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What can broadcasters expect from Chairman Pai? We’ll be summarizing some of the issues now facing the Commission in the next few days. But in the past, Commissioner Pai has been a big advocate of AM improvement, even moderating panels at NAB and other conventions to discuss ways to resolve AM issues. He also has spoken out against restrictive ownership rules (a review of which are likely to be on the agenda shortly, see our articles here and here), and against many of the nitty-gritty regulations that broadcasters face – most recently about the noncommercial ownership reporting rules for Biennial Ownership Reports (see our post here). So we are likely in for a deregulatory ride – how far and how fast remain to be seen. Look for our upcoming posts on specific issues that may be on the table for the FCC.
February 27-March 2 marks the annual gathering of broadcasters in the Nation’s Capital. The Nevada Delegation will be meeting with state representatives to discuss a number of key issues facing broadcasters including:
· Performance Tax – new cosponsors for the 115th Congress Local Radio Freedom Act (if your member has already signed on than a big thank you will suffice!)
· Advertising Tax Deductibility
· Spectrum Auction Repack/Relocation Fund
· Retransmission Consent
The FCC yesterday released its tentative agenda for its January meeting, to be held on January 31. This will be the first meeting of the post-Chairman Wheeler era, and the two Republican commissioners will be in the majority for the first time in 8 years. There is a single item on the tentative agenda – the abolition of the requirement that broadcasters maintain a paper public file, open for public inspection, containing letters and emails from the public about station operations. The order also deals with the obligation of cable operators to maintain information about their headends in their public file. We wrote in more detail about the FCC’s proposal to abolish this requirement, here. On January 31, we may see the first deregulatory actions of this new Republican-majority Commission. It will be worth watching to get our initial indication of how the regulatory treatment of broadcasters may change under the new Administration.
At the beginning of each year, we publish our broadcaster’s calendar of important dates – setting out the many dates for which broadcasters should be on alert as this year progresses. The Broadcasters Calendar for 2017 is available here. The dates set out on the calendar include FCC filing deadlines and dates by which the FCC requires that certain documents be added to a station’s public file. These dates just recently changed for noncommercial broadcasters as the FCC suspended its requirement that noncommercial stations file Biennial Ownership reports every other anniversary of their license renewal filing (see our post here). Instead, their reports will be due on December 1 deadline which is the deadline for all stations, both commercial and noncommercial, to file these Biennial reports. That deadline is included on this calendar. In some states there are political windows even in what seemingly is an off year for elections (two governors and several big-city mayoral races are particularly noteworthy). The date for the beginning of the lowest unit rate window for the November general election is on the calendar, but stations need to check locally for primary dates and for any special elections that may be held in their service areas. Also included are some copyright deadlines, including dates to make payments to SoundExchange for Internet streaming royalties.
While the dates on this calendar may change, and new ones may be added, this at least gives you a start in planning your regulatory obligations. And, remember, you should always talk to your own attorney to make sure what dates are important to you.
The FCC yesterday issued a Public Notice of the filing of a Petition for Rulemaking asking the FCC to declare that a broadcaster, by using its own airwaves and online sources to publicize job openings at its station, satisfies the requirement that a broadcaster widely disseminate information about job openings to members of all groups within its likely recruiting area. In 2002, when the FCC adopted its current EEO rules, it determined that online recruiting would not widely disseminate information about job openings in the way that a local newspaper would given the digital divide that the FCC thought existed at that time. But, the FCC said that it would later revisit that decision as circumstances change. The petition suggests that circumstances have indeed changed in the 14 years since the rules were adopted, that online recruiting is how people now find and apply for new jobs, and that it is time that the FCC recognize that fact and allow online recruiting to satisfy the obligation that a broadcaster give its community notice of job openings. Comments are due January 30, and replies on February 14.
The FCC has up to this point actively enforced its prohibition on station’s relying solely on its own airwaves and online sources for recruiting purposes, fining stations who meet their wide dissemination obligations solely by relying on such sources (see our articles about such cases here and here). But some at the FCC itself have recognized that this position no longer makes sense – including Commissioner O’Rielly who, in a blog post we wrote about here, suggested that broadcast recruiting in today’s world is appropriately done online, and that the FCC’s rules should reflect that fact. As set out in the Petition, Julius Genachowski, then-chairman of the FCC, recognized in a speech that: “In today’s world, you need broadband to find a job and apply for a job, because companies increasingly require online applications.” The petition notes that the FCC has recognized that the Internet is fine for public files and contest rules, so shouldn’t it also be found to be sufficient to get out the word about job openings?
This petition and comment period just start the ball rolling. After comments are filed, the FCC’s staff will read and analyze those comments. If they decide to move forward, they will issue a Notice of Proposed Rulemaking, setting out the specific rule changes that they are looking to make, and asking for another set of public comments on those specifics. Following the rulemaking process, the FCC can act to adopt the new rules. So watch as this process continues in the coming months.
In the interests of full disclosure, I filed the petition for rulemaking on behalf of clients of our law firm.
After months of speculation, Chairman Wheeler today announced that he will step down from the FCC on Inauguration Day. Together with the Senate not confirming the renomination of Commissioner Rosenworcel (as the Senate is effectively on recess and not expected to return before the end of the term, her renomination will almost certainly not be approved in this session of Congress, meaning that she must step down when the Congress adjourns on January 3), that leaves three Commissioners on the FCC. Two are the current Republican commissioners – Pai and O’Rielly – and Democratic Commissioner Mignon Clyburn. What will that mean for broadcasters?
First, it is expected that one of the two Republicans will be named as Acting Chairman to set the agenda for the first few months of the Trump administration, until a permanent Chair is announced (and confirmed by the Senate, if that Chair is not one of the two current Republicans). These commissioners have been vocal in their dissents on several big issues for broadcasters – including the repeal of the UHF discount (about which we wrote earlier this week) and on other issues dealing with the ownership of television stations – including the decision to not repeal the newspaper-broadcast cross-ownership rules, and the decision to reinstate the FCC’s ban on Joint Sales Agreements in TV unless they are done between stations that can be co-owned. We already speculated about these issues being on the Republican agenda soon after the election. What other issues are likely to be considered?
Certainly, the abolition of the requirement that commercial broadcasters maintain in its public file copies of all letters and emails from the public about station operations is already on the table (see our article here), and could easily be adopted quickly. It is also possible that a formal petition for rulemaking on ATSC 3.0 would be released, as some TV operators have been pushing to move the next-generation of television closer to becoming a reality. Commissioner O’Rielly has also suggested that EEO recruiting be moved online (which, thus far, the FCC has not recognized as alone being sufficient to meet the EEO requirements that job opening information be widely disseminated to all groups within a station’s service area – see our article here). I recently filed a petition on behalf of a client seeking that relief (see the petition here), so the FCC could move on that issue. Commissioner Pai has also been a big advocate for AM broadcasters so further action on the revitalization of AM now before the FCC (see our post here) could also be given higher priority by the FCC. Commissioner O’Rielly has also suggested tougher enforcement actions against pirate radio operators.
In a broader sense, there may be reform of how the FCC does business. Both Republican Commissioners have suggested process reform – to make the actions of the FCC more transparent so that interested parties know what issues are on the table and what rules are being considered – before they are adopted. This is clearly important so that the rules, before they are adopted by the FCC, can be vetted by those affected to be sure that no inadvertent “gotchas” result from imprecise language in the rule. Timing of FCC decisions is also important, so that the FCC expeditiously moves on matters that can affect the businesses of broadcasters and other regulated entities. It would also be expected that these Commissioners will be concerned with the costs of implementing regulations that are adopted – and especially how regulations affect the small companies to which they apply. So often rules are adopted that may make sense, or may be feasibly implemented, in large markets, but which are a real burden to those stations in smaller markets.
Of course, many hopes can be projected whenever there is a change in control of any entity – whether it be a business or a government agency. As with so much else in life, only time will tell what actually happens. But both of the Republican commissioners and Commissioner Clyburn as well (under whose acting Chairmanship the AM revitalization proposals were first advanced), have shown real interest in broadcast regulation. So broadcasters can hope that the new FCC will take actions that will allow them to concentrate their efforts on serving their communities through great programming and other public service efforts.
Just a few weeks ago, we wrote about the Radio Music License Committee (RMLC) filing a lawsuit against Global Music Rights (GMR) alleging that GMR was violating the antitrust laws by offering an all or nothing blanket license for rights to play the songs written by certain songwriters now represented by this new performing rights organization. RMLC was seeking to impose some oversight over the rates being charged for GMR royalties. This would be similar to the controls over the rates of ASCAP, BMI and SESAC, whose rates can only be imposed following an agreement with a copyright holder or, where there is no voluntary agreement, by a determination by a court (for ASCAP and BMI) or an arbitration panel (for SESAC) that the new rates are reasonable. Now, GMR has filed its own lawsuit against RMLC (though it claims that its suit is unrelated to the one that RMLC filed against it) alleging that it is RMLC that is violating the antitrust laws (and certain California statutes) by forming a “cartel” of buyers, i.e. commercial radio stations who are refusing to deal with GMR individually but instead are looking to RMLC for the negotiation of a license agreement that will cover the entire industry. What are the issues presented by this dueling litigation?
The RMLC suit is premised on the concept that any time multiple products from independent marketplace competitors (in this case the songs of multiple songwriters) are packaged together and sold at an all or nothing price, there is the potential for obtaining prices higher than would be obtained on the open market. For example, while a contemporary hits formatted radio station could potentially decide that the price of Adele songs are too high and pull those songs from its playlists, it is not able to do so if that song is bundled with songs written by Pharrell Williams, Bruno Mars, Beyoncé, Kanye West, Brittany Spears and Katie Perry (all of whom are listed on the GMR website as being part of its repertoire) so that the radio station either takes all the songs from all of those writers or none at all. While it might be able to get away with not playing one or two of these artists, if it has to pull them all, listeners will notice. If the station wants to keep playing in the format that it has selected, it has to pay the bundled rights fee asked by the representative performing rights organization.
In the GMR complaint (thanks to Radio Ink for posting it here), it takes the other side of the argument – alleging that it can’t negotiate independently with individual radio stations, as all of the radio stations are looking to RMLC to negotiate on their behalf. The GMR complaint alleges that this is a “buyer’s cartel” that has the effect of forcing down the rates that will be paid by radio stations for GMR music, seemingly suggesting that, if it could negotiate one on one with radio stations, it could get higher rates. In some senses, this may be true, as many smaller stations unfamiliar with the music licensing world and threatened with statutory damages of up to $150,000 for each song that it plays without a license might well cave into demands for payments by an organization that represents big name songwriters. But is this really an indication that licensing prices are being depressed by the negotiations with RMLC, or is it merely a reflection of the market power that can be exerted against these stations by a company jointly negotiating on behalf of a group of big-name songwriters, as alleged in the RMLC complaint?
In reality, it is in everyone’s interest in the music community that there is this kind of joint negotiation between associations representing music users and rights organizations representing copyright holders. As most radio stations don’t have individuals at their stations familiar with music licensing practices, it is difficult to imagine the small station in Ottumwa, Iowa or Elko, Nevada, or Dothan, Alabama each negotiating with all of the songwriter representatives. With almost 16,000 radio stations in the country, without industry-wide negotiations, it would be an almost impossible job to negotiate licenses with every station individually. Similarly, stations benefit from having performing rights organizations that offer the works of many songwriters, as negotiating with individual songwriters and their publishing companies for each and every song that is played on the a broadcast station would similarly be an almost impossible task. Having industry associations negotiating on behalf of users and copyright holders provides incredible efficiencies – and works well, especially when the reasonableness of rates is determined by some outside body, putting checks on the bargaining power of both sides in the negotiations.
Other factors play into all of these issues. One concern that we have expressed in other articles is that of the fragmentation of the music licensing business. As set out in the GMR complaint, ASCAP and BMI each represent hundreds of thousands of songwriters and tens of millions of songs. GMR, on the other hand, represents less than 100 songwriters and only about 20,000 songs. If the GMR songwriters can withdraw from the big PROs and license at super-competitive rates, what is to stop other similar organizations from following the same model, or individual publishers to withdraw and to demand dramatically higher prices for their music (as has been threatened – see our articles here and here)? With the fact there are no comprehensive databases of who owns the copyright in what music, complicated by the issue of fractional licensing where there may be multiple songwriters each owning a part of a song which, if the Department of Justice’s position about 100% licensing is not adopted, it could effectively give holders of a small interest in a song the veto right over whether a song is played by a particular user (see our article here). It becomes very difficult for any music user to decide whether they can forego payment to any claimed rightsholder. The music licensing world becomes very complicated if others follow the path that is being blazed by GMR, and music licensing becomes further fragmented.
These are all broad issues that will no doubt lead to endless discussions on blogs and panels and in scholarly journals in the near future. And they are issues that may well be considered by Congress in the coming session in its promised review of the Copyright Act (see yesterday’s notice from the House Judiciary committee on its interest in reviewing the Act this year). But for the broadcaster who is trying to figure all this out, with the potential demands for licensing from GMR on January 1, 2017 when the withdrawal from ASCAP and BMI of much of the music that it represents becomes effective, what are stations to do? Unfortunately, I can’t give blanket advice to stations as to what to do, other than to urge them to educate themselves on these issues, and to consult their legal advisors as to the meaning of what seems to be a music licensing mess that lies before us (and perhaps say a little prayer that there is a last-minute settlement to these controversies that will allow everyone to go back to their normal business operations).
The Nevada Broadcasters Association mission is to “Promote and Advocate for Nevada’s Broadcasters, while serving the public. This is a big statement that carries a lot of responsibility and we have never been more committed to the great state of Nevada and the public in which we serve.
The NVBA is the voice for Nevada’s radio and television stations. The NVBA protects the interest of our member stations as well as our industry in the state and federal governments. We have a commitment to our members to constantly improve profitability, ensure journalistic integrity, maintain compliance and spotlight important issues that effect our state and the communities we serve.
“The only security of all is in a free press. The force of public opinion cannot be resisted when permitted freely to be expressed. The agitation if produces must be submitted to. It is necessary to keep the waters pure.”
Thomas Jefferson to Lafayette, 1823
We continue to grow and set new standards for the broadcasters of Nevada and the nation. It is necessary that the Nevada Broadcasters keep the water pure.