With the NAB Convention upon us, and much of the talk being centered on television issues including the repacking of the TV band after the incentive auction, the conversion to the next-generation of TV transmission as allowed by the new ATSC 3.0 transmission standard, and the effects of the FCC’s changes in the local television ownership rules and the reinstatement of the UHF discount in connection with the national ownership cap, it almost seems like radio is an afterthought. The FCC is considering some matters of interest to radio, including how to revitalize the AM band, and it has taken steps to revitalize individual AM stations through the use of FM translators. And the FCC is apparently considering changes in FM through the creation of a new class of C4 stations (see our post here). Yet, in recent ownership orders from the FCC, while TV ownership rules have been dramatically relaxed in the face of new video competition so that local TV owners can more robustly address their challengers, there were no corresponding changes in the radio rules. In the last ownership proceeding (which we summarized here), other than making changes to the embedded market rules (potentially affecting only radio stations in the suburbs of New York and Washington), and allowing ownership joint ownership of radio with TV and newspapers through the abolition of the cross-ownership rules that had limited or prohibited those combinations, radio ownership rules themselves have not been subject to any real changes in ownership limits since those limits were set in the wake of the 1996 Telecommunications Act. The FCC did make some changes early in this century when it adopted Arbitron (now Nielsen Audio) markets as the way in which competition in rated markets is defined, but the numbers of stations that one party can own has not changed since those numbers were established in the 1996 Act – even though Congress gave the FCC the authority to review and revise the rules to insure that they remained in the public interest.
While there have been no changes in the ownership rules for radio, think about the changes that have taken place in the competitive environment since 1996. At that point, streaming was something only a few technologically-forward people even knew existed. Pandora did not launch its streaming service for another decade, and Spotify was even further behind – not launching in the US until 2011. Even those few people who knew that audio streaming existed in 1996 would never have thought that they could listen to a streaming service in their cars. Apple was not offering a streaming music service – in fact it had not even introduced the iPod (introduced in 2001) or the iTunes store (2003) – both now about to become technological relics themselves because of technological changes. Given that there was no iPod, there were obviously no podcasts to bring audio storytelling to the millions who now listen to their favorite programming through the multitude of services that provide podcasts on almost any subject. There was no Alexa to bring Amazon and other music services into the home – in fact Amazon itself had only begun selling books online in 1995. Even Sirius XM (then Sirius and XM as two competing companies) had not initiated their services at the time of the 1996 Act – as XM did not start providing service to consumers for another 5 years (with Sirius launching a year later). And the pace of change for audio technology is not slowing.
Obviously, streaming to cars – radio’s most important listening venue – is already a reality. Between streaming and satellite radio, an unlimited number of audio channels is available to most Americans. Even drivers in rural areas with little or no mobile coverage providing sufficient bandwidth to deliver streaming services can receive Sirius XM service, and podcasts and cached content from certain subscription streaming services provide additional audio options in the car. And, over time, with driverless cars on the horizon, video may too become a competitor to radio in the car.
Radio reception in the home, too, is changing. Alexa, Google Home, and Apple HomePod provide direct voice-activated access to audio content that does not include traditionally-delivered over-the-air radio. Here, too, the number of channels of programming available from these services is effectively unlimited. These digital giants providing new audio competition – including Facebook, Amazon, Google and Apple – all have market capitalizations at or well above 500 billion dollars, dwarfing the total capitalization of the radio industry of less than 10 billion dollars.
The competition for radio revenue has also dramatically changed since 1996. In 1996, local advertising competitors were the local newspaper, some TV ads, and direct mail. Local cable TV ad insertion networks were in their infancy. And digital advertising competition really did not exist. Facebook did not launch to the general public until 2006 (being available to college students two years before), and Google wasn’t launched until 1998. Analysts say that digital services now take over half of the local advertising in most radio markets.
The fact that over-the-air radio continues to command a significant audience share is no doubt attributable to the quality and relevance of the content that it provides to local listeners, its ease of access, the lack of subscription fees and habit. But with all the competition now in the radio marketplace, rules that were written when the only competitive mobile audio content was from the cassette player would seem ripe for review. So are there regulatory changes on the horizon?
FCC Chairman Pai has promised to initiate the next Quadrennial Review of the FCC’s ownership rules at some point this year. In the 1996 Act, Congress charged the FCC with reviewing the ownership rules, including the radio ownership rules, on a regular basis to see if they were still in the public interest. Initially, that review was to be done every other year, but as these reviews tend to take significant time to complete, the law now requires a Quadrennial Review. Radio will no doubt be part of this upcoming review.
The real question will be what changes in the ownership rules the FCC is prepared to make to address the seismic shift that has occurred in the audio marketplace. Will the FCC recognize that radio is no longer an island unto itself? Will they recognize that radio no longer is a separate market where radio stations only compete with other radio stations? That is a real question, as sometimes the government is slow to recognize the transformation of the marketplace. For instance, in its consideration of the Entercom-CBS merger, the Department of Justice looked only at the radio marketplace in determining which stations Entercom would have to divest to complete the merger – not considering all of these other sources of audio competition in making its judgement.
One would think that an expert agency like the FCC, which will assemble input on the current state of competition from the entire spectrum of the media industry in connection with the upcoming Quadrennial Review, will be able to assess the true state of competition in today’s marketplace. But what would change look like?
In the past, some radio companies have suggested a lifting of the “subcaps” in the radio ownership rules that limit the number of AM or FM stations that can be owned in a single market (see our article here). Right now, in the largest markets, one party can own up to 8 stations, but no more than 5 can be in one service – AM or FM. Some fear that lifting the subcaps will mean that the big players will all migrate to FM, further damaging the already-ailing AM band. The FCC will need to address whether this artificial support for the AM band is still in the public interest – and consider whether, even if the big radio owners move to FM, that won’t create more opportunities for niche programmers on the AM dial.
A more far-reaching question is whether the lifting of the subcaps goes far enough to allowing radio owners to develop the synergies to compete with the plethora of new audio competitors. Some suggest that radio owners need to be able have a marketplace presence that is even deeper than 8 stations to compete in the radio marketplace itself, much less in the greater marketplace for audio entertainment and local advertising. For instance, in a market like New York City, BIA Kelsey (the broadcast analysis service on which the FCC relies to determine which stations compete in each market) says that there are 154 radio competitors serving all or part of the market. In Los Angeles, they say that there are 93 stations that compete in the market. Are 8 stations enough to really compete in the media marketplace in those markets?
Others worry that more concentration will shut out potential new owners, and believe that new technologies still don’t provide an equivalent means to reach the radio audience. Fearing that new entrants, diverse owners, and niche programmers will be priced out of radio ownership if more consolidation is allowed, some are likely to oppose any change in the radio ownership rules.
Small market radio provides its own challenges. In markets not rated by Nielsen, the FCC looks at the overlap of radio station’s service contours to determine which stations compete, and how many radio stations are in any market. In the smallest markets, a broadcaster can own up to 5 stations, no more than 3 or which can be in any service, and in no case can the broadcaster own more than half the stations in a market. Some small market broadcasters suggest that these limits often leave one or two weak stations in a market – stations that provide little local service. Just as many markets have a single newspaper (if they even have one); some argue that some smaller markets simply cannot support multiple commercial radio operators. Should the more successful stations in the market be allowed to own some of these orphan stations, or would further consolidation in the small markets foreclose service from some operator who might come up with a unique idea that could revive an otherwise failing station?
These will all likely be considerations for the FCC in the next Quadrennial Review. Radio broadcasters who have thoughts on these issues should start to convey those thoughts to the FCC now, so that the Commission can craft the appropriate questions to be asked in the Notice of Proposed Rulemaking that it will issue to start that proceeding at some point, likely later this year.
The FCC yesterday issued a Public Notice announcing a window for mutually exclusive applicants filed in the second translator window to attempt to resolve the interference conflicts that the FCC found to exist between certain applications. The conflicting applications are listed on the Excel spreadsheet found here. These are translator applications filed in the second translator window in late 2017 which was opened primarily so that Class A and B AM stations could seek authority to rebroadcast their signals on new FM translators that would be tied to those AM stations. While mutually exclusive parties can start discussions now about resolving the conflicts between their applications, engineering amendments resolving the problems or other settlement agreements can only be filed in a window open between May 24 and June 14.
As we wrote here, applications filed in this second translator window that are not mutually exclusive have already been told to file their “long-form” applications detailing their technical proposals by May 9. The FCC has also recently scheduled auctions for mutually exclusive applicants in the first 2017 translator window who were not able to resolve their mutual exclusivity in the settlement period opened in connection with those applications (see our article here). An auction of mutually exclusive applications left over from the 2003 translator window has also been scheduled (see our post here). So, all in all, the FCC is moving rapidly to authorize many new FM translators in the coming months.
April brings with it a milestone – as it is the end of the first quarter since all radio stations have had to have their online public inspection file “live” so that anyone, anywhere, can view a station’s compliance with rules that previously could only be judged by going to the station and reviewing the paper public file. April 10, in particular, is important, as it is when Quarterly Issues Programs Lists, summarizing the most important issues facing the community which the broadcaster serves and the programs that the broadcaster aired to address those issues, must be in the online public file for all full-power radio and TV stations. We wrote about the importance of these sometimes overlooked documents here, as these are the only FCC-mandated documents that reflect how a station has served the needs and interests of its community. We have also noted that, in the past license renewal cycle, missing Quarterly Issues Programs lists were the source of the most fines issued to broadcasters. Now that compliance can be judged at any time by the FCC, their importance is only magnified. So be sure that you get these documents into your online public file by April 10.
EEO Public Inspection File Reports, summarizing a station’s employment record for the prior year, are also to be uploaded to a station’s online public file. For radio and TV stations in Delaware, Indiana, Kentucky, Pennsylvania, Tennessee, and Texas, these reports need to be completed and included in the public file by April 1 by all stations that are part of employment units with 5 or more full-time (30 hours per week) employees. In addition, radio stations in employment units with 11 or more full-time employees in Delaware and Pennsylvania, and TV stations in Texas with 5 or more full-time employees, also need to file EEO Mid-Term Reports, commonly referred to as FCC Form 397 applications. While the FCC is considering the abolition of the Mid-Term Report (see our article here), the obligation is still in place so, for now, stations must comply.
TV stations also must file with the FCC, by April 10, their Children’s Television Reports, detailing the amount of educational and informational programming that they have broadcast on each of their subchannels. Here, again, there are proposals at the FCC for reform of this requirement (see our post here), but as no action has yet been taken, this report must still be filed. In addition, TV stations must include in their public file documentation showing that they complied with the advertising limits in children’s television programming.
April also brings various filing deadlines for various groups of stations. TV stations changing channels as a result of the incentive auction must file a Transition Progress Report by April 10. This is filed on FCC Form 2100 – Schedule 387 (see our article here).
Low Power TV stations and TV translators displaced by the repacking of TV stations following the incentive auction can file for “displacement channels” (channels that are in the new core TV band and not blocked by full-power stations) in a window that opens on April 10 and runs through May 15. See our article here about that window.
Radio stations involved in the recent translator filing windows have some important dates in April. April 18 through May 9 are the dates for the window for long-form applications by AM stations that filed applications for FM translators in the second FCC window that was open late last year for Class A and B AM stations to seek FM translators (see our article here). Applications that were not found to be singletons in that auction (in other words, those applications that did conflict with other applications filed during the window) should be looking for the announcement in the near term by the FCC of a filing window for amendments to applications to resolve their mutual exclusivity.
Responses to the FCC’s latest EEO audit are due by April 12. See our article here about that audit, which notes that responses are to be posted in a station’s online public file, not filed directly with the FCC.
A number of reply comments in pending FCC proceedings are due in April. Reply comments in the FCC proceeding to abolish the filing requirements for certain FCC contracts are due by April 2 (see our summary of the FCC proposals here). Reply Comments on the FCC’s inquiry into the national cap on TV ownership are due April 18 (see our summary here). And, finally, comments on the FCC’s proposals for an incubator program are due April 9 (see our summary here).
Another busy month in regulation for broadcasters seems to be in store. Always remember to check with your counsel for other dates that we may have missed here that are important to your station.
It appears that the FCC is attempting to clear its backlog of pending translator applications – and moving quickly to do so. On Friday, it released a Public Notice announcing a new auction beginning on May 15 for the small set of mutually exclusive applications left from last year’s window for the filing of FM translator applications by Class C and D AM stations, and setting the rules and procedures for that auction. While only 26 applications (in 12 groups of mutually exclusive applications – see the list in this Excel file) are involved in the auction, it shows that the FCC is trying to rapidly clear its decks of all remaining translator applications. Already on the FCC’s schedule, as we wrote here, is an auction of mutually exclusive translators left over from its 2003 FM translator window (for the rules adopted for that auction, see the FCC notice here). The FCC has also scheduled the filing of long-form applications for “singleton” applications (ones that are predicted to not cause interference to any other translator application or any existing station) from the window opened late last year for Class A and B AM stations to file for FM translators (see our post here on the opening of the long-form filing window for the translator applications), and long-form applications for applicants who were able to work out mutually exclusive situations in the first window so that they did not need to go to auction (see our post here). Still to be announced for applicants in that Class A and B window is the settlement period for applications that are mutually with other applications. Expect that announcement soon.
In September 2017, the FCC adopted new rules making AM proofs of performance easier to conduct for many stations. We summarized the changes here, and wrote about the FCC’s adoption of these changes here. The FCC yesterday released a Public Notice announcing that these rules have completed the review process under the Paperwork Reduction Act, and are now effective. Thus, stations can now take advantage of the simplified proofing options provided under these new rules.
The FCC yesterday released a Public Notice announcing a filing window from April 18 through May 9 for “long-form” applications for new translators that were filed in the January 2018 window for Class A and B AM stations to seek new FM translators to rebroadcast their stations. The Public Notice also sets out the procedures for filing in this window. The window is for the filing of a complete Form 349 applications by applicants who were deemed to be “singletons,” i.e. their applications are not predicted to cause interference to any other translator applicant. The list of singletons is here. The long-form application requires more certifications and technical information than that which was submitted during the initial filing window.
After the long-form application is submitted to the FCC, the application will be published in an FCC public notice of broadcast applications. Interested parties will have 15 days from that publication date to comment or object. If no comments are filed, and no other issues arise, the FCC’s Audio Division is known for its speed in processing translator applications so that grants might be expected for many of the applications within 60 days of the end of the window.
Not specifically addressed is when the FCC will open a settlement window to resolve interference between applications that were not found to be singletons. At some point in the future, the FCC will allow AMs that filed applications for translators that are predicted to cause interference to other translator proposals to reach a settlement or make minor technical changes to resolve their interference issues. Until that window is open, however, mutually exclusive applicants are prohibited from communicating with each other due to the prohibited communications rules that apply during broadcast auctions – which these applications will end up in if their mutual exclusivity is not resolved during the settlement window.
In any event, it appears that a number of AM stations – more than 600 according to today’s announcement — will soon be able to start service with their new FM translator stations. If processing in the last window for Class C and D AM stations is any indication, we should see a number of grants of new translators before summer officially starts.
The FCC yesterday released a Public Notice announcing a filing window from March 14 to March 28 for “long-form” applications for new translators that were filed in last summer’s window for Class C and D AM stations to seek new FM translators to rebroadcast their stations. The Public Notice also sets the procedures for filing in this window. The window is for the filing of complete Form 349 applications by applicants who were deemed mutually exclusive in a notice released by the Commission last year (see our article here) but who were able to work out a settlement or technical solution to that mutual exclusivity in the window at the end of last year for resolving such conflicts. By resolving those situations of potential interference with other applicants, these applications can now be granted. The list of applicants who are invited to file the long-form application is here (in an Excel format). The long-form application requires more certifications and more specific technical information than that which was submitted during the initial filing window. It also allows for minor amendments to applications as long as they do not create any new conflicts.
After the long-form application is submitted to the FCC, the application will be published in an FCC public notice of broadcast applications. Interested parties will have 15 days from that publication date to comment or object. If no comments are filed, and no other issues arise, the FCC’s Audio Division is known for its speed in processing translator applications so that grants might be expected for many of the applications late within a month or two of the filing deadline.
Coming later this year will be a list of “singletons” (applications not predicted to create interference to any other application) in the second translator window for Class A and B AM stations (see our article here). A settlement window for applicants in that window who are mutually exclusive will also be announced at some later date. For applications in either of these windows who are not able to work out ways to resolve conflicts, there will eventually be an auction between mutually exclusive applicants. But, the majority of the applications on yesterday’s list will soon be new translators, and we are also bound to see hundreds more from the second window. So watch for these FM translators rebroadcasting an AM near you soon.
At its meeting yesterday, the FCC adopted a Notice of Proposed Rulemaking suggesting the abolition of the EEO Mid-Term Report, FCC Form 397. That form is filed at the mid-point of the renewal term of TV stations with 5 or more full-time employees and radio clusters with 11 or more full-time employees (see our post here about the form). As the content of the report is principally made up of the broadcaster’s last two EEO Public Inspection File Reports, and those reports are available in a broadcasters online public inspection file (which should be in place for virtually all broadcast stations when the final radio stations covert to the online public file next week, see our post here), the FCC concluded that there is no real reason that these reports need to be separately submitted, and thus proposed its elimination.
The Notice of Proposed Rulemaking did suggest that there were issues on which comments would be appropriate. The one bit of information that would not be readily available without the filing of the Form 397 would be which TV stations have 5 full-time employees and which radio clusters have more than 11 full-timers. That is important as Congress required the mid-term review of the EEO performance of stations meeting these employment thresholds. So the FCC asks how that information should be tracked. It is also noteworthy that the FCC will continue to conduct the EEO mid-term review of stations meeting these employment thresholds even without the filing of the Form 397 reports.
As the FCC says that they will continue to conduct that mid-term review, it is interesting that the FCC also asks in the NPRM what other EEO review should be conducted to assess the EEO performance of stations, seemingly at the insistence of Commissioner Clyburn who feared that the abolition of the Form 397 might send the wrong message about the FCC’s commitment to EEO even if its retention served no useful purpose. Commissioner Clyburn’s comments are available here. Seemingly, as the Commission will continue to do the EEO mid-term review, and continue audits and complaint-based reviews, many methods of assessment are already in place.
Comment dates on this proposal will be set when it is published in the Federal Register. This is one more proposal for procedural reform advanced as part of Chairman Pai’s Modernization of Media Regulation Initiative. As we wrote earlier this week, we are looking forward to more substantive proposals in the months to come.
Note, for all of you who are trying to complete your Biennial Ownership Reports that are due for commercial and noncommercial stations on March 2 (see our post here about the March 2 filing date), the FCC yesterday posted a notice on the log-in screen for its LMS electronic database, in which the ownership reports are filed, that it will be off-line for maintenance during parts of the upcoming 3-day weekend. As the system has had glitches in recent weeks, that maintenance may be overdue, but if you are running late on completing the Biennial Ownership Reports, this may not be welcome news. Plan accordingly.
As we wrote here, MMTC (a DC-based public interest group) had petitioned the US Court of Appeals for a Rehearing on its decision (about which we wrote here) upholding the FCC decision deciding not to impose any multilingual EAS obligations on broadcasters. The full Court of Appeals has just issued a one sentence order denying that reconsideration request. While, theoretically, MMTC’s next appeal would be to the Supreme Court, lacking an issue of major significance or constitutional importance, that is unlikely.
Thus, as we wrote here, the next step in any attempt to deal with multilingual EAS alerts will be with the FCC, which has agreed to further consider a survey of state EAS coordinators (“SECCs”) to see how best to insure that EAS alerts are distributed widely to the entire population. By May, SECCs are supposed to integrate information about non-English speaking groups within their states into their State EAS plans, and file those revised plans with the FCC. After that has occurred, we will see if the FCC takes further action in this area. So stay tuned, as the issue continues to evolve.