The deadline for comments on the FCC’s indecency rules was extended until June 19, confirmed in a notice published in the Federal Register this past week. Given this extension, it is worth reviewing what the FCC proposed to do in this proceeding, as there is a significant amount of misinformation circulating in certain publications and in rumors floating around the Internet about the scope of the proceeding and the FCC’s intent in launching its inquiry. In preparation for a recent interview that I did with a talk show on a Midwestern radio station, I was pointed to articles that suggested that the FCC was proposing to allow swearing and nudity on broadcast television, and how that is eliciting tens of thousands of comments from the public (see, for instance the articles here and here). Some other articles and blog posts have gone further, making it sound like the FCC was looking to turn the broadcast airwaves into some sort of adult movie paradise, as if someone at the FCC had woken up one day and thought that such a relaxation of the rule would be a good idea.  While these claims make for interesting reading, the truth is much more boring, and demonstrate that the FCC has little choice but to ask for these comments.

As we wrote here, the FCC’s inquiry is initially limited – principally asking for comments on the FCC’s policy on fleeting expletives – those times, usually in a live broadcast, where a single profane word or phrase slips out onto the airwaves. The Commission also invited comments on other aspects of the rules but, other than the fleeting expletives (and a reference to fleeting, nonsexual nudity – like the bare butt that was the subject of the NYPD fine that caused the Commission much consternation in the Courts), that’s all that the Public Notice specifically addresses. While certainly more issues may arise, they arise in this context of dealing with these fleeting incidents, not as part of an attempt to turn broadcast TV into some X-rated video service.  And the issues are not being tackled as an attempt to corrupt public morality, but instead because the FCC has to clarify these rules after the Supreme Court found last summer that it had not adequately justified the more aggressive posture that it took on indecency in the last decade.

The Supreme Court case arose out of incidents on two television shows – the Billboard Music Awards and tan episode of NYPD Blue.  In the awards show, certain on-stage performers, in their excitement over being before the crowd and winning an award, used language that was perhaps a bit too colorful for the broadcast airwaves. Prior to the last decade, such a slip would have resulted in a nasty letter from the FCC, but usually nothing more. In the last decade, the Commission became more aggressive in its enforcement, issuing fines for even a one-word slip, fines that totaled hundreds of thousands of dollars when the use of these words occurred on a network program that was carried on hundreds of stations.

But, as even Chairman Genachowski, the immediate past Chair of the FCC, apparently recognized in a tweet addressing the use of one of the prohibited expletives by Red Sox slugger David Ortiz in an on-air statement addressing the Boston crowd at the first baseball game at Fenway Park after the Marathon bombing, sometimes the use of these words is understandable, excusable, and perhaps even appropriate. Whether the hard and fast, one strike and you are out rule that had been adopted by the FCC might be too harsh is the subject of the proceeding – and has been the subject of much questioning and litigation since it was adopted.  Critics point to seemingly inconsistent application of the policy (e.g. resulting in fines where certain words were used in the PBS documentary series "The Blues", but not when those same words were used in a Memorial Day airing of "Saving Private Ryan", with an introduction by Senator John McCain). 

But whatever the merits of the issues, the FCC is not doing this proceeding as part of a conspiracy to open the airwaves so that anything goes, but instead because it pretty much has to do so in order to apply any penalties at all for indecency violations. The Supreme Court ruling last year left the FCC without any clear standards in place to address any violations that might occur. Because it effectively has no clear policies, it has hundreds (perhaps thousands) of station license renewal applications pending well beyond their normal processing dates, or money sitting in escrow deposited by FCC licensees who had unresolved complaints pending against them when they went to sell their broadcast stations (the FCC requiring selling licensees to enter into "tolling agreements" and to make deposits to be held and applied should fines be imposed at some point in the future for these past violations).  Without clarifying its policies, the FCC has no way to deal with the pending complaints.

The Court order is what is the being addressed by the FCC – not some voluntary attempt by the regulators to impose some wholesale deregulation of the airwaves. While it certainly is possible that constitutional issues may be raised, as they are in any discussion of regulation on speech, the FCC’s request, as we wrote when it was released, is limited to looking for comments on egregious cases.  As is the case with basic cable, which is not subject to the indecency rules, most media outlets, even when freed of government regulation, do not degenerate into the morass that some of the commenters appear to fear. But the FCC is not proposing to go even that far.  The comments now due on June 19 can address the real issues before the FCC – not some imagined parade of horribles.

July has many FCC obligations for broadcasters, both regularly scheduled and unique to 2013. There are the normal obligations, like the Quarterly Issues Programs lists, that need to be in the public file of all broadcast stations, radio and TV, commercial and noncommercial, by July 10. Quarterly Children’s television reports are also due to be submitted by TV stations by that same date. The Quarterly Issues Programs lists have traditionally been a problem area for broadcasters, and the source of numerous fines in connection with FCC inspections and license renewal applications (see, for instance, our article here). Recently, the failure to timely file Children’s Television Reports on Form 398 was the source of significant fines for a number of TV stations in connection with their renewal applications (see our article here). So, obviously, be aware of those dates. But also remember that there are a number of comments due in important FCC proceedings, including those described below, and there is also a July 24 filing deadline for long-form applications by the tentative winners in the recent FM auction and a July 22 deadline for settlement proposals in connection with mutually exclusive applications in the 2003 FM translator filing window.

In connection with comment deadline, the FCC is seeking comment on a study done by MMTC in connection with its multiple ownership proceeding about the effects of cross-ownership of broadcast and newspapers on minority ownership of broadcast stations. Those comments are due on July 22 (see our article here). Also, the reply comments on the FCC’s proceeding to clarify its indecency rules are due on July 18 (see our article here). Comments on stations’ experience with the online political file, and the readiness of smaller TV stations to start uploading documents to that file next year, are due in August, so stations should be preparing their thoughts on this proceeding (see our article here). 

As is seemingly the case every month, July has important regulatory deadlines for broadcasters. Don’t overlook those dates that may apply to you!

The deadline for reply comments on the FCC’s Indecency policy have been extended. These replies  had been due on July 18. But a request from CBI, a collegiate broadcasters organization, asked for more time given the extensive initial comments filed in the proceeding and the fact that college broadcasters have difficulties in responding to issues over summer school holidays.  On Friday, the Commission issued a Public Notice extending the deadline for these reply comments to August 2.

We wrote about the issues addressed in this proceeding here and here. Broadcasters now have a bit more time to work on comments in this important proceeding. Many broadcast applications for station sales and license renewal have been held up by indecency complaints, many of which, under almost any new legal regime, would not amount to anything.  One would hope that, after the replies are submitted, the Commission will quickly figure out their new policies for processing such complaints, so that these delays can be a thing of the past. But, given the difficulties that the Commission has always had in laying out clear lines for its broadcast indecency rules, that may be nothing more than a hope.

Another month is upon us, along with all of the FCC regulatory obligations that accompany it. August brings a host of license renewal obligations, along with EEO public file obligations in a number of states, as well as noncommercial Biennial Ownership Report filings in several states. We also expect that the FCC will notify stations of the date for the payment of their regulatory fees (which will either be due late this month or early next). As we reported yesterday, the filing of long-form translator applications for over 1000 applicants from the 2003 FM translator window also comes at the end of the month. There are comments due in a number of FCC proceedings. We’ll talk about some of those issues below. For TV broadcasters, we also suggest that you review our article that recently ran in TV NewsCheck, updating TV broadcasters on issues of relevance to them not only this month, but providing a description of the full gamut of issues facing TV broadcasters. We prepare this update for TV NewsCheck quarterly.

Today brings the deadline for the filing of license renewal applications for radio stations in California and for TV stations in Illinois and Wisconsin. Stations in these states, and in North and South Carolina also have EEO public inspection file reports that should be placed in their public inspection files no later than today. Noncommercial TV stations in Illinois and Wisconsin also need to file Biennial Ownership Reports today, and noncommercial radio stations in California, North Carolina, and South Carolina should also file their Biennial Ownership Reports by today.

The next round of license renewals will be filed on October 1, and stations in the states where those renewals are due should start their pre-filing renewal announcements today. That would be TV stations in Iowa and Missouri, and radio stations in Alaska, Hawaii, Oregon, Washington, American Samoa, Guam, the Mariana Islands, and Saipan. The final month of post-filing announcements for TV stations in Ohio and Michigan, and for radio stations in Arizona, Idaho, Nevada, New Mexico, Utah, and Wyoming are also to be run this month, with announcements due to be run today.

Reply comments in two long-running FCC proceedings are due early this month. Reply comments are due on August 2 on the FCC’s indecency rules, and on August 6 on the recently filed MMTC study on the effects of media cross-ownership on the entry of new owners into the broadcast industry. Those stations subject to the most recent EEO random audit have until August 12 to respond. And comments on the FCC’s online public file for TV stations, and the upcoming 2014 obligation for all TV stations to post their political files online, are due on August 26.

And finally, be alert for the annual regulatory fees. The FCC has to adopt final rules for the fee payments, which should happen any day (see our article here about the proposals). And then the FCC will set the dates by which those fees are to be filed. Given that the new FCC fiscal year begins on October 1, the fees need to be in before that. So look for a fee filing window soon.

While we are in the last days of summer, regulation never takes a vacation. So be alert for deadlines that apply to you.

At long last, it appears that we will soon have a complete FCC, as the Senate has approved the nomination of Tom Wheeler to be the next FCC Chairman, and Michael O’Rielly for the other vacancy on the FCC.  The nomination of Mr. Wheeler had been held up by Senator Ted Cruz on grounds that he feared the FCC taking action to implement provisions of the Disclose Act (which we wrote about here).  Senator Cruz was particularly concerned that a new FCC might adopt rules that would require disclosure not just of a political ads sponsor, but also of the chief financing sources of the sponsor.  Mr. Wheeler apparently assured Senator Cruz that the adoption of such a rule was not high on his agenda, the hold on the nomination was dropped, and the new Chairman was confirmed.  He should take office very soon – with press reports suggesting that it will be on Monday.  What issues should broadcasters expect the new FCC to tackle?

There are many big issues for broadcasters that are under consideration but not decided, and we would expect that the new FCC chair would want to quickly start to deal with them.  The biggest issue is no doubt the Incentive Auctions – looking at the reclaiming of spectrum from TV broadcasters to allow it to be re-sold to wireless companies for wireless broadband and other uses.  We last wrote about that incredibly complex proceeding here.  The FCC under Chairman Genachowski had looked to have rules in place before the end of this year to reclaim the spectrum and to sell it to the wireless companies.  The former chair had hoped to have the auction itself occur in 2014.  With the delays in the confirmation of the Chairman, and the recent government shutdown, many observers are expecting the rules will be pushed back to next year, and the auction itself to the year after – but all that remains to be seen.

The other big pending issue is the potential revision of the broadcast multiple ownership rules.  There are three big issues pending in the ownership area – the elimination of the broadcast-newspaper cross ownership prohibition, the status of Joint Sales and Shared Services Agreements, and the UHF discount.  We wrote about the UHF discount issue here – as the FCC recently proposed to eliminate the discount, which would effectively cause many television companies to be at or above the current caps that limit television station owners to owning stations in markets that reach no more than 39% of the TV households in the US.  UHF stations currently count for half the audience in the market that they serve – a remnant of analog broadcasting days.  The elimination of the UHF discount would effectively double the audience count of most companies, and could have a profound impact on the recent trading market for TV stations.

The battle that DC “public interest” groups have been waging against consolidation of any sort have led to the  FCC’s reluctance to relax the broadcast-newspaper cross-interest rules, even though the value and reach of newspapers has radically changed since this prohibition was adopted in the 1970s.  See our last article on that issue, here.  The JSA/SSA issue has also been one that we have written about many times (see, for instance, this story), as these public interest groups and cable companies (who fear that these agreements give TV stations too much power in retransmission negotiations) oppose the continuation of these arrangements.  TV stations, on the other hand, see them as crucial to the survival of many stations, especially in smaller markets, and see the impact of local consolidation as simply a counterweight to the power of other multichannel video providers in each television markets.

But, in addition to these extremely high-profile issues, there are a number of other outstanding proceedings that the new FCC might choose to address.  These include the following:

• Indecency (see our article here about the FCC’s request for comment on what to do about the indecency policy since its remand to the FCC by the Supreme Court)
• TV public interest obligations and the online public file (see our articles on the FCC’s request for comments on the existing obligations for TV stations in connection with their online public files and the extension of the obligation with respect to their political files to smaller stations, and our article here about the pending proceeding on the call for the regularization and perhaps quantification of the reporting of the public interest programming of broadcasters).

Even outstanding longer have been proceedings to look at other issues.  Some of these may be addressed by the new Commission, others may continue to languish:

• EEO review – there have been requests for reconsideration of the FCC’s EEO program pending for over 10 years, dealing with requests to allow more reliance on Internet sources (see the article we wrote here about fines issued to stations that relied solely on Internet recruitment sources to fill station job openings).
• Noncommercial biennial ownership report filing requirements (see our article here on the issues outstanding as to biennial ownership reports)
• Sponsorship identification (see our article about the open proceeding on sponsorship ID issues here)
• Various diversity issues including the use of TV Channels 5 and 6 for FM broadcasting (probably to remain pending until the incentive auction and repacking of the TV band is completed)

 In addition to these specific proceedings, sometimes the most important decisions made by a new Chairman are in tone and direction of the agency, and in the appointment of new leaders for the various offices in the FCC.  While many of the leaders of parts of the FCC that we all are used to dealing with may remain in place, there are always some shakeups in any new administration. 

Lots for the new Chair to take care of.  So watch to see what happens!

Last week brought a number of Washington developments that we’ll write about in more detail soon, including the FCC’s decision to relax the limitations on foreign ownership of broadcast stations.  But there were also a number of other actions that bear mention – including the decision released late Friday to extend the deadline for the filing of Biennial Ownership reports that are to be filed by all commercial broadcasters – including AM, FM, TV. LPTV and Class A TV station owners.  These more complicated versions of FCC Form 323 are filed every other year to assess diversity in the ownership of broadcast stations.  These reports were originally to be filed on November 1, but the filing date was extended to December 2 earlier this year (see our article here), due to the recognized complexity of the completion and electronic filing of these forms.  Now, after the FCC shutdown deprived broadcasters of several weeks’ preparation time in which the electronic forms were available for use, the deadline has been extended to December 20.  The FCC Public Notice warns filers to try to submit their reports before the deadline to avoid potential slowdowns in the electronic system due to an expected heavy volume of users as the deadline approaches.

In fact, the effect that heavy demands on FCC’s electronic filing system was made evident by the FCC’s last-minute decision to extend by one day the last day for filing LPFM applications.  That extended deadline passed on Friday, after being extended from the originally announced extended deadline (due to the government shutdown) of Thursday, because glitches in the FCC’s electronic filing system delayed last-minute filings before that Thursday deadline.  There has not yet been any announcement of the number of LPFM applications filed in the window, but many think that the number will rival if not exceed the thousands of applications filed in the 2003 FM translator window – applications that the FCC is still processing over 10 years after their filing. 

Another long-standing FCC issue has been the standards that the FCC will use in enforcing its policy against broadcast indecency.  The FCC still struggles to decide how to enforce its policy after it was determined by the Supreme Court to not have been sufficiently articulated so that a broadcaster can know what is prohibited and what it permitted.  We wrote several times about a recent FCC request for public comment on how the Commission can decide which cases are so egregious that they need to be prosecuted in the future (see our articles here and here).  But, in a Consent Decree with Liberman Broadcasting released last week, the FCC demonstrated that it was still enforcing that policy despite its uncertainty over the standards to be used, requiring a $110,000 payment and an agreed-upon compliance plan to be instituted in exchange for dismissing pending indecency complaints.  The complaints were filed against a Spanish-language television operator who broadcast  a specific program that was allegedly indecent. According to the FCC’s Public Notice describing the Consent Decree, the programming “featured pornographic film performers and exotic dancers who engaged in behavior inconsistent with the Commission’s indecency standards for broadcast programming.”  A fine of that magnitude demonstrates that the FCC still takes indecency serious despite the ongoing proceedings to define just how its standards will be enforced.

Finally, in connection with another request for public comment, the FCC announced the dates for public comment on the proposal for the elimination of the “UHF discount.”  That proceeding proposes to eliminate the current policy of counting UHF television stations as reaching only 50% of a market in assessing compliance with the multiple ownership rules that limit one owner from having attributable interests in television stations reaching more than 39% of the nationwide television audience (see our summary of the FCC’s proposal to eliminate the UHF discount here).  The proposed elimination could put the brakes on the acquisition of new television stations by many of the country’s biggest television owners.  Comments in this proceeding will be due on December 16, and Reply Comments on January 13. 

As with seemingly every week, last week was another busy one for the FCC in dealing with legal issues of which broadcasters should be aware. 

It is the beginning of another year – and a time to look ahead to look ahead at what broadcasters should expect from Washington in the coming year.  With so many issues on the table, we’ll divide the issues into two parts – talking about FCC issues today, and issues from Capitol Hill and elsewhere in Washington’s alphabet soup of regulatory agencies in the near future.  In addition, watch these pages for our calendar of regulatory deadlines for broadcasters in the next few days.

Each January, we publish a list of issues for the coming year, and it is not always the case that these issues make it to the top of various piles (literal or figurative) that sit in various offices at the FCC.  As set forth below, there are a number of FCC proceedings that remain open, and could be resolved this year.  But just as often, a good number of these issues sit unresolved to be included, once again, on our list of issues for next year.  While some issues are almost guaranteed to be considered, others are a crap shoot as to whether they will in fact bubble up to the top of the FCC’s long list of pending items. So this list should not be seen as a definitive list of what will be considered by the FCC this year, but instead as an alert as to what might be coming your way this year. Issues unique to radio and TV, and those that could affect the broadcast industry generally, are addressed below.

General Broadcast Issues

There are numerous issues before the FCC that affect both radio and television broadcasters, some of which have been pending for many years and are ripe for resolution, while others are raised in proceedings that are just beginning. These include:

Multiple Ownership Rules Review: Last year at this time, we wrote that the FCC was very close to resolving its Quadrennial review of its multiple ownership rules, officially begun in 2011 with a Notice of Proposed Rulemaking. The rumors were that the FCC was ready to issue an order at the end of 2012 relaxing the rules against the cross-ownership of broadcast stations and newspapers, as well as the radio-television cross-interest prohibitions, while leaving most other rules in place. TV Joint Sales Agreements were also rumored to be part of the FCC’s considerations – perhaps making some or all of these agreements attributable. But all of those decisions were put on hold after there were objections that any even modest change in the rules would have an impact on minority ownership of broadcast stations. Since then, the proceeding has been on hold, even though comments on the minority issue were filed over 6 months ago. In fact, the only real decision was to start a new proceeding on the UHF discount, discussed below in the section on TV issues.

While TV joint sales and shared services agreements have been in the news lately (and we’ll write about recent actions in that area soon), the other news on multiple ownership is that there is no news.  Recently, the word from the FCC is that the proceeding is not going to be resolved before taking new comments from the public to freshen the record, and the whole proceeding may well be rolled into the next Quadrennial Review of the ownership rules.  So, in 2014, we may see no resolution of the broad ownership issues, but instead more opportunities for interested parties to file comments with the FCC to update the information collected years ago in this proceeding. 

Indecency: After the Supreme Court decision in June 2012, upholding the FCC’s right to regulate indecency but questioning the current procedure for doing so, the FCC’s regulation of indecency has been up in the air. Many license renewal applications for both radio and television stations continue to be held up because of pending complaints, and many sales of stations happen only when the seller’s agree to escrow funds to cover any indecency fine on pending complaints that may arise at some point in the future whenever the Commission decides what standards to apply to the pending complaints. In this past year, the FCC took public comments asking how it should proceed in this area, suggesting that it reserve enforcement actions for egregious violations – and asking for comments on how such complaints should be identified.  Given that this is an election year, and the politics of the FCC are often to avoid doing anything that could be used as a political issue before an election, unless new policies are adopted early this year (and we have heard no rumors that there is a big push to do so), we may again be writing about this issue as being one on the FCC’s agenda at this time next year.

EEO Rules: There are fundamental issues about the FCC’s EEO policies that have not been addressed in the 10 years since these rules were first adopted. Proposals to extend the rules to part-time employees, and to require the filing of FCC Form 395 (the form that classifies all employees by race and gender), are still pending from that long-ago proceeding. Also pending are proposals sought in requests for reconsideration of the adoption of the EEO rules that would make the EEO rules comport with today’s reality – such as the proposals to allow Internet-based EEO recruiting. Maybe this will be the year that some of these outstanding issues are finally resolved.  But, with the recent fines issued to stations for not reaching out to community groups that had asked to be informed about job openings at stations, it may well be that the FCC has just decided to leave these issues as is and clarify enforcement policies through cases that come before it from renewal filings or EEO audit response. 

Political Rules: In recent elections, we have seen the effects of the Citizens United case in the significant political spending on broadcast commercials by third-party organizations. While there have been calls for more regulation on such ads, we don’t expect action in that area from the FCC (though there are discussions on Capitol Hill and at other government agencies about such ads). Instead, at the FCC, there may be some minor tweaking of the political broadcasting rules as cases come before the Commission.  We are still looking at outstanding issues pending before the FCC from previous elections – including appeals of the decision of the FCC, issued just before the last Federal election, holding that TV stations have to give candidates equal access to certain single-issue candidates – even though such candidates are qualified only in the distant reaches of the station’s coverage area, and even when such candidates are “running” for office not with any expectation that they will be elected, but instead simply so that they can get access to television stations to run some controversial commercials not primarily intended to promote their candidacy, but instead to promote their position on some other issue. As this is a political year, we wouldn’t expect any far-reaching changes to be announced prior to the election, but clarifications in cases or controversies brought before the FCC are certainly possible. Also, as TV stations in smaller markets (and those that are not in the Top 4 in the larger markets) will need to begin to put their political file into their online public file, look for there to be some last-minute lobbying on those obligations in light of the FCC’s request for comments on possible changes or revisions to the online public file rules. 

Public Interest Programming Reports: At the same time as it began its proceeding to adopt an Online Public File for TV stations, the FCC began a proceeding to look at the adoption of a new form on which broadcasters would report the public interest programming that they do. This form would replace the Quarterly Issues Programs list, and the Form 355 adopted 5 years ago for television but never implemented. The proposal released in 2011 was simply a Notice of Inquiry, meaning that the FCC would need to adopt a Notice of Proposed Rulemaking to move further on this proposal. While we have not heard much about the status of this proposal lately, with some of the complaints about the usefulness of the Online Public File, this proceeding could bubble up at some point this year.  As no Notice of Proposed Rulemaking has yet to be released, before any new rules were adopted a whole new set of comments would need to be received. So don’t expect a new form this year.

Television Issues

Spectrum issues have been the dominant TV concerns in past years, and will probably be front and center again this year as the FCC looks to further develop its plans for the incentive auction to reclaim TV spectrum for wireless broadband users.  But there are many other issues before the Commission that could have an even greater short-term impact than the incentive auction.  These include issues dealing with the carriage of television stations by cable and satellite television providers, the treatment of the UHF discount, and definition of an MVPD (multichannel video programming distributor) for FCC purposes – including for the must-carry and retransmission consent debates. Issues about accessibility to video programming and the implementation of other consumer protection issues are also on the agenda. Specific issues for TV include:

Spectrum reclamation: The FCC was originally supposed to have released rules for its incentive auction in 2013.  But, given the delays in the appointment of a new FCC Chair, and the complexity of the issues involved in the proceeding, the Chairman recently announced that the rules would be out in 2014, and the auction would be planned for 2015.  This is an incredibly complex proceeding, proposing methods to implement a “reverse auction,” where certain TV stations would bid to be able to sell their spectrum to wireless companies and either go out of business or move to a VHF channel or share spectrum with another station. The stations left after the reverse auction would be packed into a smaller part of the TV band, and the spectrum that is cleared would be sold to wireless companies.  But all these moving pieces need to be coordinated, as the reverse auction cannot be completed until the FCC knows that enough money will be coming in from the wireless companies to fund the buyout of the TV stations willing to give up their spectrum.

As this is a highly complex process, which will need sophisticated computer programs to keep all of the bidding straight, the FCC wants to get the process right, and have an electronic system to handle the process that will work.  In addition, there are all sorts of details to be worked out – including international coordination of TV channel changes and the determination of the costs that will be reimbursed to remaining TV stations for their repacking into a smaller part of the TV band.  Look for more opportunities for public input in the early parts of this year as the FCC moves towards finalizing its incentive auction rules later this year.

Retransmission Consent Reform: Another issue that was on our list last year, and remains there, is the question of retransmission consent negotiations.  After every dispute between an MVPD and a TV broadcaster over retransmission fees there are new cries for legislative or regulatory changes to the retransmission consent process.  Some multichannel video programming distributors and some public interest groups argue that the FCC should protect viewers who may have their broadcast TV service disappear if a TV station does not reach a deal with a MVPD, while the broadcasters argue that the ability to remove the station from an MVPD is the heart of the negotiation, and removing the risk of the MVPD losing the right to carry the station would hobble the negotiation process.  There is a pending proceeding at the FCC to determine if the rules governing the negotiation of retransmission consent agreements should be changed. MVPDs also object to TV stations operating through a JSA or Shared Services agreement negotiating jointly, while TV broadcasters see that as a way to equalize their bargaining position, especially for stations not affiliated with the Top 4 networks. Look for some movement in this very controversial proceeding later in the year.

Defining an MVPD:  Two years ago, the FCC initiated a proceeding to determine if an Internet-delivered video programming service could qualify as an MVPD.  While that proceeding garnered little attention, as the primary issue seemed to be the service’s ability to get access to cable programming, there has been renewed interest in the proceeding in light of the Aereo decisions (about which we last wrote here), as this proceeding could be used as a way to define the must carry and retransmission consent obligations of Internet delivered video sources should the court decisions not fully address that issue to the satisfaction of broadcasters – though there are legislative remedies possible as well.

UHF Discount:  One new issue this year is the proposed repeal of the “UHF discount,” which counts a UHF station as reaching only half of a market in assessing a television company’s compliance with the current rules that limit any company to at most stations reaching 39% of the US TV households.  The FCC has tentatively concluded that the digital conversion has made the discount counterproductive as UHF stations have better coverage in a digital world, instead of suffering from the coverage issues that they faced in analog TV at the time that the rule was adopted.  TV station owners argue that getting rid of the discount is changing the rules in the middle of the game, especially as many of these companies have deals in the works at the current time.  In a multichannel universe where most households have access to dozens, sometime hundreds of nationwide or worldwide networks, limiting the reach of a station group no longer makes sense as it once did, and effectively reducing that reach by adopting the change in the rules makes even less sense.  While many thought that this issue would be resolved quickly, given the complexities involved, it may take some time before the FCC gets around to finalizing this proposal, but look for much lobbying on it this year.

Accessibility: Each year, accessibility issues play a more and more important role in video transmissions – with this past year bringing further obligations for video providers to caption television programming that has been repurposed for the Internet, including mobile applications.  With the expansion of the obligations to live and near live programming this past Fall, virtually all programming captioned on TV needs to be captioned when retransmitted on the Internet.

Right now, the captioning applies only to full length programs.  But at the end of the year, the FCC asked for comments on whether the rules should go further and require captioning of even video clips that are rebroadcast on the Internet.  Look for this to be a matter of much debate this year, but for resolution to come in the future, as the FCC will still need to put out a formal Notice of Proposed Rulemaking should it plan specific rules to mandate such captioning. 

LPTV/Class A TV: As these stations look toward a mandatory digital conversion in 2015, expect that there will be more examination of the qualifications of Class A TV stations to retain their protected status. With the emphasis on spectrum auctions, Class A TV stations may tie up spectrum that will otherwise be available for the repacking of the TV band for auction to wireless companies. Thus, expect the FCC’s scrutiny of these stations to continue through 2014.  We’ve already seen many high proposed fines for problems like violations of the recordkeeping obligations attached to children’s programming requirements in connection with TV license renewals of many of these stations.  In most cases, there is a carrot offered to the Class A licensees – give up the Class A status (and the protection from being bumped off your channel by the incentive auction that the primary status as a Class A affords you) and avoid the fine.  Expect more of these Hobson’s choices to be posed to Class A licensees in the coming year.

Sports Blackout Rules.  Just before the holidays, the FCC released a Notice of Proposed Rulemaking, proposing to do away with its sports blackout rule.  With the attention that rule received this past weekend, as a number of NFL cities almost did not get to watch their teams in home playoff games when the games almost did not sell out, the proposal to change the rule may well get changed this year. 

Radio Issues

 Radio has fewer unique issues on the front burner at the FCC, but there are still things to be thinking about.  In addition to the general issues discussed above (multiple ownership, indecency, EEO, documentation of public interest efforts), issues on the radar screen for radio include:

AM Radio:  For the first time in many years, AM radio was at the forefront of policy discussions at the FCC in 2013.  We would expect that there will continue to be attention to AM issues in 2014.  Comments in the proceeding to adopt certain technical fixes for AM, and to open an FM translator window for AM applicants will be filed this month, and we would anticipate some actions this year – perhaps starting with that translator window (see our summary of the issue in this proceeding here and here) .  Longer term, look for more exploration of technical fixes for AM, perhaps including further discussions of an all-digital operation. 

FM Translator Issues: While the issues involving FM translator applications left from the 2003 FM translator window have largely been settled, and thousands of new FM translators from that window granted in 2013 (see our articles here and here), there are still applications that are mutually exclusive that remain to be processed.  Look for an auction for these final applications to be announced later this year.  Also, as part of the AM improvement proceeding described above, the FCC is looking at potentially modifying the Mattoon waiver policy.  Watch for a resolution of that issue this year. 

LPFM Applications.  Much attention will also be paid to the processing of LPFM applications filed in the LPFM window (see our last article on this subject here).  There will some applications that will be challenged by full-power stations alleging interference, and there will also be a few conflicts between applications filed in the window and FM translator applications that were modified after the LPFM window was opened, where the FCC has indicated that the LPFM applications have some degree of priority over the previously filed translator modifications.  Once LPFM stations are up and operating, we would expect that there will also be practical interference issues to resolve.  While these issues will probably play out on an application by application basis, rather than as issues of broad FCC policy, they will be closely watched by radio broadcasters.

Conclusion

These are but some of the legal and regulatory issues that will be facing broadcasters in the upcoming year. There are many other proceedings at the FCC that can also affect stations – including reexaminations of the EAS rules, review of the environmental rules applicable to tower construction, and a reexamination of the allocation of FCC costs as reflected in the annual regulatory fees that broadcasters pay (see our articles here and here).  There are also other issues that are pending but have seemingly stalled at the FCC, including a reexamination of the sponsorship identification rules, a review of the Biennial broadcast ownership filings (including whether there should be reporting of some nonattributable interests and whether noncommercial broadcasters should be brought under the same process as commercial broadcasters), and the proceeding to reexamine the rules that prohibit noncommercial broadcasters from interrupting their programming to fund-raise for third parties.  Any of these proceedings could pop back to the top of the FCC’s stack at any time.

And there are many issues in Congress or at other agencies that could affect broadcasters.  We will write about those issues in another article in the near future.  So there is always something happening in Washington for which broadcasters need to be alert.

Each year, we make these predictions trying to include everything that we can think of, and there are always numerous other issues arise that we did not anticipate. Sometimes policy decisions will come from individual cases, and sometimes they will be driven by a particular FCC Commissioner who finds a specific issue that is of specific interest to him or her.  So, while this article sets out some of the issues to which broadcasters need to pay attention, stay alert, watch the trade press and the pages of this blog to see what other challenges may be coming from Washington for broadcasters as this year progresses.

Last night’s Super Bowl didn’t offer much in the way of excitement on the field, as the game was seemingly over by the end of the first half.  But, for the last decade, the half-time show itself may offer some anxiety to the stations carrying the game.  10 years ago, Janet Jackson had her infamous Super Bowl wardrobe malfunction incident which started a firestorm at the FCC for the next several years, as it ignited  many calls to more aggressively regulate indecency on the airwaves.  As a result of the incident, a number of fines were meted out for this program and to many others that aired soon thereafter.  But, in reality, what the incident did was to highlight just how difficult it is for the FCC to enforce any sort of indecency rules, as the issue raised at that time continue to be debated at the FCC right up to the present day.

As we have written before, the FCC policy that was applied to the Janet Jackson incident is one that is still in a state of limbo, as the FCC has issued a request for public comment on whether it should limit its enforcement to cases where there are egregious violations of the indecency policy rather than those that last a fraction of a second, as was the case in the Janet Jackson Super Bowl incident.  This need for reexamination arose after the Supreme Court decided that the FCC’s crackdown on any indecency, even “fleeting expletives”, was not adequately explained as it departed from prior FCC policy that understood that, on occasion, mistakes happen.  As long as the error causing something arguable indecent to be broadcast wasn’t repeated or planned, there would be no substantial penalty.  But even the common sense reform which essentially stepped back to the prior policy of recognizing that mistakes happen gave rise to many protests that the FCC should not back down on its tough indecency enforcement. 

Yet many broadcasters continue to wait while these reforms are pounded out.  Many broadcast sales and license renewals continue to be delayed by indecency complaints.  While the Commission’s staff has seemingly started to weed out some of the cases where the issues were clearly not actionable (where they would not give rise to fines no matter what standard was used), there remain many in a grey area where, in order to get approval for a station sale through the FCC, or to get a renewal granted, the licensee must sign a “tolling agreement”, giving up statute of limitations rights and sometimes escrowing sufficient funds to cover any potential future fine.

This weekend, there was a story on NPR’s On The Media, found  here, where an ESPN commentator suggested that this dispute was old news that would not arise today as society has changed and people would not take offence at an incident like the Janet Jackson case.  The story cites to the decline in the number of indecency complaints that have been filed at the FCC in recent years.  But this seems to us to simply be a reflection of the decline of organized campaigns to flood the FCC with thousands of complaints on any incident that offended the monitors at specific groups that were active in organizing such complaint-filing frenzies.  Complaints are still filed at the FCC on a regular basis, and it takes only one complaint to tie up a broadcast licensee.

So we are looking forward to a resolution of this long-standing proceeding 10 years after it became the “hot” issue in broadcasting, just as we are looking forward to a more competitive Super Bowl next year!

Each year, at about this time, we pull out the crystal ball and make predictions of the issues affecting broadcasters that will likely bubble up to the top of the FCC’s agenda in the coming year.  While we try each year to throw in a mention of the issues that come to our mind, there are always surprises, and new issues that we did not anticipate. Sometimes policy decisions will come from individual cases, and sometimes they will be driven by a particular FCC Commissioner who finds a specific issue that is of specific interest to him or her.  But here is our try at listing at least some of the issues that broadcasters should expect from Washington in the coming year.  With so many issues on the table, we’ll divide the issues into two parts – talking about FCC issues today, and issues from Capitol Hill and elsewhere in the maze of government agencies and courts who deal with broadcast issues.  In addition, watch these pages for our calendar of regulatory deadlines for broadcasters in the next few days.

So here are some issues that are on the table at the FCC – starting first with issues affecting all stations, then on to TV and radio issues in separate sections below. 

General Broadcast Issues

There are numerous issues before the FCC that affect both radio and television broadcasters, some of which have been pending for many years and are ripe for resolution, while others are raised in proceedings that are just beginning. These include:

Multiple Ownership Rules Review: In April, the FCC finally addressed its long outstanding Quadrennial Review of the broadcast multiple ownership rules – essentially by punting most of them into the next Quadrennial Review, which probably won’t be resolved until 2016.  Issues deferred include any revisions to the local ownership limits for radio or TV (such as loosening the ownership caps for TV stations in smaller markets, which the FCC tentatively suggested that they would not do), any revision to the newspaper-broadcast cross-ownership rule (which the FCC tentatively suggested that they would consider – perhaps so that this rule can be changed before the newspaper becomes extinct), and questions about the attribution of TV Shared Services Agreements (which the FCC is already scrutinizing under an Interim Policy adopted by the Media Bureau).

Other multiple ownership issues will be discussed elsewhere in this article and its companion on issues to resolved outside the FCC, as the Courts will be deciding on appeals of the FCC’s decision to attribute TV JSAs for multiple ownership purposed (meaning that a JSA can only be done between two stations that can be commonly owned under the current ownership rules).  The FCC also has on its plate the question of the UHF discount in assessing compliance with national ownership caps for TV, which is discussed in more detail in the Television section, below. 

Indecency: After the Supreme Court decision in June 2012, upholding the FCC’s right to regulate indecency but questioning the current procedure for doing so, the FCC’s regulation of indecency has been up in the air. In 2013, the FCC took public comments asking how it should proceed in this area, suggesting that it reserve enforcement actions for egregious violations – and asking for comments on how such complaints should be identified.  The FCC has, in the past year, released holds that had been delaying action on many license renewals, some for almost a decade, perhaps signaling some internal thinking about how to enforce the indecency policies. In a recent post on the FCC Blog, it was stated that over 950 renewals have been granted after the resolution of pending complaints.  It is our assumption that most of these involved the resolution of long-pending indecency complaints.  Perhaps in the coming year we will see that internal thinking reflected in some external guidance to broadcasters on enforcement principles for broadcasters.

Contest Rules.  Late this past year, the FCC proposed to reform the rules for contests run by broadcast stations – proposing to allow broadcasters to disclose the material terms of the contest on the Internet, rather than requiring that they be broadcast on the air enough so that a listener is likely to have heard them.  This common-sense reform of the contest rules seems to be on a fast track, so we would expect action on this item sometime in 2015.

Foreign Ownership of Broadcast Stations.  In late 2013, the FCC issued a statement clarifying its policies on the foreign ownership of broadcast licensees, making clear that what was thought to be an absolute prohibition on the ownership of more than 25% of the stock of the parent company of a licensee by non-US citizens was in fact only a guideline that could be exceeded if proposed greater foreign ownership of a station would not adversely affect the public interest.  While many thought that this would bring an influx of foreign investors to the US broadcast marketplace, the first company to file an application seeking FCC consent under this new policy was Pandora, and not because it believed that its foreign ownership exceeded 25%, but instead because, as a public company, they could not absolutely prove the citizenship of all of their shareholders using standards that the FCC adopted in the 1970s, long before many of the current ways of trading public securities came into being.  As the Pandora request has been pending for over 6 months, we would expect that the FCC will act on it this year, and perhaps further clarify its policy on foreign ownership of broadcast stations.

EEO Rules: There are fundamental issues about the FCC’s EEO policies that have not been addressed in the 11 years since these rules were first adopted. Proposals to extend the rules to part-time employees, and to require the filing of FCC Form 395 (the form that classifies all employees by race and gender), are still pending from that long-ago proceeding. Also pending are proposals sought in requests for reconsideration of the adoption of the EEO rules that would make the EEO rules comport with today’s reality – such as the proposals to allow Internet-based EEO recruiting. Maybe this will be the year that some of these outstanding issues are finally resolved, especially as larger station employment groups will begin this year to file EEO Mid-Term Reports on FCC Form 397.  But, with the recent fines issued to stations for not reaching out to community groups that had asked to be informed about job openings at stations, it may well be that the FCC has just decided to leave these issues as is and clarify enforcement policies through cases that come before it from renewal filings, Mid-Term Reports or EEO audit responses. 

Political Rules: In recent elections, we have seen the effects of the Citizens United case in the significant political spending on broadcast commercials by third-party organizations. While there have been calls for more regulation on such ads, we don’t expect action in that area from the FCC. Instead, at the FCC, there may be some minor tweaking of the political broadcasting rules as cases come before the Commission.  We are still looking at outstanding issues pending before the FCC from previous elections – including appeals of the decision of the FCC, issued just before the last Presidential election, holding that TV stations have to give candidates equal access to certain single-issue candidates – even though such candidates are qualified only in the distant reaches of the station’s coverage area, and even when such candidates are “running” for office not with any expectation that they will be elected, but instead simply so that they can get access to television stations to run some controversial commercials not primarily intended to promote their candidacy, but instead to promote their position on some other issue. There are also reportedly issues that the Commission will be asked to address concerning station policies on levels of sold-out preemptible advertising time, and how candidates are to be treated in sold-out situations.  Also, there may be further actions on the FCC complaints about the sufficiency of online political files of TV stations and on the proper sponsorship identification of PAC ads where the PAC is funded by a single individual.  Given that there is a one-year respite before the next election cycle starts, it might be the case that some of these issues actually get considered and resolved.   

Public Interest Programming Reports: In a proposal released in 2011, the FCC issued a Notice of Inquiry to look at the adoption of a new form on which broadcasters would report the public interest programming that they do. This form would replace the Quarterly Issues Programs list, and the Form 355 adopted in 8 years ago for television but never implemented. The proposal was simply a Notice of Inquiry, meaning that the FCC would need to adopt a Notice of Proposed Rulemaking to move further on this proposal. We have not heard much about the status of this proposal lately.  As no Notice of Proposed Rulemaking has yet to be released, before any new rules were adopted a whole new set of comments would need to be received. So don’t expect a new form this year.

Television Issues

Spectrum issues have been the dominant TV concerns in past years, and will be front and center again this year as the FCC looks to complete the adoption of its rules for the incentive auction to reclaim TV spectrum for wireless broadband users, which is now scheduled to take place in 2016.  There are many issues over the auction that are yet to be worked out, and there are portions of those rules already adopted that are subject to Court challenge (which we will write about soon in a second installment of our predictions, looking at actions in Courts and at other agencies that can affect broadcasters in the coming year). 

In addition to the incentive auction, there are many other issues before the Commission that could have an impact on a TV broadcaster’s operations.  These include issues dealing with the carriage of television stations by cable and satellite television providers, the treatment of the UHF discount for multiple ownership purposes, and definition of an MVPD (multichannel video programming distributor) for FCC purposes – including for the must-carry and retransmission consent debates. Issues about accessibility to video programming and the implementation of other consumer protection issues are also on the agenda. Specific issues for TV include:

Spectrum reclamation: The incentive auction is perhaps the most complex proceeding that the FCC has ever undertaken.  The auction process consists of two parts, a “reverse auction,” where certain TV stations would bid to be able to sell their spectrum to the FCC to be repurposed for wireless uses and either go out of business or move to a VHF channel or share spectrum with another station. The TV stations left after the reverse auction would be packed into a smaller part of the TV band, and the spectrum that is cleared would be sold to wireless companies in a “forward auction.”  But all these moving pieces need to be coordinated, as the reverse auction cannot be completed until the FCC knows that enough money will be coming in from the wireless companies in the forward auction to fund the buyout of the TV stations willing to give up their spectrum.

As this is a highly complex process, which will need sophisticated computer programs to keep all of the bidding straight, the FCC wants to get the process right, and have an electronic system to handle the process that will work.  In addition, there are all sorts of details to be worked out – including how stations participating in the reverse auction will be valued in determining how much to pay them to vacate their spectrum, international coordination of TV channel changes as part of the repacking of the TV band, and the final method for determining the costs that will be reimbursed to remaining TV stations for their repacking into the smaller TV band.  Comments on the auction bidding process are due at the end of January, and the FCC will be making a push to finalize all these issues this year (subject to potential delays from the pending Court appeals on some of the rules already adopted by the FCC for the conduct of the auction and the interference to which remaining TV stations can be subject as they are repacked into the smaller TV band.

Retransmission Consent Reform: Another issue that was on our list for the last few years, and which remains on the list, is the question of retransmission consent negotiations.  After every dispute between an MVPD and a TV broadcaster over retransmission fees there are new cries for legislative or regulatory changes to the retransmission consent process.  Some multichannel video programming distributors and some public interest groups argue that the FCC should protect viewers who may have their broadcast TV service disappear if a TV station does not reach a deal with a MVPD, while the broadcasters argue that the ability to remove the station from an MVPD is the heart of the negotiation, and removing the risk of the MVPD losing the right to carry the station would hobble the negotiation process.  In the past year, the FCC adopted rules prohibiting the joint negotiation of retransmission consent agreements between stations in the same market that are not commonly owned.  It also proposed rules to change or eliminate the network nonduplication and syndicated exclusivity rules.  Issues about retransmission consent were also considered by Congress in its debates over the STELAR legislation, authorizing the continued carriage of TV stations by satellite television companies, though most were ultimately tabled.  But action in this area may well be on the table again this year – either at the FCC or in Congress. 

Defining an MVPD:  Two years ago, the FCC initiated a proceeding to determine if an Internet-delivered video programming service could qualify as an MVPD.  Just before Christmas, the FCC issued a Notice of Proposed Rulemaking suggesting that this in fact occur.  With all of the recent announcements about Internet-delivered video programming, in many cases programming to be provided in a “linear” as opposed to an on-demand fashion like cable TV programming, it is expected that this proceeding will receive very active consideration in the coming year sa the FCC tries to decide on its role in regulating Internet-delivered video programming. 

UHF Discount:  In 2013, the FCC proposed repeal of the “UHF discount,” which counts a UHF station as reaching only half of a market’s population in assessing a television company’s compliance with the current rules that limit any company to at most stations reaching 39% of the US TV households.  The FCC has tentatively concluded that the digital conversion has made the discount counterproductive as UHF stations have better coverage in a digital world, instead of suffering from the coverage issues that they faced in analog TV at the time that the rule was adopted.  TV station owners argue that getting rid of the discount is changing the rules in the middle of the game, especially as many of these companies have deals in the works at the current time.  In a multichannel universe where most households have access to dozens, sometime hundreds of nationwide or worldwide networks, limiting the reach of a station group no longer makes sense as it once did, and effectively reducing that reach by adopting the change in the rules makes even less sense.  While many thought that this issue would be resolved quickly, given the complexities involved, it may take some time before the FCC gets around to finalizing this proposal, but look for much lobbying on it this year, and a decision may well be postponed until the 2016 expected resolution of the Quadrennial Ownership Review referenced above.

Accessibility: Each year, accessibility issues play a more and more important role in video transmissions.  This year, rules on captioning quality will go into effect (once the FCC concluded how much authority it can assert over program providers on these issues), and new complaint procedures will also become effective for handling complaints about station compliance with new Electronic Newsroom Technique captioning procedures that went into effect last year.  Secondary audio streams of TV stations will also need to begin to provide aurally emergency information, and additional rules about providing audio descriptions of video programming will go into effect for Top 4 network stations in the Top 60 TV markets.  We would expect all of these issues will bring their own sets of compliance issues for TV stations,  and new complaints for the FCC to process.  We also expect further action (and many denials) of requests for captioning exemptions from smaller program providers (see our recent article about one such denial, here).  Stations should be alert to these deadlines and watch for further FCC actions in this area. 

Also on the Commission’s agenda will be the resolution of issues relating to the repurposing of captioned broadcast video onto the Internet.  The FCC left open certain issues about the new captioning requirements for video clips – including whether to require that they be captioned when used on third-party websites, and how to deal with “mash-ups” of video clips taken from TV programs with video that comes from other sources.  Look for this issue to be considered later this year.  See our Broadcasters Calendar for more information about the implementation dates for these accessibility obligations. 

LPTV/Class A TV: These stations had expected a mandatory digital conversion in 2015, but it appears that the FCC will postpone that obligation – as the status of many of these stations may be uncertain after the conclusion of the incentive auction.  In addition to the postponement of the digital conversion deadline, expect the FCC to further qualify what rights, if any, these stations will have once the incentive auction and spectrum repacking takes place.   

Radio Issues

 Radio has fewer unique issues on the front burner at the FCC, but there are still things to be thinking about.  In addition to the general issues discussed above (multiple ownership, indecency, EEO, documentation of public interest efforts), issues on the radar screen for radio include:

AM Radio:  In our predictions last year, we were optimistic that, during the course of the year, the FCC would provide some regulatory relief to AM broadcasters.  Well, we remain optimistic that there will be relief – and hopefully this will be the year that it will come.   We would expect that the first actions will be easier ones – opening an FM translator window to provide FM translators for AM stations and perhaps changing the “ratchet rule” which in many cases makes it difficult for AM stations to make changes in their facilities as the rule requires stations to lower power so as to decrease interference caused by such moves.  Longer term, look for more exploration of other technical fixes for AM, perhaps including further discussions of an all-digital operation. 

Online Public File for Radio Stations.  The proposal to require an online public file for radio stations rocketed onto the FCC docket this past year with a Notice of Proposed Rulemaking to adopt that requirement.  Given the speed with which the proposal has moved in the past year, and as 2016 is an election year and the political file is a driving factor in the adoption of this obligation, we predict that rules will be adopted later this year, but implementation will probably roll out slowly – starting with big market stations in 2016. 

FM Translator Issues: While the issues involving FM translator applications left from the 2003 FM translator window have largely been settled, and thousands of new FM translators from that window granted in 2013 (see our articles here and here), there are still applications that are mutually exclusive that remain to be processed.  Look for an auction for these final applications to be announced later this year. 

LPFM Applications.  The remaining LPFM applications from last year’s window will be processed this year.  Look for there to be more complaints of actual interference to full-power stations from new LPFMs as new stations, grated as through the recent filing window, begin to start operations in the coming year. 

Conclusion

These are but some of the legal and regulatory issues that will be facing broadcasters in the upcoming year. There are many other proceedings at the FCC that can also affect stations – including reexaminations of the EAS rules, review of the environmental rules applicable to tower construction, and a reexamination of the allocation of FCC costs as reflected in the annual regulatory fees that broadcasters pay.  There are also other issues that are pending but have seemingly stalled at the FCC, including a reexamination of the sponsorship identification rules (sponsorship ID having been the subject of a number of recent fines, perhaps this issue is slowly moving back onto the FCC’s radar),  a review of the Biennial broadcast ownership filings (including whether there should be reporting of some nonattributable interests and whether noncommercial broadcasters should be brought under the same process as commercial broadcasters), and the proceeding to reexamine the rules that prohibit noncommercial broadcasters from interrupting their programming to fund-raise for third parties.  Any of these proceedings could pop back to the top of the FCC’s stack at any time.  Broader communications issues, including the net neutrality debate and the consideration of various media mergers, will also have some effect on the business world in which the broadcaster operates. 

And there are many issues in Congress or at other agencies that could affect broadcasters.  We will write about those issues in another article in the near future.  So there is always something happening in Washington for which broadcasters need to be alert.  And this article provides just a sample of the many issues that may be coming your way in the coming year.    

The FCC set a new record for a fine for a single violation of its indecency rules – $325,000 for a 3 second visual image of a penis run in a corner of a TV screen a single time on a TV station during its 6 PM news (a full description of the image is in the FCC’s Notice of Apparent Liability but, so as to not trigger too many spam filters, I will omit any more details in this article). The image in the newscast was a visual of a website, the website having several different frames, each with video images, and one of those frames had the image that led to the fine. This is the first time that the FCC has imposed a fine of $325,000, an amount authorized by Congress during the FCC’s last crackdown on indecency but never before used by the FCC. And not only did the FCC issue the Notice of Apparent Liability describing its legal reasoning for imposing the fine, but they also put out a press release publicizing the Notice, highlighting other recent indecency actions taken by the FCC, and warning broadcasters to pay attention to the decision. What happened here?

According to the FCC’s order, a TV station did a story on a former adult movie star who had retired from her former profession and begun to work with the local rescue squad. In providing background to what might otherwise be an off-beat human interest story about a person with a colorful past adapting to a new life as part of a local community, to provide context, the station showed the website of the adult movie company for which she had formerly worked. In editing the brief clip of the website into the story, neither the independent producer who put the story together nor anyone at the station noted the visual in one corner of the webpage with the image that got the station into trouble. According to the station, the image was not viewable on the editing machines used by those producing the story. But, apparently viewers at home, perhaps watching on bigger screens, were able to see the image, prompting the FCC complaint and other complaints to the station. While the image appeared on screen for only about 3 seconds, and only once, the FCC nevertheless selected this case to be its first in which to levy this new level of indecency fine – ten times higher than previous fines for a single broadcast of indecent material on a single station. Why?

First, the FCC looked at the image at issue and determined that this was a case that nicely fit within its definition of indecency. To be indecent under the FCC rules, the Commission will assess whether broadcast material depicts or describes sexual or excretory organs or activities in a manner that “is patently offensive.” In making that decision, the FCC has said that “the full context in which the material appeared is critically important.” That context is determined by looking at three principal factors: (1) the explicitness or graphic nature of the description or depiction; (2) whether the material dwells on or repeats at length descriptions or depictions of sexual or excretory organs or activities; and (3) whether the material panders to, titillates, or shocks the audience. While the image in question was no doubt explicit, and probably shocking to some in the audience, the FCC had to explain how the case fit into the second criteria, given that the image was on screen for only 3 seconds. The Commission noted that it balances and weighs these three factors and, in this case, the material was so offensive and graphic, that it was on screen long enough to be noticed, and that the factors therefore dictated a determination that this broadcast was indecent.

But why the heavy fine on something that was likely a mistake by the broadcaster? Clearly, it was to send a message. The FCC repeatedly noted that this broadcast was during the 6 PM news, at an hour that children were likely to be watching. Where the station decided to make a story about an adult film actor, and to illustrate it with material from an adult website, the Commission stated that it felt that the broadcaster should have exercised more care in reviewing the material for broadcast. Basically, the Commission seems to be saying that if you are playing with fire, don’t complain if you get burnt.

But there will still no doubt be questions should the broadcaster decide to contest the Notice of Apparent Liability. Did the FCC really need to come down this hard on a very reputable broadcaster whose TV station obviously made a mistake? There is no question that the station should have been more careful in its editing, and the FCC wanted to warn other stations not to make the same mistake. But was a $325,000 fine necessary to make that point? This is not a situation where a station was repeatedly airing nasty material in a blatant attempt to push the limits to get ratings (like some morning radio shows with which the FCC has had problems in the past). Instead, it was one story that was run by a TV station, a little risqué perhaps, but certainly not over the line (but for the image in question). The Commission noted the fact that the station was ultimately owned by Schurz Communications, a significant company with multiple broadcast and newspaper interests, seemingly to conclude that the amount of the fine was necessary to make an impact on a big company. But for a well-respected company like this, wouldn’t almost any size fine and the publicity from this decision have had the same impact?

And what about the fact that the FCC’s own rules are currently under review? The FCC itself is trying to decide how to deal with fleeting expletives and images after the Supreme Court determined that its prior enforcement of its indecency policy did not give sufficient notice to the broadcaster of what was prohibited and what was permitted. In the Notice which began its review of its indecency policy (which we wrote about here, here and here), the FCC says that its indecency policy is constitutional and that the broadcaster should have known that this material was prohibited. It also notes that its request for comment on how to enforce the policy for fleeting images and expletives, and whether to only enforce the policy in egregious cases, came out after the conduct in question here (though the Supreme Court’s decision was before the conduct).

Yet these are all questions that will no doubt be argued in many quarters over the next few months. Watch as the argument develops – but also exercise caution as, once the FCC has pulled out this big cannon in its arsenal, it may well look to use it again, so don’t become a target!

It’s that time of the year when we need to dust off the crystal ball and make predictions about the legal issues that will impact the business of broadcasters in 2016.  While we try to look ahead to identify the issues that are on the agenda of the FCC and other government agencies, there are always surprises as the regulators come up with issues that we did not anticipate. With this being an election year, issues may arise as regulators look to make a political point, or as Commissioners look to establish a legacy before the end of their terms in office.  And you can count on there being issues that arise that were unanticipated at the beginning of the year.

But, we’ll nevertheless give it a try – trying to guess the issues that we will likely be covering this year.  We’ll start today with issues likely to be considered by the FCC, and we’ll write later about issues that may arise on Capitol Hill and elsewhere in the maze of government agencies and courts who deal with broadcast issues.  In addition, watch these pages for our calendar of regulatory deadlines for broadcasters in the next few days.

So here are some issues that are on the table at the FCC.  While the TV incentive auction may well suck up much of the attention, especially in the first half of the year, there are many other issues to consider.  We’ll start below with issues affecting all stations, and then move on to TV and radio issues in separate sections below. 

General Broadcast Issues

Issues likely to be considered this year that could affect both radio and television broadcasters, include:

Multiple Ownership Rules Review: In 2014, the FCC addressed its long outstanding Quadrennial Review of the broadcast multiple ownership rules by pushing its consideration of most of the rules until 2016. Even the one issue considered in 2014, prohibiting Joint Sales Agreements between TV stations in the same market that could not be commonly owned, has been put on hold for a decade by a recent act of Congress, grandfathering all of the JSAs that were in effect prior to the FCC’s 2014 decision.  But the issues raised in the 2014 notice in the current Quadrennial Review, reach across the broadcast spectrum.  Issues that are to be considered in the ownership review that is supposed to take place this year include revisions to the local ownership limits for radio or TV (such as loosening the ownership caps for TV stations in smaller markets, which the FCC tentatively suggested that they would not do), any revision to the newspaper-broadcast cross-ownership rule (which the FCC tentatively suggested that they would consider – perhaps so that this rule can be changed before the newspaper becomes extinct), and questions about the attribution of TV Shared Services Agreements (which the FCC is already scrutinizing under an Interim Policy adopted by the Media Bureau).

Also under consideration is whether the FCC should continue to apply “the UHF discount” in assessing compliance with national ownership caps for TV, an issues which is discussed in more detail in the Television section, below.

Indecency: After the Supreme Court decision in June 2012, upholding the FCC’s right to regulate indecency but questioning the current procedure for doing so, the FCC’s regulation of indecency has been up in the air. In 2013, the FCC took public comments asking how it should proceed in this area, suggesting that it reserve enforcement actions for egregious violations – and asking for comments on how such complaints should be identified.  While last year brought a $325,000 fine for a violation of the indecency rules (the first fine of that magnitude issued by the FCC), in general, the FCC has been quiet in enforcing its indecency rules since the Supreme Court decision.  As the FCC’s 2013 proposals drew many agitated comments and prompted much media attention, in an election year, don’t look to the FCC to resolve the ambiguities in this long-outstanding proceeding.

Foreign Ownership of Broadcast Stations.  In late 2013, the FCC issued a statement clarifying its policies on the foreign ownership of broadcast licensees, making clear that what was thought to be an absolute prohibition on the ownership of more than 25% of the stock of the parent company of a licensee by non-US citizens was in fact only a guideline that could be exceeded if proposed greater foreign ownership of a station would not adversely affect the public interest.  While many thought that this would bring an influx of foreign investors to the US broadcast marketplace, the first company to file an application seeking FCC consent under this new policy was Pandora, and not because it believed that its foreign ownership exceeded 25%, but instead because, as a public company, they could not absolutely prove the citizenship of all of their shareholders using standards that the FCC adopted in the 1970s, long before many of the current ways of trading public securities came into being.  At the end of last year, the FCC requested and received comments on its proposals to somewhat simplify the process of identifying foreign owners.  While the issues are now teed up for FCC action, this is another proceeding that could raise political issues, so if the FCC actually takes action here, it may well be late in the year after the elections.

EEO Rules: There are fundamental issues about the FCC’s EEO policies that have not been addressed in the 12 years since these rules were first adopted. Proposals to extend the rules to part-time employees, and to require the filing of FCC Form 395 (the form that classifies all employees by race and gender), are still pending from that long-ago proceeding. Also pending are proposals sought in requests for reconsideration of the adoption of the EEO rules that would make the EEO rules comport with today’s reality – such as the proposals to allow Internet-based EEO recruiting. Given last year’s announcement to allow the Internet to serve as the primary location for notifying the public about broadcast contest rules, maybe this will be the year that some of these outstanding issues are finally resolved.

Political Rules: In what will probably be a big political broadcasting year, don’t expect any fundamental changes in the FCC’s political broadcasting rules to address the impact of the Citizens United case in the significant political spending on broadcast commercials by third-party organizations. While there have been calls for more regulation on such ads, we don’t expect action in that area from the FCC. Instead, at the FCC, there may be some minor tweaking of the political broadcasting rules as cases come before the Commission.  The one area where the FCC may be active is in the area of sponsorship identification.  We have seen the FCC impose a large sanction – $540,000 – on a radio operator for not fully identifying the sponsor of an issue ad. Plus there are complaints pending against many TV stations for not identifying the “true” sponsor of PAC ads, where the PAC was principally funded by a single individual.  We are still looking at other outstanding issues pending before the FCC from previous elections – including appeals of the decision of the FCC, issued just before the last Presidential election, holding that TV stations have to give candidates equal access to certain single-issue candidates – even though such candidates are qualified only in the distant reaches of the station’s coverage area, and even when such candidates are “running” for office not with any expectation that they will be elected, but instead simply so that they can get access to television stations to run some controversial commercials not primarily intended to promote their candidacy, but instead to promote their position on some other issue. The FCC also asked about the last in, first out policies that stations use to determine which ads to preempt when they have too many preemptible ads, and whether such policies, when applied to political candidates, are an issue.   While these are outstanding, given the time before the election, we doubt that there will be much resolution here, and in fact new issues may arise that will join these in the queue for resolution next year.

Public Interest Programming Reports: In a proposal released in 2011, the FCC issued a Notice of Inquiry to look at the adoption of a new form on which broadcasters would report the public interest programming that they do. This form would replace the Quarterly Issues Programs list, and the Form 355 adopted 8 years ago for television but never implemented. The proposal was simply a Notice of Inquiry, meaning that the FCC would need to adopt a Notice of Proposed Rulemaking to move further on this proposal. We have not heard much about the status of this proposal lately.  As no Notice of Proposed Rulemaking has yet to be released, before any new rules were adopted a whole new set of comments would need to be received. So don’t expect a new form this year.

Television Issues

The Incentive Auction has been the dominant concern for TV broadcasters for several years now, and, barring any last minute glitches, this will be the year that it actually happens.  With TV broadcasters just this week having submitted their applications to participate in the “Reverse Auction,” and with wireless companies having soon to submit their applications to participate in the “Forward Auction” to buy the reclaimed spectrum, the Incentive Auction looks to be a reality that will reshape the TV landscape for years to come.  Not only will a number of stations disappear, but the remainder will be repacked into a much smaller TV band.  This smaller band, until the next generation of digital television through ATSC 3.0 becomes a reality, will have less opportunities for new broadcasters, and may result in the loss of many LPTV and TV translator operators.  The results may begin to take shape late this year of the bidding can be completed by then.

While the Incentive Auction will certainly take center stage for many months, even limiting the conversations that broadcasters can have with each other about buying and selling stations and otherwise planning for the future, there are many other issues before the Commission that could also have a significant impact on the operation of the remaining TV stations.  These include an FCC examination of the rules dealing with the negotiations between stations and cable and satellite television providers about the compensation to be paid for carriage of those stations, the treatment of the UHF discount for multiple ownership purposes, and definition of an MVPD (multichannel video programming distributor) for FCC purposes. Issues about accessibility to video programming and the implementation of other consumer protection issues are also on the agenda. Specific issues for TV include:

Retransmission Consent Reform: Another issue that has been on our list for the last few years, and which now bubbles to the top, is the question as to whether to change the nature of the retransmission consent negotiation process.  After every dispute between an MVPD and a TV broadcaster over retransmission fees there are new cries for legislative or regulatory changes to the retransmission consent process.  Last year, the FCC started a proceeding looking to further define “good faith negotiation” of retransmission consent – in many cases proposing rules that could limit the power that a TV station has to block access to its signal, the heart of the station’s leverage in the negotiation process.  The FCC Chairman has stated that will resolve the proceeding this year. So watch for the fireworks that are bound to ensue.  Last year, the Chairman has attempted to get through the FCC rule changes to eliminate the network nonduplication and syndicated exclusivity rules.  These efforts failed, reportedly as he could not get a majority of Commissioners to support his position.  This issue is still on the table, but given the objections from other Commissioners, and the opposition of many in both parties in Congress, we would doubt that the issue will resurface soon.  But retransmission consent is sure to be a contentious issue again this year.

Defining an MVPD:  Three years ago, the FCC initiated a proceeding to determine if an Internet-delivered video programming service could qualify as an MVPD. Last year, that proceeding matured into a full Notice of Proposed Rulemaking, proposing to treat many Internet video systems as MVPDs, subjecting them to FCC rules – including must carry and retransmission consent rules, and perhaps program access rules giving them access to certain cable programming.  While these rules would benefit some “OTT” (over-the-top) video programming providers, others opposed the proposals seemingly more concerned about being subject to FCC regulation.  Thus, this proceeding, too, seems to be stalled.

UHF Discount:  In 2013, the FCC proposed repeal of the “UHF discount,” which counts a UHF station as reaching only half of a market’s population in assessing a television company’s compliance with the current rules that limit any company to at most stations reaching 39% of the US TV households.  The FCC has tentatively concluded that the digital conversion has made the discount counterproductive as UHF stations have better coverage in a digital world, instead of suffering from the coverage issues that they faced in analog TV at the time that the rule was adopted.  TV station owners argue that getting rid of the discount is changing the rules in the middle of the game, especially as many of these companies have deals in the works at the current time.  In a multichannel universe where most households have access to dozens, sometime hundreds of nationwide or worldwide networks, limiting the reach of a station group no longer makes sense as it once did, and effectively reducing that reach by adopting the change in the rules makes even less sense.  While many thought that this issue would be resolved quickly, it has lingered officially unresolved (though effectively in place as the FCC’s staff is not processing applications that would violate the proposed rule), but look for much lobbying on it this year, and a decision may come in connection with Quadrennial Ownership Review referenced above.

Accessibility: In the last few years, many new rules on making video programming accessible to hearing or visually impaired viewers have come into effect.  These include rules mandating the quality of closed captioning, the captioning of online video clips, and new rules about making available audio versions on TV stations’ SAP channels of emergency warnings carried in crawls and otherwise visually presented during entertainment programming.  While we have seen a plethora of new rules, so far FCC enforcement of these rules has not been active.  Given the aggressive enforcement of FCC rules in other area, we would not be surprised to see enforcement here as well.

Also on the Commission’s agenda will be the resolution of remaining issues relating to the repurposing of captioned broadcast video onto the Internet.  The FCC left open certain issues about the new captioning requirements for video clips – including whether to require that they be captioned when used on third-party websites, and how to deal with “mash-ups” of video clips taken from TV programs with video that comes from other sources.  Look for this issue to be considered later this year.

Radio Issues

While radio issues are perhaps not as dramatic as those facing TV, there are still a number of very important proceedings that will have a major impact on radio broadcasters.  In addition to the general issues discussed above (multiple ownership, indecency, EEO, documentation of public interest efforts), issues on the radar screen for radio include:

AM Radio:  Late in 2015, the FCC finally took its first steps to help revitalize AM radio.  The first effort to assist AM owners begins later this month, when the window for filing to move FM translators as much as 250 miles to serve an AM station opens.  Also this year, the FCC will implement certain other technical rules that were changed in its Revitalization Order.  But fundamental issues, like lessening protections of clear channel stations or, more dramatically, moving to a fully digitized transmission system, seem far off.  But at least there may be some discussion of these issues this year.

Online Public File for Radio Stations.  The proposal to require an online public file for radio stations rocketed onto the FCC docket in late 2014.  It now looks like that proposal will be adopted later this month, and implemented, at least for some stations, in time so that large-market stations will have their political files online in time for the 2016 election.  Look for the roll-out schedule when the FCC acts on this issue late this month.

FM Translator Issues: While the issues involving FM translator applications left from the 2003 FM translator window have largely been settled, and thousands of new FM translators from that window granted in 2013 (see our articles here and here), there are still applications that are mutually exclusive that remain to be processed.  Look for an auction for these final applications to be announced later this year. The FCC promised to resolve those applications so, in 2017, it can open a new translator window for AM stations who did not get translators this year through the process described above, allowing them to be moved up to 250 miles.

LPFM Applications.  The remaining LPFM applications from the 2014 window will probably be processed this year.  Surprisingly, the number of interference complaints from full-power stations to all the new LPFM stations has not been great.  But as more of the recently-granted LPFMs get on the air, watch for the number of those complaints to rise.

Conclusion

These are but some of the legal and regulatory issues that will be facing broadcasters in the upcoming year. There are many other proceedings at the FCC that have been long outstanding, some of which may be resolved this year.  These include the reexamination of the EAS rules  (which includes the proposal for some stations to have mandatory obligations to give emergency warnings in languages other than English), review of the environmental and FAA rules applicable to tower construction, and a reexamination of the allocation of FCC costs as reflected in the annual regulatory fees that broadcasters pay.  There are also other issues that are pending but have seemingly stalled at the FCC, including a reexamination of the sponsorship identification rules (sponsorship ID having been the subject of a number of recent fines, most notably the $540,000 fine referenced above issued to Cumulus for failing to explicitly identify the sponsor of an issue ad),  a review of the Biennial broadcast ownership filings (including whether there should be reporting of some nonattributable interests and whether noncommercial broadcasters should be brought under the same process as commercial broadcasters), and the proceeding to reexamine the rules that prohibit noncommercial broadcasters from interrupting their programming to fund-raise for third parties.  Any of these proceedings could pop back to the top of the FCC’s stack at any time. These and many other issues can pop up at the FCC at any time, so keep watching.

And there are many issues in Congress or at other agencies that could affect broadcasters.  We will write about those issues in another article in the near future.  But, just from the list here, you can

A Washington Post article published this weekend was titled “Is there anything you can’t say on TV anymore? It’s complicated.” And, it really is. The Post article presents a very good overview on the status of the FCC’s indecency rules. What will happen with those rules has been a matter of conjecture for several years, ever since the Supreme Court threw out the fines that the FCC had imposed for fleeting expletives that had slipped out in the Golden Globes and other awards programs, a case that also had the effect of negating that other fine for a “slip,” the notorious Janet Jackson clothing malfunction during her Super Bowl performance. Other than a well-publicized $325,000 fine on a Roanoke TV station for a short but very explicit image that slipped into the corner of a news report on a porn star turned first responder (see our article here on the Roanoke case), the FCC has been largely quiet on the indecency front since it launched a post-Supreme court proceeding to determine how they should amend their rules in light of the Court’s decision (see our summary here).

As we wrote when comments were filed in that proceeding, it drew much attention, with many commenters fearing that the FCC would back away from all indecency regulation on broadcast TV. In an election year like this one, don’t expect in the near future to see any definitive answers as to what is indecent and what is not. Neither political party wants to be tagged with being pro-smut by one side of the political spectrum, or anti-First Amendment expression by the other. But the Post article raises other very interesting questions about the difference in legal treatment between cable and broadcast programming, especially when so many viewers hooked up to some cable or satellite service don’t really understand the difference between cable network programming and that from broadcast sources.

We have written before about the fact that all cable – basic cable and premium channels – are not subject to the same indecency rules as are broadcast stations. While the government years ago tried to expand broadcast indecency regulation to cable channels, the Courts threw out such regulation, finding that cable was different than broadcast. In essence, as cable was invited into the home, and could be uninvited by cancelling a subscription, or specific channels could be blocked, the government’s interest in restricting adult programming did not overcome the free speech rights of cable systems to provide, and cable viewers to receive, that programming. As the Post article points out, to the extent that basic cable has not had an explosion of “F-bombs” or the more explicit programming that might be expected on HBO, Showtime or one of the other premium cable channels has been simply a matter of marketing and advertising. Providers have been leery of offending viewers or advertisers with more explicit programming on basic cable, and thus have not indulged in the manner that they legally could have though, as the article points out, that is changing gradually to meet audience demands for more adult programming.

Broadcast TV has no doubt itself evolved from the twin beds used by the married couple in the Dick Van Dyke show of so long ago, but the indecency rules still apply to broadcast stations, as evidenced by the big Roanoke fine. Broadcasters do have greater leniency after 10 PM to run more adult fare, but again driven by marketing and advertising concerns, most still refrain from using those four-letter words and other explicit content that you might see on cable channels. For instance, on an episode of the Stephen Colbert show that aired this week, the new book written by X Files actor David Duchovny was being discussed, and the four-letter word in the title was bleeped over a dozen times from the conversation, and the title of the book (and the lips of Colbert and Duchovny) were blurred to avoid even showing the word in any visual manner (see this article from USA Today with a link to the program).

In a recent seminar that I did for a College Broadcaster’s organization, the topic came up in connection with song lyrics. Apparently, some college radio stations are more adventuresome with their music selections in the 10 PM to 6 AM safe harbor hours. Certain genres of music where lyric choices are not G-rated are played during those hours. While they might bring complaints, the FCC should dismiss complaints for content aired during those hours (unless it were to veer from merely indecent to the far more explicit category of obscenity, which has no socially redeeming value and is always prohibited, but which the Supreme Court itself has had trouble defining in any clear, easy to apply test). Of course, stations need to be careful if they are located near a time zone barrier, as what may be permitted where it is broadcast could be a problem if it is received in an area where the time is an hour earlier.

So the Post got it right – the current state of broadcast indecency is complicated and will no doubt remain that way for the foreseeable future – and perhaps longer. But, as the Roanoke case shows, even without clear rules on all content, if a broadcaster goes too far, the FCC will crack down.

With the Super Bowl soon to kick off in Houston, the New York Times just ran a story (here) recalling that during the last Super Bowl held in Houston, the notorious “wardrobe malfunction” occurred.  The article highlighted the NFL’s concerns since then in picking halftime performers. To readers of this blog, that incident raises a whole host of other issues, as it triggered a re-examination of the FCC’s indecency rules which, 13 years after the incident, does not appear to have any end in sight. The Super Bowl incident, as well as various other instances of “fleeting expletives” that slipped out during TV awards shows, led to numerous FCC fines in the early 2000s, and a long string of court appeals thereafter. These court appeals culminated in a Supreme Court decision throwing out the FCC’s fines against broadcasters, not because the FCC did not have the authority to issue fines for indecent conduct, but instead because the FCC did not give adequate notice to stations as to what was permitted and what was prohibited as it had not adequately explain why it had decided to abandon its prior policy of just issuing admonitions to stations that had inadvertent fleeting indecency slip-ups.

After the Supreme Court’s decision almost 5 years ago, the FCC initiated a proceeding to re-examine its indecency rules which drew broad comment and much controversy (which we wrote about here and here). But no resolution to that proceeding has ever been reached (see our article here reacting to a Washington Post article asking what the current bounds of broadcast indecency are). In the last several years, but for one $325,000 fine for what the FCC believed to be an egregious violation of the rules, we have not seen much indecency enforcement out of the FCC. Will that change in the next administration? That is one question to which we don’t have the answer – as indecency is a notoriously difficult area in which to make rules. Limits are hard to define, and it is extremely sensitive politically to adopt positions relaxing any FCC enforcement. Perhaps it won’t be until the next wardrobe malfunction or the next egregious violation that we will see any further clarification of the FCC’s indecency rules.

A new President and a new Chair of the FCC have already demonstrated that change is in the air in Washington. Already we’ve seen Chairman Pai lead the FCC to abolish the requirement that broadcasters maintain letters from the public about station operations in their public file (which will take effect once the Paperwork Reduction Act analysis is finalized), revoke the Media Bureau guidance that had limited Shared Services Agreements in connection with the sales of television stations, and rescind for further consideration FCC decisions about the reporting of those with attributable interests in noncommercial broadcast stations and the admonitions given to TV stations for violations of the obligation for reporting the issues discussed in, and sponsors of, political ads (see our article here). Also on the table for consideration next week are orders that have already been released for public review on expanding the use of FM translators for AM stations and proposing rules for the roll-out of the new ATSC 3.0 standard for television. Plus, the television incentive auction moves toward its conclusion in the repacking of the television spectrum to clear space for new wireless users. Plenty of action in just over 3 weeks.

But there are many other broadcast issues that are unresolved to one degree or another – and potentially new issues ready to be discussed by the FCC this year. We usually dust off the crystal ball and make predictions about the legal issues that will impact the business of broadcasters earlier in the year, but we have waited this year to get a taste for the changes in store from the new administration. So we’ll try to look at the issues that are on the table in Washington that could affect broadcasters, and make some general assessments on the likelihood that they will be addressed this year. While we try to look ahead to identify the issues that are on the agenda of the FCC, there are always surprises as the regulators come up with issues that we did not anticipate. With this being the first year of a new administration that promises a different approach to regulation generally, what lies ahead is particularly hard to predict.

But, we’ll nevertheless give it a try – trying to guess the issues that we will likely be covering on the Blog and dealing with on behalf of our clients this year. We’ll start today with issues likely to be considered by the FCC, and we’ll write later about issues that may arise on Capitol Hill and elsewhere in the maze of government agencies and courts who deal with media issues.  For information about standard filing dates for broadcasters, see our calendar of regulatory deadlines for broadcasters published last month.

So here are some issues that are on the table at the FCC. The aftermath of the TV incentive auction may well suck up much of the attention, especially in the first half of the year, and we’ll write about that separately. But there are many other issues to consider. We’ll start below with issues affecting all stations, and then move on to TV and radio issues in separate sections below.

General Broadcast Issues

Issues likely to be considered this year that could affect both radio and television broadcasters, include:

Multiple Ownership Rules Review: Last year, the FCC addressed its long outstanding Quadrennial Review of the broadcast multiple ownership rules by declining to make any changes in its ownership rules except to effectively ban new Joint Sales Agreements in television except between two stations that can be commonly owned under the multiple ownership rules, and requiring more reporting on various forms of shared services agreements (see our articles here and here). Despite calls for reform and relaxation of the rules, no changes were made in the local TV ownership rules nor in the ban on the cross-ownership of newspapers and broadcast stations. Both of the Republican Commissioners dissented from that decision, suggesting that times had changed and the rules needed to adapt.

Now those same Republicans are in the majority at the FCC, and broadcasters are expecting things to change. Already, petitions for reconsideration of this decision have been put on public notice for comment, with comments by broadcasters and newspaper companies supporting reconsideration, and public interest groups and some cable associations (with respect to loosening of the local television ownership rules) questioning the need for changes in the rules adopted last year. Issues to be considered on reconsideration include revisions to the local ownership limits for TV (including loosening or abolishing the ownership caps for TV stations in individual markets), elimination of the newspaper-broadcast cross-ownership rule, and elimination of the FCC’s recordkeeping requirements for stations operating with Shared Services Agreements. For radio, a request is on file to change the Commission’s treatment of the ownership attribution of stations in embedded markets. We would expect FCC action this year on these proposals (any appeals of which would likely be consolidated with appeals of last year’s decision which are pending in the US Court of Appeals).

Also under consideration is whether the FCC should continue to apply “the UHF discount” in assessing compliance with national ownership caps for TV, an issue which is discussed in more detail in the Television section, below.

In short, given the past statements of the two Republican commissioners who now form the majority at the FCC, expect to see deregulation in these ownership rules. Fast consideration can be given to those issues that are already before the FCC on reconsideration. It may be a longer time before we see other changes, e.g. changes in the local radio ownership rules, But we expect change are coming.

General Regulatory Underbrush: The new Administration, and both of the Republican commissioners, have indicated a real interest in doing away with rules with little real public interest benefit that require the time and resources of broadcasters to achieve regulatory compliance. We would expect action in this area this year, with new proposals being advanced to cut down on the regulatory burden of broadcasters and other FCC regulates. Already eliminated is the requirement that broadcasters retain letters from the public about station operations – the last vestige the paper public file for many stations. Some broadcasters suggest that the FCC go even further and reduce other public file requirements. When the file was on paper and stored at the station (as it still is for many radio licensees), broadcasters were almost unanimous in stating that the file was virtually never visited – except perhaps when a competitor sought to stir up trouble, or when a local university broadcasting professor assigned a class project requiring students to visit stations and ask to view their public files. Now that these are online and hosted by the FCC, viewership statistics for these files might be very illuminating to see just how often they are visited by the public.

The main studio rules themselves are viewed by some as being an anachronism by many broadcasters. Over the years, the FCC has eliminated rules that require specific amounts of programming originated from main studios. Now that the public file has gone online, all of the theoretical reasons for mandating access to the studio has disappeared. While it may still be important that local residents be able to communicate with their local stations to report matters of public interest and to comment on station operations, do these matters really require a local main studio manned during all business hours? As much communication already takes place by electronic means, and face-to-face meetings can easily be set up by making appointments, the costs of manning a main studio could be eliminated. Especially given the security concerns noted in the proposals on the elimination of the paper public file, we would expect the FCC to review the main studio rule, and perhaps many other rules, in the near term. Many other similar areas may be ripe for review in the coming months as well as the FCC looks to abolish unnecessary regulation.

EEO Rules: One of those other areas ripe for the review that take up significant amounts of broadcaster’s time and resources is EEO. There are fundamental issues about the FCC’s EEO policies that have not been addressed in the 12 years since these rules were first adopted. Already teed up to the Commission is a proposal that would make the EEO rules comport with today’s business reality by allowing required EEO recruiting outreach to be conducted solely through online sources, a reversal of the position taken in several recent cases (see our post here). As Commissioner O’Rielly has been a big proponent of online recruiting (see our article here), we would not be surprised to see this proposal to move quickly through the FCC.

One question that has arisen since the election is whether EEO reform should go even further. The new administration has floated ideas about transferring FCC oversight of certain activities from the Commission to other agencies specialized in handling such issues. Some broadcasters have noted that the EEOC and state employment agencies are charged with overseeing all employers to assure that they do not discriminate in hiring. Is there really a need for the FCC to impose additional EEO burdens on broadcasters on top of the paramount requirement that they don’t discriminate? At the same time, many equal employment advocacy groups argue that these rules are still important, and even that they should be more stringent in certain areas. Time will tell whether the FCC takes further steps to review the regulatory burdens on broadcasters in this area, but we would expect that the issue will be raised with the FCC.

FCC Reform. While Congress is considering its own proposals for regulatory reform of the FCC, one issue that has been mentioned in many articles on the new administration has been the proposal to reduce the scope of the issues considered by the agency – leaving many issues to other agencies with more expertise. Leaving merger review to antitrust authorities, leaving sponsorship and contest issues to the FTC, and moving authority for EEO to the EEOC and state employment agencies would be some examples of where power could be devolved from the FCC. Will it? It certainly would be a process that would take more time than many of the other changes mentioned in these pages so it will be something to watch.

Political Rules: We just saw the new FCC rescind the decision of the old one – a decision which had attempted to clarify its political disclosure rules by requiring broadcasters disclose in their public files a list of all issues addressed by any political ad, and all executive officers or directors of third-party groups buying political advertising time. The decision was rescinded, but the issues remain pending. The two Republican commissioners expressed concern that they had not approved the final decision in these cases. Some clarification of this decision is likely, if only to address whether, in candidate ads, stations really need to look at each candidate ad and identify all of the specific issues addressed. Look for further action on these issues to come quickly.

While there have been calls for even more disclosure since the Supreme Court’s Citizens United case allowed for more significant political spending on broadcast commercials by corporations and other third-party organizations, that traditionally has not been an issue that the current majority political party has wanted to tackle. Another area that loomed large with the last administration was in the area of sponsorship identification. We saw the FCC impose a large sanction – $540,000 – on a radio operator for not fully identifying the sponsor of an issue ad. Plus there are complaints pending against many TV stations for not identifying the “true” sponsor of a PAC ads, where the PAC was principally funded by a single individual. We are still looking at other outstanding issues pending before the FCC from previous elections – including appeals of the decision of the FCC, issued just before the 2012 Presidential election, holding that TV stations have to give candidates equal access to certain single-issue candidates – even though such candidates are qualified only in the distant reaches of the station’s coverage area, and even when such candidates are “running” for office not with any expectation that they will be elected, but instead simply so that they can get access to television stations to run some controversial commercials not primarily intended to promote their candidacy, but instead to promote their position on some other issue. The FCC also asked about the “last in, first out” policies that some stations use to determine which ads to preempt when they have too many preemptible ads, and whether such policies, when applied to political candidates, are an issue.   While these questions are outstanding, they would not seem like high priority issues for this new administration, so we’ll have to see if they are even addressed in the coming year. Given that this is an off-year in the election calendar, perhaps it would be a good time for all sorts of political broadcasting issues to be tackled by the FCC, but we are not sure if it will be a priority.

Foreign Ownership of Broadcast Stations.  In late 2013, the FCC issued a statement clarifying its policies on the foreign ownership of broadcast licensees, making clear that what was thought to be an absolute prohibition on the ownership of more than 25% of the stock of the parent company of a licensee by non-US citizens was in fact only a guideline that could be exceeded if proposed greater foreign ownership of a station would not adversely affect the public interest.  While many thought that this would bring an influx of foreign investors to the US broadcast marketplace, the first company to file an application seeking FCC consent under this new policy was Pandora, and not because it believed that its foreign ownership exceeded 25%, but instead because, as a public company, they could not absolutely prove the citizenship of all of their shareholders using standards that the FCC adopted in the 1970s, long before many of the current ways of trading public securities came into being.  Last year, the FCC simplified rules for public companies to assess their foreign ownership, and early this year approved two transactions involving Spanish-language broadcasters allowing foreign ownership to exceed 25%, and this week approved another application allowing a Cayman Islands-based company to increase its investment in Pandora. Still pending, however, is a case where foreign owners seek to acquire 100% of a radio company, as well as other cases involving other foreign ownership combinations in excess of 25%. While the Republican Commissioners were fully supportive of the liberalization of the foreign ownership rules that have occurred thus far, we wonder if the political rhetoric about foreign trade will inhibit the FCC from taking the next step to approve 100% foreign ownership of a broadcast station. Given the number of pending cases, some indication should come relatively soon (or if they are not approved in the next few months, that alone may provide some indication there as to the new administration’s view on these issues).

Indecency: After the Supreme Court decision in June 2012, upholding the FCC’s right to regulate indecency but questioning the current procedure for doing so, the FCC’s regulation of indecency has been up in the air. In 2013, the FCC took public comments asking how it should proceed in this area, suggesting that it reserve enforcement actions for egregious violations – and asking for comments on how such complaints should be identified.  While 2015 brought a $325,000 fine for a violation of the indecency rules (the first fine of that magnitude issued by the FCC), in general, the FCC has been quiet in enforcing its indecency rules since the Supreme Court decision. As the FCC’s 2013 proposals drew many agitated comments and prompted much media attention, we question whether a clarification of these long-ambiguous rules will be in the cards in the first year of this new administration.

Public Interest Programming Reports: In a proposal released in 2011, the FCC issued a Notice of Inquiry to look at the adoption of a new form on which broadcasters would report the public interest programming that they do. This form would replace the Quarterly Issues Programs list, and the Form 355 adopted in 8 years ago for television but never implemented. The proposal was simply a Notice of Inquiry, meaning that the FCC would need to adopt a Notice of Proposed Rulemaking to move further on this proposal. We have not heard much about the status of this proposal lately.  As no Notice of Proposed Rulemaking has yet to be released, before any new rules were adopted a whole new set of comments would need to be received. Given the inclinations of the current majority of Commissioners, we would not expect any action on this matter this year (except to, perhaps, close the book on the proposal).

Television Issues

The Incentive Auction has been the dominant concern for TV broadcasters for several years now, and, barring any last minute glitches, this will be the year that it concludes. The Reverse Auction is now closed, and the Forward Auction only has to finalize the allocation of particular channels to winning bidders to close the book on the auction itself, a process that the FCC has said will conclude by the end of March. But then will come reality – the repacking of the remaining TV stations into a much smaller TV band during a 39 month transition period. This smaller band, until the next generation of digital television through ATSC 3.0 becomes a reality, will have less room for new television stations, and may result in the loss of some LPTV and TV translator operators.

While the repacking will be the center of attention for many television stations, there are many other issues before the Commission that could also have a significant impact on the operation of the remaining TV stations.  But there are perhaps not as many issues as in years past, as the FCC concluded the proceeding last year dealing with the relationship between television and MVPDs, and also seemingly decided to not pursue any expansion in the definition of an MVPD to include online video providers. So what is left for TV stations to deal with this year? The two big issues are likely to be the review of last year’s decision on the UHF discount and how it is applied for multiple ownership purposes, and implementation of ATSC 3.0. Review of local TV ownership rules and the treatment of Joint Sales Agreements are also likely on the table for FCC consideration this year. Specific issues for TV include:

UHF Discount:  Last year, the FCC voted 3 to 2 to eliminate the UHF Discount which counts a UHF station as reaching only half of a TV market’s population in assessing a television company’s compliance with the current rules that limit any company to at most stations reaching 39% of the US TV households.  The FCC had concluded that the digital conversion made the discount counterproductive as UHF stations have better coverage in a digital world, instead of suffering from the coverage issues that they faced in analog TV at the time that the rule was adopted.  The Republican Commissioners, who are now in the majority at the FCC, have suggested that the rule should not have been repealed without Congressional authorization, and that any review needs to be tied into a review of the local TV ownership rules. As the local TV rules are now themselves subject to review (as described below), and a petition for reconsideration of the abolition of the UHF discount has already been published in the Federal Register, received comments pursuant to that notice and is now ripe for action, we would look for some reexamination of last year’s decision at some point relatively early this year.

Local TV Ownership Rules: Last year’s FCC ownership decision did not seriously review the local TV ownership rules. Many TV station owners argue that these rules are outdated.  In a multichannel universe, most households have access to dozens, sometime hundreds of nationwide or worldwide networks; many of the most watched channels are commonly owned with no harm to the public. Yet the FCC’s local television ownership rules prohibit the combination of two local stations in all but the largest TV markets (those that will have 8 independent broadcast television owners after the combination) and prohibit the combination of two top-4 stations in any market. As then-Commissioner (now Chairman) Pai once noted, the FCC will allow Charter and Time Warner Cable to combine, but won’t let two TV stations in a small market merge. Moreover, especially in small markets, where the operational costs of running a TV station with local programming is not much different than the costs in large markets but the potential economic return is vastly smaller, having multiple commonly owned stations may be the only way to insure that a market has multiple over-the-air programming options.   While a year ago, reform of these rules may have seemed far-fetched, today they seem very possible.

ATSC 3.0: A year ago, ATSC 3.0 was not even on our list of issues for the coming year. Today, it looks like it could become a reality this year. At next week’s FCC meeting, we are going to see a decision starting the formal rulemaking to adopt technical standards for the voluntary new transmission standard, and looking to set the rules of the road for that conversion. Given the promises of the new standard’s ability to integrate into today’s online digital media world while transmitting multiple programming steams and all sorts of IP-compatible data, many broadcasters see their economic future tied up in the new standard. Given the need to re-engineer so many TV stations as part of the incentive auction repack, this seems to be the time to adopt and implement the new standard – so watch for quick action on the rulemaking that is being put forward by the FCC.

Accessibility: In the last few years, many new rules on making video programming accessible to hearing or visually impaired viewers have come into effect. These include rules mandating the quality of closed captioning, the captioning of online video clips, and rules about making available audio versions on TV stations’ SAP channels of emergency warnings carried in crawls and otherwise visually presented during entertainment programming. The latter issue is still not totally resolved, as there is no technical methodology for easily converting visual images (such as weather maps) into speech for broadcast on the SAP channel (see our post here). Also pending is the resolution of remaining issues relating to the repurposing of captioned broadcast video onto the Internet.  The FCC left open certain issues about the new captioning requirements for video clips – including whether to require that they be captioned when used on third-party websites, and how to deal with “mash-ups” of video clips taken from TV programs with video that comes from other sources.  These issues have not been ones of partisan contention in the past, but whether they will be a high priority for the new Commission remains to be seen.

Radio Issues

Many of the issues for radio are occurring outside the jurisdiction of the FCC, as they deal with copyright issues – especially in the area of music licensing. These issues are considered in Congress and in the Courts, and we will discuss them in a separate article. Other issues affecting radio – like EEO and other possible FCC deregulatory actions, were discussed above in the section on issues affecting all stations though, in many cases, they may affect radio operators more directly than other services. But there are some other radio-specific issues that the FCC will likely consider this year. These include:

AM Radio:  Late in 2015, the FCC finally took its first steps to help revitalize AM radio.  The first effort to assist AM owners began last year, when the window for filing to move FM translators as much as 250 miles to serve an AM station opened. Hundreds of FM translators around the country were moved to serve AM stations. At the FCC meeting next week, we expect the FCC to adopt the order that it put out for public review last month, allowing greater latitude for the location of FM translators for AM stations.

But issues still remain. The FCC has promised to open another window this year, where AM stations that could not buy translators during last year’s windows can file for new translators to rebroadcast their AMs, if there are frequencies available in their community. Other fundamental AM issues, like lessening protections of clear channel stations or, more dramatically, moving to a fully digitized transmission system, are contentious and a resolution seems far off. Chairman Pai has been a big proponent of the rescue of AM, so look for some attention to these issues in the coming year as the Chairman spearheads efforts to find solutions to these difficult issues.

FM Translator Issues: Believe it or not there are still FM translator applications left from the 2003 FM translator window that have not been disposed of. While most of the mutually exclusive applications settled, and thousands of new FM translators from that window were granted in 2013 (see our articles here and here), there are still applications that are mutually exclusive that remain to be processed.  Look for an auction for these final applications to be announced after the incentive auction has been completed.

Local Radio Ownership Rules: While review of the local TV ownership rules is an issue pending before the FCC right now in petitions for reconsideration of the FCC decision on those rules from last year, review of the radio rules (except for the limited issue of how these rules are applied in embedded markets) is not directly on the table. Yet, more and more, broadcasters are talking about whether those rules need to be examined. The issue of whether the sub-caps still make sense, limiting the number of AM or FM stations that one owner can hold in a given market, will be an issue that will be debated more and more in the coming year. While a broadcaster can own up to 8 stations in the biggest markets (those with at least 45 radio signals), they are limited to owning only 5 FM stations. As the audio marketplace is no longer one where radio dominates as it once did in the past, and as the competition only seems likely to increase as the connected car becomes more common, it seems like it is time for these rules to be re-examined.

Other Technical Rules: While not specifically teed up for consideration, we would not be surprised if the FCC looks at other technical rules that have posed issues for radio broadcasters in the past. One area of concern has been the rural radio rules that have restricted the movement of stations to areas where they can serve the most people. Could this policy be up for review? Are there other processing issues that have slowed the provision of service and the highest and best uses of radio facilities? Broadcasters have an FCC that seems much more receptive to business concerns. Thus, we would expect that there will be more proposals that are brought forward in the coming months to lessen the regulatory burden on broadcasters, and to create more opportunities for them to thrive in the coming years.

Conclusion

These are but some of the legal and regulatory issues that will be facing broadcasters in the upcoming year. There are many other issues that can pop up at any time – especially in the unpredictable atmosphere of a new administration. And there are many issues in Congress or at other agencies that could affect broadcasters.  We will write about those issues in other articles in the near future.  But, just from the list here, you can see that there is plenty of change on the regulatory horizon for broadcasters likely for 2017 – probably more than we’ve seen in decades.  So pay attention as the issues arise – as, in the coming months, there may be many business opportunities that arise from regulatory changes. Be ready to take advantage of them!

Several articles published at the end of last week suggested that the FCC, based on a statement by FCC Chairman Pai on a radio show, would be investigating comments made by Stephen Colbert on a program last week. The comments, suggesting a sexual act between President Trump and Vladimir Putin, has raised much controversy and apparently resulted in the filing of a number of complaints at the FCC. However, just because the statement was controversial does not mean that the FCC has any jurisdiction to do anything about it consistent with its precedent and constitutional protections which governs speech generally. The Chairman’s statement was no doubt nothing more than an acknowledgement that the FCC would deal with complaints that were filed, rather than any implication that there was likely to be any penalty for the statements of the TV host. Why?

The Colbert Show starts at 11:30 PM on the east and west coasts. Even in the rest of the country where it runs earlier, it begins at 10:30. Under the FCC’s policy on indecency, programs airing after 10 PM and before 6 AM are considered to be in the “safe harbor” where children are unlikely to be in the audience, so indecent programming – programming that “depicts or describes sexual or excretory organs or activities in terms patently offensive as measured by contemporary community standards for the broadcast medium” – is not prohibited. In other words, during these overnight hours, stations can run material that is sexually oriented and which would normally not be acceptable on television – allowing more adult oriented content to run even on broadcast stations. As the Colbert program ran during this safe harbor, the FCC’s indecency rules would not apply. But what about obscenity?

Theoretically, a program that runs during the safe harbor could still be illegal if it is obscene. But for a program to be obscene, it needs to be really bad. Even the Supreme Court has had difficulty finding content to be obscene, looking at factors including whether it is designed to appeal to the prurient interests of the viewer, whether it offends contemporary community standards and whether it is lacking in social significance. This is a very high standard as, under our First Amendment, we only want to ban speech (and that is the purpose of defining something as obscene – it says that it can be banned) that is not only offensive but also serves no social purpose. A television program like that in question here is never going to be found obscene – the words describing the specific sexual act itself was bleeped out of the broadcast, the description was not designed to appeal to prurient interests (sexual interests – it was not delivered in such an explicit way as to appeal solely to sexual interest), and it did have social significance – it was delivered in a politically motivated statement. Under these circumstances, the extremely rigorous obscenity test simply would not be met.

So if the speech is not obscene, and can’t be prosecuted for being indecent because of the hour at which it ran, what does that leave? It seems to me that it leaves a bunch of headlines about an “investigation” destined to go nowhere – much ado about nothing.

When press reports first started to emerge that the FCC was investigating for possible indecency violations a Stephen Colbert bit from his Late Show television program suggesting that the President had engaged in certain sex acts with the Russian President, we wrote that the controversy was much ado about nothing (see our article here). We suggested that the rumors of the FCC “investigation” was simply the FCC doing what it has to do to process any complaint – just looking to see if there were any grounds to indicate that the programming in question filed violated any FCC rules. Given that the actual language used by Mr. Colbert was “bleeped” out of his show, that the show run during the FCC safe-harbor (10 PM – 6 AM) during which indecent content can be run, and as the political nature of the comment (and the way in which it was presented) made it unlikely to be seen as obscene, we did not see that the FCC could take any action in this case. According to press reports, the FCC has concluded the same thing and terminated their review of this case. This does not mean that the FCC will not take action against a broadcaster who runs indecent content if an appropriate case for action is presented (like the $325,000 fine imposed on a TV station for graphic sexual images in a 6 PM newscast, see our story here). It just means that the Colbert case simply did not present that appropriate case for FCC action.

Yesterday, the President reportedly used the word “shithole” to describe certain countries whose immigrants were seemingly less favored than others. This predictably caused outrage in many quarters – and left the electronic media, especially broadcast TV in a quandary. Do they broadcast the purportedly used term, or do they use some euphemism so that “shit,” one of those words that the FCC has from time to time found inappropriate to be used on the air, does not reach tender ears? The New York Times ran a story describing how different media outlets handled the story here. What is a broadcaster to do?

The FCC has said repeatedly that there is no blanket rule exempting news programming from its indecency rules – so theoretically, a broadcaster could face an indecency action at the FCC for the use of a proscribed word on the air, even in a newscast. However, the FCC has recognized that decisions made about the language used in newscasts are subject to a different level of First Amendment protection than language that might be included in an entertainment program. So, for instance, when NPR aired excerpts from a tape of mobster John Gotti that had been introduced during his criminal trial, and that tape contained multiple words usually not allowed on broadcast stations, the FCC and the courts found that, in the circumstances of news coverage, the use of these words was not actionable. In another case, a CBS Morning News interview with the winner of the Survivor television program, there was a similar decision from the FCC. On the morning news program, the winning contestant labeled a competitor a “bullshitter.” The FCC took no action, deferring to the licensee’s decision given that it was made in the context of a news program. So, while there is no blanket exception for indecency in news programs (witness the huge fine issued to a TV station that had not properly edited a news segment on a former adult industry movie star turned first responder, about which we wrote here), certainly the FCC has provided stations more discretion to air otherwise prohibited words in their news if necessary to provide context to their news coverage. But with FCC Chairman Pai admonishing broadcasters to “keep it clean,” and with the FCC’s indecency rules still on the books, and any complaint likely to cost time and money to defend, broadcasters may want to be cautious in their approach to these situations, even in the context of news programs.

Update: 1/12/2018;  Tonight, on All Things Considered, there was a very good discussion (available here) of NPR’s use of the term supposedly used by the President, and how the specific words were used only where they were thought to be newsworthy – and the term was used sparingly.  That story struck me as containing good advice for those stations that decide to use any such term on the air in a news report – the profane term should be used sparingly and only when it is newsworthy.  A repeated use of the profane word, even in news reporting, could be used to question the news judgment of the station.  So use judgement and discretion – there is no blank check even in news reports.

It’s a new year, and a good time to reflect on where all the Washington issues for TV broadcasters stand at the moment, especially given the rapid pace of change since the new administration took over just about a year ago. While we try on this Blog to write about many of the DC issues for broadcasters, we can’t always address everything that is happening. Every few months, my partner David O’Connor and I update a list of the legal and regulatory issues facing TV broadcasters. That list of issues is published by TVNewsCheck and the latest version, published this week, is available on their website, here. It provides a summary of the status of legal and regulatory issues ranging from the adoption of the ATSC 3.0 standard at one end of the alphabet to White Spaces and Wireless Microphones on the other – with summaries of other issues including the Incentive Auction, Ownership Rule Changes, Media Regulation Modernization, EEO compliance, Political Advertising and Sponsorship Identification, along with dozens of other topics, many with links to our more detailed discussions here on the Blog. Of course, the status of these issues changes almost daily, so watch this Blog and other trade publications for the latest Washington news of interest to broadcasters.

It’s that time of the year when we need to dust off the crystal ball and make predictions about the legal issues that will impact the business of broadcasters in 2016.  While we try to look ahead to identify the issues that are on the agenda of the FCC and other government agencies, there are always surprises as the regulators come up with issues that we did not anticipate. With this being an election year, issues may arise as regulators look to make a political point, or as Commissioners look to establish a legacy before the end of their terms in office.  And you can count on there being issues that arise that were unanticipated at the beginning of the year.

But, we’ll nevertheless give it a try – trying to guess the issues that we will likely be covering this year.  We’ll start today with issues likely to be considered by the FCC, and we’ll write later about issues that may arise on Capitol Hill and elsewhere in the maze of government agencies and courts who deal with broadcast issues.  In addition, watch these pages for our calendar of regulatory deadlines for broadcasters in the next few days.

So here are some issues that are on the table at the FCC.  While the TV incentive auction may well suck up much of the attention, especially in the first half of the year, there are many other issues to consider.  We’ll start below with issues affecting all stations, and then move on to TV and radio issues in separate sections below. 

General Broadcast Issues

Issues likely to be considered this year that could affect both radio and television broadcasters, include:

Multiple Ownership Rules Review: In 2014, the FCC addressed its long outstanding Quadrennial Review of the broadcast multiple ownership rules by pushing its consideration of most of the rules until 2016. Even the one issue considered in 2014, prohibiting Joint Sales Agreements between TV stations in the same market that could not be commonly owned, has been put on hold for a decade by a recent act of Congress, grandfathering all of the JSAs that were in effect prior to the FCC’s 2014 decision.  But the issues raised in the 2014 notice in the current Quadrennial Review, reach across the broadcast spectrum.  Issues that are to be considered in the ownership review that is supposed to take place this year include revisions to the local ownership limits for radio or TV (such as loosening the ownership caps for TV stations in smaller markets, which the FCC tentatively suggested that they would not do), any revision to the newspaper-broadcast cross-ownership rule (which the FCC tentatively suggested that they would consider – perhaps so that this rule can be changed before the newspaper becomes extinct), and questions about the attribution of TV Shared Services Agreements (which the FCC is already scrutinizing under an Interim Policy adopted by the Media Bureau).

Also under consideration is whether the FCC should continue to apply “the UHF discount” in assessing compliance with national ownership caps for TV, an issues which is discussed in more detail in the Television section, below.

Indecency: After the Supreme Court decision in June 2012, upholding the FCC’s right to regulate indecency but questioning the current procedure for doing so, the FCC’s regulation of indecency has been up in the air. In 2013, the FCC took public comments asking how it should proceed in this area, suggesting that it reserve enforcement actions for egregious violations – and asking for comments on how such complaints should be identified.  While last year brought a $325,000 fine for a violation of the indecency rules (the first fine of that magnitude issued by the FCC), in general, the FCC has been quiet in enforcing its indecency rules since the Supreme Court decision.  As the FCC’s 2013 proposals drew many agitated comments and prompted much media attention, in an election year, don’t look to the FCC to resolve the ambiguities in this long-outstanding proceeding.

Foreign Ownership of Broadcast Stations.  In late 2013, the FCC issued a statement clarifying its policies on the foreign ownership of broadcast licensees, making clear that what was thought to be an absolute prohibition on the ownership of more than 25% of the stock of the parent company of a licensee by non-US citizens was in fact only a guideline that could be exceeded if proposed greater foreign ownership of a station would not adversely affect the public interest.  While many thought that this would bring an influx of foreign investors to the US broadcast marketplace, the first company to file an application seeking FCC consent under this new policy was Pandora, and not because it believed that its foreign ownership exceeded 25%, but instead because, as a public company, they could not absolutely prove the citizenship of all of their shareholders using standards that the FCC adopted in the 1970s, long before many of the current ways of trading public securities came into being.  At the end of last year, the FCC requested and received comments on its proposals to somewhat simplify the process of identifying foreign owners.  While the issues are now teed up for FCC action, this is another proceeding that could raise political issues, so if the FCC actually takes action here, it may well be late in the year after the elections.

EEO Rules: There are fundamental issues about the FCC’s EEO policies that have not been addressed in the 12 years since these rules were first adopted. Proposals to extend the rules to part-time employees, and to require the filing of FCC Form 395 (the form that classifies all employees by race and gender), are still pending from that long-ago proceeding. Also pending are proposals sought in requests for reconsideration of the adoption of the EEO rules that would make the EEO rules comport with today’s reality – such as the proposals to allow Internet-based EEO recruiting. Given last year’s announcement to allow the Internet to serve as the primary location for notifying the public about broadcast contest rules, maybe this will be the year that some of these outstanding issues are finally resolved.

Political Rules: In what will probably be a big political broadcasting year, don’t expect any fundamental changes in the FCC’s political broadcasting rules to address the impact of the Citizens United case in the significant political spending on broadcast commercials by third-party organizations. While there have been calls for more regulation on such ads, we don’t expect action in that area from the FCC. Instead, at the FCC, there may be some minor tweaking of the political broadcasting rules as cases come before the Commission.  The one area where the FCC may be active is in the area of sponsorship identification.  We have seen the FCC impose a large sanction – $540,000 – on a radio operator for not fully identifying the sponsor of an issue ad. Plus there are complaints pending against many TV stations for not identifying the “true” sponsor of PAC ads, where the PAC was principally funded by a single individual.  We are still looking at other outstanding issues pending before the FCC from previous elections – including appeals of the decision of the FCC, issued just before the last Presidential election, holding that TV stations have to give candidates equal access to certain single-issue candidates – even though such candidates are qualified only in the distant reaches of the station’s coverage area, and even when such candidates are “running” for office not with any expectation that they will be elected, but instead simply so that they can get access to television stations to run some controversial commercials not primarily intended to promote their candidacy, but instead to promote their position on some other issue. The FCC also asked about the last in, first out policies that stations use to determine which ads to preempt when they have too many preemptible ads, and whether such policies, when applied to political candidates, are an issue.   While these are outstanding, given the time before the election, we doubt that there will be much resolution here, and in fact new issues may arise that will join these in the queue for resolution next year.

Public Interest Programming Reports: In a proposal released in 2011, the FCC issued a Notice of Inquiry to look at the adoption of a new form on which broadcasters would report the public interest programming that they do. This form would replace the Quarterly Issues Programs list, and the Form 355 adopted 8 years ago for television but never implemented. The proposal was simply a Notice of Inquiry, meaning that the FCC would need to adopt a Notice of Proposed Rulemaking to move further on this proposal. We have not heard much about the status of this proposal lately.  As no Notice of Proposed Rulemaking has yet to be released, before any new rules were adopted a whole new set of comments would need to be received. So don’t expect a new form this year.

Television Issues

The Incentive Auction has been the dominant concern for TV broadcasters for several years now, and, barring any last minute glitches, this will be the year that it actually happens.  With TV broadcasters just this week having submitted their applications to participate in the “Reverse Auction,” and with wireless companies having soon to submit their applications to participate in the “Forward Auction” to buy the reclaimed spectrum, the Incentive Auction looks to be a reality that will reshape the TV landscape for years to come.  Not only will a number of stations disappear, but the remainder will be repacked into a much smaller TV band.  This smaller band, until the next generation of digital television through ATSC 3.0 becomes a reality, will have less opportunities for new broadcasters, and may result in the loss of many LPTV and TV translator operators.  The results may begin to take shape late this year of the bidding can be completed by then.

While the Incentive Auction will certainly take center stage for many months, even limiting the conversations that broadcasters can have with each other about buying and selling stations and otherwise planning for the future, there are many other issues before the Commission that could also have a significant impact on the operation of the remaining TV stations.  These include an FCC examination of the rules dealing with the negotiations between stations and cable and satellite television providers about the compensation to be paid for carriage of those stations, the treatment of the UHF discount for multiple ownership purposes, and definition of an MVPD (multichannel video programming distributor) for FCC purposes. Issues about accessibility to video programming and the implementation of other consumer protection issues are also on the agenda. Specific issues for TV include:

Retransmission Consent Reform: Another issue that has been on our list for the last few years, and which now bubbles to the top, is the question as to whether to change the nature of the retransmission consent negotiation process.  After every dispute between an MVPD and a TV broadcaster over retransmission fees there are new cries for legislative or regulatory changes to the retransmission consent process.  Last year, the FCC started a proceeding looking to further define “good faith negotiation” of retransmission consent – in many cases proposing rules that could limit the power that a TV station has to block access to its signal, the heart of the station’s leverage in the negotiation process.  The FCC Chairman has stated that will resolve the proceeding this year. So watch for the fireworks that are bound to ensue.  Last year, the Chairman has attempted to get through the FCC rule changes to eliminate the network nonduplication and syndicated exclusivity rules.  These efforts failed, reportedly as he could not get a majority of Commissioners to support his position.  This issue is still on the table, but given the objections from other Commissioners, and the opposition of many in both parties in Congress, we would doubt that the issue will resurface soon.  But retransmission consent is sure to be a contentious issue again this year.

Defining an MVPD:  Three years ago, the FCC initiated a proceeding to determine if an Internet-delivered video programming service could qualify as an MVPD. Last year, that proceeding matured into a full Notice of Proposed Rulemaking, proposing to treat many Internet video systems as MVPDs, subjecting them to FCC rules – including must carry and retransmission consent rules, and perhaps program access rules giving them access to certain cable programming.  While these rules would benefit some “OTT” (over-the-top) video programming providers, others opposed the proposals seemingly more concerned about being subject to FCC regulation.  Thus, this proceeding, too, seems to be stalled.

UHF Discount:  In 2013, the FCC proposed repeal of the “UHF discount,” which counts a UHF station as reaching only half of a market’s population in assessing a television company’s compliance with the current rules that limit any company to at most stations reaching 39% of the US TV households.  The FCC has tentatively concluded that the digital conversion has made the discount counterproductive as UHF stations have better coverage in a digital world, instead of suffering from the coverage issues that they faced in analog TV at the time that the rule was adopted.  TV station owners argue that getting rid of the discount is changing the rules in the middle of the game, especially as many of these companies have deals in the works at the current time.  In a multichannel universe where most households have access to dozens, sometime hundreds of nationwide or worldwide networks, limiting the reach of a station group no longer makes sense as it once did, and effectively reducing that reach by adopting the change in the rules makes even less sense.  While many thought that this issue would be resolved quickly, it has lingered officially unresolved (though effectively in place as the FCC’s staff is not processing applications that would violate the proposed rule), but look for much lobbying on it this year, and a decision may come in connection with Quadrennial Ownership Review referenced above.

Accessibility: In the last few years, many new rules on making video programming accessible to hearing or visually impaired viewers have come into effect.  These include rules mandating the quality of closed captioning, the captioning of online video clips, and new rules about making available audio versions on TV stations’ SAP channels of emergency warnings carried in crawls and otherwise visually presented during entertainment programming.  While we have seen a plethora of new rules, so far FCC enforcement of these rules has not been active.  Given the aggressive enforcement of FCC rules in other area, we would not be surprised to see enforcement here as well.

Also on the Commission’s agenda will be the resolution of remaining issues relating to the repurposing of captioned broadcast video onto the Internet.  The FCC left open certain issues about the new captioning requirements for video clips – including whether to require that they be captioned when used on third-party websites, and how to deal with “mash-ups” of video clips taken from TV programs with video that comes from other sources.  Look for this issue to be considered later this year.

Radio Issues

While radio issues are perhaps not as dramatic as those facing TV, there are still a number of very important proceedings that will have a major impact on radio broadcasters.  In addition to the general issues discussed above (multiple ownership, indecency, EEO, documentation of public interest efforts), issues on the radar screen for radio include:

AM Radio:  Late in 2015, the FCC finally took its first steps to help revitalize AM radio.  The first effort to assist AM owners begins later this month, when the window for filing to move FM translators as much as 250 miles to serve an AM station opens.  Also this year, the FCC will implement certain other technical rules that were changed in its Revitalization Order.  But fundamental issues, like lessening protections of clear channel stations or, more dramatically, moving to a fully digitized transmission system, seem far off.  But at least there may be some discussion of these issues this year.

Online Public File for Radio Stations.  The proposal to require an online public file for radio stations rocketed onto the FCC docket in late 2014.  It now looks like that proposal will be adopted later this month, and implemented, at least for some stations, in time so that large-market stations will have their political files online in time for the 2016 election.  Look for the roll-out schedule when the FCC acts on this issue late this month.

FM Translator Issues: While the issues involving FM translator applications left from the 2003 FM translator window have largely been settled, and thousands of new FM translators from that window granted in 2013 (see our articles here and here), there are still applications that are mutually exclusive that remain to be processed.  Look for an auction for these final applications to be announced later this year. The FCC promised to resolve those applications so, in 2017, it can open a new translator window for AM stations who did not get translators this year through the process described above, allowing them to be moved up to 250 miles.

LPFM Applications.  The remaining LPFM applications from the 2014 window will probably be processed this year.  Surprisingly, the number of interference complaints from full-power stations to all the new LPFM stations has not been great.  But as more of the recently-granted LPFMs get on the air, watch for the number of those complaints to rise.

Conclusion

These are but some of the legal and regulatory issues that will be facing broadcasters in the upcoming year. There are many other proceedings at the FCC that have been long outstanding, some of which may be resolved this year.  These include the reexamination of the EAS rules  (which includes the proposal for some stations to have mandatory obligations to give emergency warnings in languages other than English), review of the environmental and FAA rules applicable to tower construction, and a reexamination of the allocation of FCC costs as reflected in the annual regulatory fees that broadcasters pay.  There are also other issues that are pending but have seemingly stalled at the FCC, including a reexamination of the sponsorship identification rules (sponsorship ID having been the subject of a number of recent fines, most notably the $540,000 fine referenced above issued to Cumulus for failing to explicitly identify the sponsor of an issue ad),  a review of the Biennial broadcast ownership filings (including whether there should be reporting of some nonattributable interests and whether noncommercial broadcasters should be brought under the same process as commercial broadcasters), and the proceeding to reexamine the rules that prohibit noncommercial broadcasters from interrupting their programming to fund-raise for third parties.  Any of these proceedings could pop back to the top of the FCC’s stack at any time. These and many other issues can pop up at the FCC at any time, so keep watching.

And there are many issues in Congress or at other agencies that could affect broadcasters.  We will write about those issues in another article in the near future.  But, just from the list here, you can

A Washington Post article published this weekend was titled “Is there anything you can’t say on TV anymore? It’s complicated.” And, it really is. The Post article presents a very good overview on the status of the FCC’s indecency rules. What will happen with those rules has been a matter of conjecture for several years, ever since the Supreme Court threw out the fines that the FCC had imposed for fleeting expletives that had slipped out in the Golden Globes and other awards programs, a case that also had the effect of negating that other fine for a “slip,” the notorious Janet Jackson clothing malfunction during her Super Bowl performance. Other than a well-publicized $325,000 fine on a Roanoke TV station for a short but very explicit image that slipped into the corner of a news report on a porn star turned first responder (see our article here on the Roanoke case), the FCC has been largely quiet on the indecency front since it launched a post-Supreme court proceeding to determine how they should amend their rules in light of the Court’s decision (see our summary here).

As we wrote when comments were filed in that proceeding, it drew much attention, with many commenters fearing that the FCC would back away from all indecency regulation on broadcast TV. In an election year like this one, don’t expect in the near future to see any definitive answers as to what is indecent and what is not. Neither political party wants to be tagged with being pro-smut by one side of the political spectrum, or anti-First Amendment expression by the other. But the Post article raises other very interesting questions about the difference in legal treatment between cable and broadcast programming, especially when so many viewers hooked up to some cable or satellite service don’t really understand the difference between cable network programming and that from broadcast sources.

We have written before about the fact that all cable – basic cable and premium channels – are not subject to the same indecency rules as are broadcast stations. While the government years ago tried to expand broadcast indecency regulation to cable channels, the Courts threw out such regulation, finding that cable was different than broadcast. In essence, as cable was invited into the home, and could be uninvited by cancelling a subscription, or specific channels could be blocked, the government’s interest in restricting adult programming did not overcome the free speech rights of cable systems to provide, and cable viewers to receive, that programming. As the Post article points out, to the extent that basic cable has not had an explosion of “F-bombs” or the more explicit programming that might be expected on HBO, Showtime or one of the other premium cable channels has been simply a matter of marketing and advertising. Providers have been leery of offending viewers or advertisers with more explicit programming on basic cable, and thus have not indulged in the manner that they legally could have though, as the article points out, that is changing gradually to meet audience demands for more adult programming.

Broadcast TV has no doubt itself evolved from the twin beds used by the married couple in the Dick Van Dyke show of so long ago, but the indecency rules still apply to broadcast stations, as evidenced by the big Roanoke fine. Broadcasters do have greater leniency after 10 PM to run more adult fare, but again driven by marketing and advertising concerns, most still refrain from using those four-letter words and other explicit content that you might see on cable channels. For instance, on an episode of the Stephen Colbert show that aired this week, the new book written by X Files actor David Duchovny was being discussed, and the four-letter word in the title was bleeped over a dozen times from the conversation, and the title of the book (and the lips of Colbert and Duchovny) were blurred to avoid even showing the word in any visual manner (see this article from USA Today with a link to the program).

In a recent seminar that I did for a College Broadcaster’s organization, the topic came up in connection with song lyrics. Apparently, some college radio stations are more adventuresome with their music selections in the 10 PM to 6 AM safe harbor hours. Certain genres of music where lyric choices are not G-rated are played during those hours. While they might bring complaints, the FCC should dismiss complaints for content aired during those hours (unless it were to veer from merely indecent to the far more explicit category of obscenity, which has no socially redeeming value and is always prohibited, but which the Supreme Court itself has had trouble defining in any clear, easy to apply test). Of course, stations need to be careful if they are located near a time zone barrier, as what may be permitted where it is broadcast could be a problem if it is received in an area where the time is an hour earlier.

So the Post got it right – the current state of broadcast indecency is complicated and will no doubt remain that way for the foreseeable future – and perhaps longer. But, as the Roanoke case shows, even without clear rules on all content, if a broadcaster goes too far, the FCC will crack down.