCC announced it would conduct random annual EEO audits, it decided that it would audit five percent of radio stations, five percent of TV stations, and five percent of cable systems each year for EEO compliance.

Further evidence of the FCC’s five-percent fondness arose this week in the context of a proceeding we first wrote about in the December FCC Enforcement Monitor. That story discussed a South Carolina AM station which, in an unusual twist, was fined twice for failing to file a license renewal application on time.

Section 73.3539(a) of the FCC’s Rules requires license renewal applications to be filed four months prior to the expiration date of the license. The AM station’s license was set to expire in December 2003, but no license renewal application was filed. The station licensee later explained that it did not file a license renewal application because it did not realize its license had expired. In May of 2011, seven years later, the FCC notified the station that its license had indeed expired, its authority to operate had been terminated, and its call letters had been deleted from the FCC’s database.

After receiving this letter, the station filed a late license renewal application and a subsequent request for Special Temporary Authority to operate the station until the license renewal application was granted. Because so much time had passed since the station failed to timely file its 2003 license renewal application, however, the deadline for the station’s 2011 license renewal application (for the 2011-2019 license term) also passed without the station filing a timely license renewal application. As a result, the FCC found the station liable for an additional violation of its license renewal filing obligations.

The base fine for failing to file required forms is $3,000. Thus, the FCC found the station liable for a total of $6,000 relating to these two violations, and an additional $4,000 for violating Section 301 of the Communications Act by continuing to operate for seven years after license expiration. The base forfeiture for the latter offense is $10,000, but the FCC reduced its proposed forfeiture to $4,000 because the station was not a pirate, and had previously been licensed. Combining all of the various proposed fines, however, still left the station holding a Notice of Apparent Liability for $10,000. On the good news side, the FCC did elect to renew the station’s license, holding that the station’s alleged rule violations did not evidence a “pattern of abuse.”

This week brought an additional chapter to the tale when the FCC released a decision on Valentine’s Day responding to the licensee’s request to have the $10,000 fine reduced or cancelled. The licensee presented two grounds for modifying the FCC’s original order. First, the licensee noted that one of the station’s co-owners had been in very poor health, and it was because of this that the station had missed the license renewal filing deadline (the decision fails to make clear whether it was the first or second license renewal application that the illness caused to be missed). The FCC indicated that it was sympathetic to the co-owner’s health issues, but it made clear that illness does not excuse the failure to timely file a license renewal application, particularly where the person in poor health was not the sole owner of the station.

The second ground presented was that the $10,000 fine was excessive for a small town AM station, particularly given the station’s financial status. As required by the FCC for those pleading financial hardship, the licensee turned over its tax returns for the past three years, showing annual gross revenues of $86,437, $88,947, and $103,707. Applying its five-percent solution, the FCC concluded that the licensee was entitled to a reduction in the fine, stating that “the Bureau has found forfeitures of approximately 5 percent of a licensee’s average gross revenue to be reasonable,” and that the “current proposed forfeiture of $10,000 constitutes approximately 11 percent of Licensee’s average gross revenue from 2008 to 2010.” The FCC therefore reduced the forfeiture to $4,600, stating that it would “align this case with the 5 percent standard used in prior cases.”

While few licensees would be pleased to hand over five percent of their annual gross revenue to the FCC, all should be aware that five percent marks the FCC’s threshold for assessing when a fine moves from being big enough to ensure future rule compliance, to instead causing undue financial hardship. For those facing an FCC fine, that is an important distinction.

Published on:

By

While the FCC gets to have a say in nearly every sale or merger in the communications industry, no matter how small, the Department of Justice and the Federal Trade Commission will also be called upon if a transaction is large enough. The test for when a transaction is large enough to require a filing with the DOJ or the FTC is whether it exceeds the minimum financial thresholds of the Hart-Scott-Rodino (“HSR”) Act.

Because of inflation and other factors, however, the HSR thresholds must be annually adjusted to accurately separate small deals from big deals. This separation is critical because the DOJ and the FTC have limited resources to investigate transactions, and therefore only require advance notification of transactions that involve companies or transactions above a certain minimum size. Transactions that fall below the HSR reporting thresholds, however, are not immune from antitrust scrutiny even after they are consummated if they are likely to have an anticompetitive effect in any relevant market.

On February 27, 2012, the HSR thresholds will increase significantly, with the “minimum size-of-transaction test” threshold increasing from $50 million to $68.2 million. If the value of the proposed transaction is above $68.2 million but below $272.8 million (up from $200 million), reporting is required only if the ultimate parents of the acquiring and acquired entities meet certain “size-of-person” tests, the thresholds for which will also increase on February 27, 2012. Subject to a myriad of exemptions, transactions valued at over $272.8 million under the HSR regulations must generally be reported. If that sounds complicated (and it can be), Pillsbury’s Antitrust lawyers recently published an Advisory with more details on these changes.
While transactions that meet these thresholds must be reported whether or not they are communications-related, the thresholds can be particularly relevant to large broadcasters, since broadcasters that enter into a transaction requiring an HSR filing need to be aware that they may not be able to implement a local marketing agreement or similar cooperative arrangement in conjunction with an anticipated acquisition until the HSR filing has been made and the mandatory post-filing waiting period has either passed without action by the DOJ/FTC, or the DOJ/FTC have agreed to terminate the HSR waiting period early.

With communications transactions starting to heat up again, the increase in the HSR thresholds is welcome, and may simplify transactions that fall above the current HSR thresholds, but below the new ones.

Published on:

By

Last Thursday, the FCC’s Media Bureau issued a Letter Decision involving two disputed coordinate correction applications for a station’s main and auxiliary antennas that, at least on paper, proposed to increase the short spacing to another radio station. In the Letter Decision, the Media Bureau spelled out the circumstances under which a requested coordinate correction, absent an actual change in facilities, will be approved by the Media Bureau.

Certain FCC applications and registrations require parties to specify the geographic coordinates for the site that is the subject of the filing. Examples of such FCC filings include applications for modifications to an AM or FM broadcast station on FCC Form 301 or 302, antenna and tower registrations on FCC Form 854, and applications seeking authorization to operate studio transmitter links on FCC Form 601. The Letter Decision emphasized that the coordinates supplied to the FCC should be accurate not only to prevent interference among stations, but also to avoid unanticipated and potentially costly disputes like the one discussed in this decision.

As detailed in the Letter Decision, a California broadcaster filed applications seeking to correct its main and auxiliary transmitter site coordinates on FCC Form 302-FM pursuant to the FCC rule that allows a station to correct its coordinates by no more than three seconds of latitude and/or longitude without requesting a new construction permit. The applications in question were opposed by a broadcaster in an adjacent market who argued that the applications to correct the coordinates would impermissibly increase the existing short spacing between the applicant’s station and its station. While the correction of coordinates did technically reduce the stated distance between the stations, it did so by only 304 feet.

The Media Bureau stated in the Letter Decision that it is an “undisputed fact” that the coordinate changes proposed would increase the short spacing, but it decided to approve the applications because the increase in short spacing was negligible, or “de minimis.” In doing so, the Media Bureau relied on a 1998 case involving a coordinate correction that proposed a “paper” change in coordinates of a similar distance (less than a tenth of a kilometer).

However, the Media Bureau also concluded that in assessing the distances between transmitter sites to determine whether a short-spacing is increased under the FCC’s Rules, it will round distances to the nearest kilometer. Using this rounding methodology, the distance between the stations in the Letter Decision remained unchanged by the correction, since both the old and the new distances rounded to 221 kilometers, and therefore created no “change” in the short spacing between the stations.

The take away from the Letter Decision is that the Media Bureau will likely approve applications to correct coordinates that increase an existing short spacing where (i) the application is for correction of site data that does not involve an actual facility change; (ii) the correction raises no environmental or international (or other) issues; (iii) the difference between the authorized and corrected spacing involved is de minimis (keep in mind the only clear line even after the Letter Decision is that a tenth of a kilometer, or less, will be considered de minimis by the FCC); and (iv) a change of more than a tenth of a kilometer may be permissible where rounding to the nearest kilometer would indicate no change in the distance between stations.

Published on:

By

As a follow up to my earlier post today, the FCC has just released a decision rejecting a political advertising complaint filed by Randall Terry against WMAQ-TV in Chicago.

The FCC ruled that Terry failed to meet his burden to demonstrate to the station that he is a bona fide candidate for the Democratic Presidential Primary in Illinois. The FCC also ruled that even if Terry were a bona fide candidate, it was reasonable for the station to reject his request for ad time during the Super Bowl, since a station could reasonably conclude that “it may well be impossible, given the station’s limited spot inventory for that broadcast, including the pre-game and post-game shows, to provide reasonable access to all eligible federal candidates who request time during that broadcast.”

One aspect of the decision that is particularly interesting is the FCC’s conclusion that the mere fact that some stations may have aired the spots did not make another station’s decision not to air them unreasonable. The FCC assessed the degree to which Terry demonstrated he had broadly campaigned in Illinois, concluding that “[r]eview of the information provided by Terry to the station regarding his substantial showing demonstrates that much of it is either incomplete or without specific facts to support his claims regarding particular campaign activities” and that “the few locations in which he mentions campaigning fail to demonstrate that he has engaged in campaign activities throughout a substantial part of the state, as required by Commission precedent.”

While it is unlikely this decision marks the end of the controversy, it will certainly allow broadcasters to breathe easier for the moment. Unavoidably, however, the decision provides a road map to those seeking to exploit the rules in the future, detailing the type of showing they will need to make “next time” to establish a right to reasonable access, equal opportunity, and lowest unit charge (although probably not during the Super Bowl). While the FCC today set the bar appropriately high for establishing a bona fide candidacy, the benefits conveyed to candidates by the Communications Act are sufficiently attractive that it likely won’t be long before we see an effort by another “candidate” to clear that hurdle.

Published on:

By

If you are a television broadcaster, count yourself fortunate if you have not heard from the ad agency for Randall Terry. In a self-proclaimed effort to exploit the laws requiring broadcasters to give federal candidates guaranteed access to airtime as well as their lowest ad rates, Terry has announced he is running for President and wishes to air anti-abortion ads containing graphic footage of aborted fetuses during Super Bowl coverage and elsewhere.

Stations seeking not to air the ads have been the recipients of angry messages from the Terry campaign arguing that stations have no choice but to carry the ads under federal law, and they are not permitted to modify the ads in any way to delete the graphic content. That would be a generally accurate statement of the law if Terry is indeed a qualified “bona fide” candidate for President. The Terry campaign has already lodged at least one complaint at the FCC against a Chicago station for refusing to run the ads, and has sent messages to stations threatening a license renewal challenge if they don’t run his ads.

To say the least, this puts stations in an awkward position. If the FCC rules that Terry is a bona fide candidate, then stations that refused to air the ads are in violation of the political ad provisions of the Communications Act. If they air the ads and the FCC rules that Terry is not a bona fide candidate, then the stations are potentially liable for the content of those ads (since the “no censorship” rule on political ads wouldn’t apply). Either way, they risk license renewal challenges, either from Terry or from offended viewers. Even after the FCC rules, it’s a fair bet that the decision will be appealed, meaning that it may be a while before broadcasters have any clarity as to their legal obligations.

What has been absent from the discussion so far, however, is that the issue may loom far larger over other federal candidates than it does over broadcasters. The Communications Act grants federal candidates rights that no commercial advertiser has–a guaranteed right of access to a station’s airtime and, during the 45 days preceding a primary and the 60 days preceding a general election, a guarantee of paying the lowest available rate for ad time. Stated differently, broadcasters are required to air political speech they may disagree with, and to economically contribute to the candidate by selling airtime at prices below what they would be charging other short-term advertisers. An argument can be made that the former violates a broadcaster’s First Amendment rights, and that the latter violates both a broadcaster’s First Amendment rights (by requiring it to subsidize a candidate’s political speech), and its Fifth Amendment rights (via a government “taking” of its airtime and ad revenue).

Because broadcasters have always seen the carriage of candidate ads as part of their civic duty, they have carried them with a smile and not seriously challenged the statute that imposes these obligations. However, episodes like the Terry ads expose what we have always known about these rules, and that is simply the fact that they could easily be gamed. Some of the media have described the Terry ads as attempting to exploit a “loophole” in the law, but that is of course not really accurate, since a loophole suggests the law is working in a way other than intended when in fact, guaranteed carriage and lowest unit charge for bona fide federal candidates is the very purpose of the law.

Given the number of comedians and others over the years that have taken steps to run for President, I am frankly surprised that we have not yet seen the political ad that says “I’m George Smith and I’m running for President. I hope you’ll vote for me, but whether you do or don’t, I think you’ll find that the trip to the voting booth goes well with a nice cold Smith-brand beer.” Such ads could well qualify for guaranteed placement and the lowest possible ad rates.

If broadcasters find themselves increasingly forced to carry and subsidize “candidate” ads that cause their viewers to tune out while the advertiser avoids paying normal ad rates, the unspoken agreement between broadcasters and the federal government to live with the political advertising rules may come to an end, leading to a constitutional challenge of those rules. Sound farfetched? Not really. For decades, the FCC enforced an EEO rule that went beyond what was constitutionally permissible, but the FCC had perfected the art of fining stations an amount large enough to ensure future compliance, but low enough that it wasn’t worth the expense of challenging the rule in court. That “truce” between broadcasters and the FCC ended when the FCC upped the ante and sought to take a station’s license away for alleged EEO rule violations. At that point, our firm was hired to defend the station’s license at hearing. We let both the FCC and the petitioner that had raised the challenge know that the station was ready to vigorously defend its license, and that pursuing the case could well result in a court invalidating the FCC’s decades-old EEO rule. They pursued the case anyway, and the U.S. Court of Appeals for the DC Circuit did indeed toss out the EEO rule as unconstitutional.

Broadcasters are now faced with a somewhat similar situation, where their licenses are being threatened because a potential petitioner is arguing that they must forgo their First Amendment right to select their content, and instead air content (at a discount) that they find visually repugnant, regardless of their own political views on the abortion issue. If they are forced to do so, they have a beautiful set of facts with which to challenge the political ad provisions of the Communications Act, potentially resulting in a finding that those provisions are not constitutional in the current media environment, much to the detriment of candidates everywhere.

It is therefore not surprising that steps are being taken to avoid this “high noon” constitutional showdown between broadcasters and the Communications Act. The Democratic National Committee attempted to take some of the pressure off of broadcasters by releasing a letter stating, among other things, that “Mr. Terry’s claims to be a Democratic candidate for President are false. Accordingly, he should not be accorded the benefits of someone conducting a legitimate campaign for public office.” This letter gives the FCC ammunition to support broadcasters that do not wish to air the ads, and it is in no one’s interest to force broadcasters into a corner where challenging the constitutionality of the political rules is their least objectionable option. If that happens, future candidates could well find that they will no longer be “accorded the benefits of someone conducting a legitimate campaign for public office.”

Published on:

By and

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:

  • Failure to Refresh Tower Paint Garners $8,000 Fine
  • FCC Levies $25,000 Fine for Failure to Respond
  • $85,000 Consent Decree Terminates Investigation Into Unauthorized Transfers of Control

Tower Owners Receive Harsh Reminder Regarding Lighting and Painting Compliance
The FCC, citing air traffic navigation safety, has fined many tower owners for noncompliance with Part 17 of the Commission’s Rules. Part 17 includes regulations pertaining to the registration, maintenance and notification obligations of tower owners. The base fine for violating Part 17 requirements is $10,000.

Part 17 supplements the notification obligations imposed by the Federal Aviation Administration (“FAA”). Section 17.7 of the FCC’s Rules requires that certain tower structures, including most structures over 200 feet in height and those near airports or heliports, be registered with the FCC. Section 17.21 mandates that most towers over 200 feet be lit and painted in accordance with the FAA’s recommendations. These recommendations include the use of orange and white paint (alternating bands) and red or white flashing, strobe or static lights.

With the recent release of two Notices of Apparent Liability (“NAL”), the FCC continued its pursuit of those who fail to comply with its tower rules, including Section 17.50, which mandates that any tower required to be painted in accordance with the FAA’s guidelines or the FCC’s Rules must be cleaned or repainted as often as necessary to maintain good visibility.

In the first of the two NALs, agents from the Dallas Field Office inspected a 402-foot tower located in Quanah, Texas and determined that the existing paint, which was faded, scraped, peeling or missing in certain areas, was insufficient. The NAL indicates that the agents were unable to distinguish between the orange and white bands from a “quarter mile from the [tower]”, thereby “reducing the structure’s visibility.”

Shortly after the Quanah inspection, agents from the Dallas Field Office also inspected a 419-foot tower located in Durant, Oklahoma. The agents found a similar situation, where the tower’s paint was faded, scraped, peeling or missing in certain areas. The agents were again unable to distinguish between the orange and white bands from “800 feet away from the [tower]”, once again “reducing the structure’s visibility.”

The FCC levied the full base fine of $10,000 against each tower owner. The FCC also mandated that no later than 30 days after the release of the respective NAL, a “written statement pursuant to Section 1.16 of the Rules signed under penalty of perjury by an officer or director of [the tower owner] stating that the [tower] has been painted to maintain good visibility” be delivered to the Dallas Field Office.

Continue reading →

Published on:

By

The Comment and Reply Comment dates have been set for the FCC’s Notice of Proposed Rulemaking in the Congressionally-mandated Quadrennial Regulatory Review of the FCC’s broadcast ownership rules. Comments are due on March 5, 2012 and Reply Comments are due on April 3, 2012.

As discussed in more detail in our Advisory, the NPRM can fairly be described as the regulatory equivalent of moonwalking–appearing to go forward with deregulation while actually going backward–and it is important for broadcasters to step up and get involved.

While the FCC tentatively has concluded that, other than minor tweaks that may not be so minor, it will make almost no changes to any of its broadcast ownership rules, the NPRM asks many questions about the future of the media marketplace. In particular, the NPRM seeks to scrutinize many contractual relationships among broadcasters, such as Local News Services (“LNS”) agreements and Shared Services (“SSA”) agreements, that currently fall outside of the FCC’s ownership rules, and asks whether those rules should be modified to make such agreements attributable ownership interests.

The commissioners’ separate statements regarding the NPRM make clear that the lack of definitive forward movement is the result of significant differences among the commissioners along the traditional regulatory/deregulatory fault line. This fault line is particularly apparent with regard to the suggestion that the ownership rules be expanded to encompass a wide array of contractual and operational practices in the industry.

When the FCC released the Notice of Inquiry in 2010 that commenced this proceeding, it did not ask for comment regarding whether any contractual arrangements should be deemed attributable under the FCC’s ownership rules. The FCC’s sudden interest now is therefore the result of comments filed by public advocacy groups in response to the Notice of Inquiry. These comments follow on the heels of calls for disclosure of such agreements in other proceedings, such as the proceedings concerning online public inspection files and quarterly public interest programming report requirements for television broadcasters, and the FCC’s report on the Information Needs of Communities. These advocacy groups assert that inter-broadcaster agreements result in layoffs, lower the quality of news programming, reduce the number of diverse voices in a market, and allow a station to have as much control over another station’s programming and operations as a Local Marketing Agreement (“LMA”), which the FCC already regulates under its ownership rules.

The FCC notes in the NPRM that its attribution rules are intended to restrict any arrangement which confers such influence or control over a station that it has the potential to impact programming or other “core” functions of that station. The FCC asks whether LNS and SSA arrangements confer a level of influence similar to an LMA, and if so, whether they should therefore be regulated like LMAs. Related to this question, the FCC asks whether the amount of local news programming available in a market would be reduced if LNS and SSA agreements are restricted in the same manner as LMAs.

While the FCC’s future treatment of such agreements is only one of many consequential matters presented by the NPRM, it is one that will have a significant impact on how broadcasters operate in the future. Although the FCC’s NPRM may itself be an exercise in regulatory moonwalking, broadcasters now need to put their best foot forward, or face the prospect of more regulation from this “deregulatory” proceeding.

Published on:

By

By Lauren Lynch Flick and Lauren A. Birzon

Certain stations must also file proxy paperwork and additional fee to avoid usage reporting for the year.

As January comes to a close, don’t forget that annual minimum copyright royalty fees for webcasting and internet simulcasting of radio programming, along with the corresponding forms, are due to SoundExchange by January 31, 2012.

With the exception of certain eligible noncommercial broadcasters (those that are affiliated with NPR, APM, PRI or certain other organizations and have timely elected the rates and terms negotiated with SoundExchange by the Corporation for Public Broadcasting), commercial and noncommercial webcasters and broadcasters streaming content on the Internet must submit the appropriate Annual Minimum Fee Statement of Account, along with a minimum fee payment of $500.00 per stream. For webcasters with multiple streams, the total fee is capped at $50,000.00.

January 31st is also the deadline for certain filers to elect “proxy” reporting, which allows the streamer to pay an additional $100 fee and avoid having to submit regular reports of use to SoundExchange during 2012. This option is only available to certain categories of streamers. “Small Broadcasters” (broadcasters with fewer than 27,777 aggregate tuning hours in 2011), “Noncommercial Educational Webcasters” (noncommercial educational webcasters with fewer than 55,000 monthly aggregate tuning hours in 2011) and “Noncommercial Microcasters” (noncommercial webcasters other than educational webcasters with fewer than 44,000 aggregate tuning hours in 2011) may choose this exemption by filing the appropriate Notice of Election and a $100.00 fee by January 31st, 2012. Certain other filers that are not eligible for a reporting waiver must still file the Notice of Election to elect an alternative to the standard Copyright Royalty Board rates.

Annual Minimum Fee Statements of Account, Notices of Election, and payments should be sent to SoundExchange, Inc., 1121 Fourteenth Street, NW, Suite 700, Washington, DC 20005, Attn: Royalty Administration.

A PDF version of this article can be found at Reminder: Annual Minimum Fee Statements for Streaming Due to SoundExchange by January 31, 2012.

Published on:

By

One of the curiosities of communications law is that while there are thousands of applicable rules and statutory provisions, there are a handful that the FCC likes to enforce with particular gusto. One of these is the rule regarding how on-air contests must be conducted. Over the years, many broadcasters have found this to be a “strict liability” rule, with any problem that occurs in an on-air contest being laid at the feet of the broadcaster along with the standard $4,000 fine. As a result, despite the myriad state laws governing the conduct of contests, broadcast contests tend to be some of the more carefully conducted contests out there.

The rule itself, Section 73.1216, is one of the most concise of the FCC’s rules, being only two sentences long: “A licensee that broadcasts or advertises information about a contest it conducts shall fully and accurately disclose the material terms of the contest, and shall conduct the contest substantially as announced or advertised. No contest description shall be false, misleading or deceptive with respect to any material term.” Significantly longer than the rule itself, however, are the three footnotes to the rule, which provide details about what must be disclosed and how. The key requirements are that the “material terms” of the contest be disclosed on-air through “a reasonable number of announcements”. The typical basis for a $4,000 contest fine is that the station either fails to adequately disclose the material terms of the contest, or fails to comply with those terms in running the contest (for example, failing to award the stated prize).

What has changed since the current rule was adopted in 1976, however, is that stations increasingly have a station website with much content that is independent of their broadcast content, including online contests. While a station and its website will obviously cross-promote each other, neither is a substitute for the other, and each is a separate channel of communication with the public. As a general rule, the FCC has no jurisdiction over websites, and has not attempted to regulate contests that are not conducted on-air. While online contests are subject to numerous state and federal law requirements, they are not normally the subject of FCC proceedings.

Yesterday, however, the FCC released a decision proposing to fine a number of Clear Channel radio stations $22,000 for contest rule violations relating to a car contest conducted on the stations’ websites. Both the size of the fine and the fact that it does not relate to a true on-air contest make it a noteworthy decision. In the contest, listeners were invited to submit video commercials for Chevrolet (keep in mind the stations fined were radio stations), with the contestant submitting the best commercial winning a car. The FCC received a complaint from a listener who argued that the stations involved in the contest failed to disclose the material terms of the contest on-air, failed to conduct the contest in accordance with the stated rules, and improperly awarded the prize to a friend of an employee.

While the FCC declined to find that the contest was “fixed” merely because the winner was a friend of a station employee, it did find that the stations failed to disclose the material terms of the contest on-air, and that the stations failed to conduct the contest in accordance with the rules in any event, principally because the rules were internally inconsistent. One provision in the rules stated that entries would be accepted through March 21, 2008, but another provision stated that judges would select a winner on March 10, 2008, before the stated deadline for entries had passed.

In its defense, Clear Channel argued that the FCC’s rule doesn’t apply, since the contest was conducted on the stations’ websites, and was not a broadcast contest. In addition, it noted that the contest rules were posted on the station websites where the contest was being conducted. The FCC rejected this argument, stating that the stations had promoted the contest on-air, and that this cross-promotion made the contest a broadcast contest subject to the FCC’s rule. Interestingly, it does not appear from the FCC’s order that Clear Channel made the arguments that: (1) stations promote advertisers’ contests all of the time and the mere fact that a contest is promoted on-air does not extend the FCC’s jurisdiction to the conduct of those contests, and (2) there isn’t any reason from a First Amendment standpoint for requiring a different level of disclosure from a broadcaster than any other party choosing to promote its online contest on-air.

Having concluded that its contest rule applied, the FCC found that the stations violated that rule when they failed to air announcements disclosing the material terms of the contest rules, and that they also violated the rule by failing to accurately state the deadline for entries, creating confusion among listeners. Noting that the contest was promoted on multiple stations, that Clear Channel has previously been found in violation of the contest rule on multiple occasions, and that Clear Channel has “substantial revenues”, the FCC increased the base fine of $4000 to $22,000, an unusually high amount for a contest rule violation.

So what should broadcasters take away from this decision? First, that any on-air promotion of a contest makes it a “broadcast contest” unless the contest is conducted by a third party. In this regard, stations will want to be careful about co-sponsoring an advertiser’s contest, since an advertised contest that otherwise fully complies with all state and federal laws can suddenly cause a problem if the FCC concludes that it is a licensee-conducted contest.

Second, and this part is nothing new, stations and others conducting contests need to make sure that the contest rules are carefully written, consistent with law, and not confusing to potential contestants. Surprising as it is, major companies holding national contests frequently fail to accomplish this successfully, and the lawyers in our Contests & Sweepstakes practice are regularly called upon to draft or revise contest rules to avoid this problem. Given yesterday’s FCC decision, broadcasters have one more reason than everyone else to make sure that their contests, online or otherwise, are carefully conducted to comply with the law.

Published on:

By

It is clear to anyone paying attention that the FCC (along with FEMA) has been working diligently to improve the Nation’s Emergency Alert System (EAS). In the last few years alone, the FCC has, among other things, initiated proceedings requiring EAS Participants to accept messages using a common EAS messaging protocol (CAP) for the next generation of EAS delivery; provided guidance regarding “live code” testing of EAS; adopted standards for wireless carriers to receive and deliver emergency alerts via mobile devices; and conducted the first ever nationwide test of the Emergency Alert System.

In its latest effort, the FCC issued a Report and Order earlier this week revising the FCC’s Part 11 EAS Rules to specify the manner in which EAS Participants must be able to receive CAP-formatted alert messages, and making other changes to clarify and streamline the Part 11 Rules. As I reported previously, all EAS Participants are required to be able to receive CAP-formatted EAS alerts no later than June 30, 2012.

The FCC’s latest Order focuses on the steps necessary to ensure that CAP messages can be processed in the same manner as the currently-used protocol, Specific Area Message Encoding (SAME). The FCC concludes that, for at least the time being, it should maintain the existing legacy EAS daisy chain, including using the legacy SAME protocol, because switching over to a fully CAP-centric EAS system is currently technolocigally infeasible given that most EAS Participants can receive, but are unable to pass along, messages using CAP. Thus, the FCC has a adopted a “CAP-in, SAME-out” transitional approach where EAS equipment will be required to receive and convert CAP-formatted messages into a SAME-compliant message to be sent downstream. In doing so, the FCC agreed with a majority of the commenters in the proceeding, including the National Association of Broadcasters, who argued that “there is a definite value in retaining the current ‘daisy-chain’ EAS distribution system as a proven, redundant method of delivering public alerts.” The FCC’s decision is also consistent with comments filed by a consortium of the State Broadcasters Associations, who stated that “it makes little sense for the FCC to adopt sweeping Next Generation EAS rule changes at this time when legacy EAS, as governed by the Commission’s current Part 11 Rules, is going to be around for the foreseeable future.”

While the FCC’s Order is limited in scope, it is not limited in length, coming in at 130 pages. Highlights of the Order that are of particular interest for EAS Participants include the following:

  • EAS Participants will be required to use the procedures for message conversion in the EAS-CAP Industry Group’s (ECIG’s) ECIG Implementation Guide, which was adopted by FEMA on September 30, 2010. Among other things, the ECIG Guide outlines how parties can convert CAP-formatted messages into SAME-compliant messages.
  • The FCC has decided that it would be unrealistic to require EAS Participants to use a specific technical standard for CAP monitoring. As a result, while EAS Participants will be required to monitor FEMA’s Integrated Public Alert and Warning System (IPAWS) system for federal CAP-formatted alert messages, they will be permitted to do so using whatever interface technology is appropriate for them as long as the equipment used is able to interface with IPAWS.
  • The Order states that the FCC will allow EAS Participants to meet their obligation to receive and process CAP messages by using intermediary devices (stand-alone devices capable of decoding CAP-formatted messages) in tandem with their existing legacy EAS equipment.
  • Among a series of Part 11 Rule revisions, the FCC is amending Part 11 to require EAS Participants to use the enhanced rich text data in CAP messages to create video crawl displays.
  • The Order indicates that the FCC will allow parties to file for waivers of the requirement to monitor, receive, and process CAP-formatted messages. The FCC indicates that a lack of broadband Internet access will create a presumption in favor of a waiver. However, it is important to note that the FCC has limited such waivers to six months, with the option to renew if circumstances do not change.
  • As part of a lengthy discussion, the Order adopts streamlined procedures for EAS equipment certification that take into account the standards and testing procedures adopted by the current FEMA IPAWS Conformity Assessment Program for CAP products. In doing so, the FCC is also incorporating conformance with the ECIG Implementation Guide into the certification process.
  • The Order also streamlines rules governing the processing of Emergency Action Notifications (EAN) and eliminates several provisions of Part 11, including the Emergency Action Termination (EAT) event code and Non-Participating National (NN) status.

The FCC also agreed with a proposal advanced by the State Broadcasters Associations and others to eliminate the requirement that EAS Participants receive and transmit CAP-formatted messages initiated by state governors. The FCC agreed that the gubernatorial requirement should be eliminated because “there is near universal voluntary participation by EAS Participants in carrying state and local EAS messages … [and] having an enforceable means to guarantee such carriage seems unnecessary.”

As even the highly condensed summary above indicates, the FCC’s Order is lengthy, very technical at times, and includes many rule changes and tweaks that EAS Participants will need to learn. EAS Participants should therefore become very familiar with the Order if they are going to be able to comply with these requirements going forward. They will also need to stay tuned for further developments in this rapidly changing area. With the June 30, 2012, CAP-compliance deadline growing nearer every day, EAS will remain a lively area for the FCC in the coming months.