FCC Chairman Ajit Pai formally unveiled two proposals on Thursday to remove outdated broadcast regulations. First, the Commission released a draft Notice of Proposed Rulemaking that would eliminate the main studio rule for all services (including the associated minimum staffing requirements). Second, the Commission released a draft Public Notice seeking comment on media-related rules to modify or repeal. Both items are on the agenda for the FCC’s May 18 open meeting (where they will share the dais with Chairman Pai’s proposal to remove Title II regulation of broadband Internet access service).
With the publication of an announcement in the Federal Register on April 20, 2017, the FCC’s new foreign ownership rules, originally adopted on September 30, 2016, are now finally effective. The FCC’s September 2016 order made two significant changes to the agency’s foreign ownership rules. First, the new rules contain “streamlined” procedures that broadcasters must follow when filing a petition for declaratory ruling seeking FCC approval to exceed the foreign ownership limits set forth in Section 310(b)(4) of the Communications Act. Second, the FCC reformed the methodology for publicly traded broadcasters and common carriers to assess compliance with the statutory foreign ownership limits set forth in Sections 310(b)(3) and 310(b)(4) of the Act, and made clear that private companies are expected to have full knowledge of the extent of their foreign ownership.
The effectiveness of these new rules clears the way for additional foreign investment in broadcast companies, by extending to broadcasters procedures for declaratory rulings that are similar to those which have long applied to common carriers. The new rules also set forth a uniform methodology for publicly traded companies subject to the foreign ownership restrictions to assess their compliance with those restrictions. Although this new methodology provides increased transparency regarding the steps that the FCC expects public companies to take, it also heightens the need for such companies to exercise due diligence by monitoring foreign investments consistent with the new requirements.
On March 30, 2017, the FCC or Commission released two draft items that, if adopted at the Commission’s April Open Meeting, would reduce regulatory burdens on noncommercial educational (NCE) broadcasters.
FCC Form 323-E and Permissive Use of SUFRNs
The first item is a draft Order on Reconsideration (Draft Recon Order) that would roll-back a requirement that officers, directors, and other individuals with attributable interests in NCE stations obtain FRNs or “Restricted Use” FRNs (RUFRNs) for purposes of completing and filing ownership reports. To obtain an FRN or RUFRN, an individual must disclose his/her social security number, date of birth, or other personal information. NCE broadcasters objected to the requirement, adopted in January 2016, and argued that such disclosure would discourage volunteers from serving on the governing boards of NCE stations and pose unique challenges for board members who are politically elected or appointed. Continue Reading
On Thursday afternoon, the FCC released the text of a draft Order that would grant a Petition for Reconsideration and reinstate the “discount” applied to UHF television stations when calculating compliance with the 39% national TV ownership cap. The Commission will vote on the Order at its April 20, 2017 open meeting.
The FCC adopted the UHF discount in 1985, explaining that it compensated for the fact that the signal strength of a UHF television signal decreased more rapidly with distance, resulting in smaller coverage areas and smaller audience reach.
In September, the Commission voted to eliminate the UHF discount, finding that there is “there is no remaining technical justification” for the discount.
As part of its pilot project for meeting transparency, the FCC has released the text of an order on its March agenda to expand channel sharing outside of the auction context. The draft order will fill in many holes in the current channel sharing regime, but it still includes several restrictions on the type of channel sharing agreements that will be permitted.
To understand the draft order, it is useful to review the FCC’s prior actions on channel sharing. In the 2014 Incentive Auction Report and Order, the Commission allowed channel sharing between auction-eligible full power and Class A stations that filed their channel sharing agreements with the FCC prior to the reverse auction application deadline. In June 2015, the Commission adopted its First Order on Reconsideration to allow certain stations to enter into channel sharing agreements after the Incentive Auction. To qualify for post-auction channel sharing, the “sharee” station must: (1) have elected an “intent to channel share” on its auction application; and (2) relinquished its spectrum in the auction. The First Order on Reconsideration also clarified that stations may enter into term-limited channel sharing agreements. However, the Order did not address whether stations could enter into new channel sharing agreements once their original agreements expired, including that among other issues in a Further Notice of Proposed Rulemaking. Then, in the LPTV Third Report and Order, the Commission permitted channel sharing between low power and TV translator stations.
So, to recap the current rules:
- Full power and Class A stations that relinquished spectrum in the auction can channel share with another station that did not relinquish spectrum in the auction.
- Full power and Class A stations cannot channel share after the auction-related sharing windows.
- Any LPTV and TV translator stations can channel share with each other.
- Full power and Class A stations cannot share with LPTV and TV translator stations.
Simple right? The draft order will alter these rules by: (1) allowing full power stations that relinquished their spectrum usage rights in the auction to enter into new channel sharing agreements once their original agreements expire; (2) allowing Class A stations that did not participate in the auction to expand their over-the-air coverage through channel sharing; and (3) permitting channel sharing between primary (full power and Class A) and secondary (LPTV and TV translator) stations in specific circumstances. However, there are several restrictions that could reduce the viability of channel sharing under the draft order. Continue Reading
The Media Bureau of the Federal Communications Commission (FCC) has released the first-ever decision permitting foreign citizens to own 100% of broadcast station licensees. In the declaratory ruling, the FCC authorized two Australian citizens each to own 50% of Frontier Media, LLC, the parent company of broadcast licensees owning seven AM radio stations, eight FM radio stations, thirteen FM translators, and one TV translator in Alaska, Arkansas, and Texas. As a condition of approval, the owners must obtain prior consent for any additional foreign owners, but the ruling imposes no other significant conditions. Continue Reading
Originally posted on WileyConnect, the Internet of Things Blog by Wiley Rein LLP.
It’s time to answer the most important question on everyone’s mind after Super Bowl LI: what type of regulatory approvals and deviations were required to enable Intel’s massive display of 300 choreographed unmanned aircraft systems (UAS) that kicked off Lady Gaga’s Super Bowl halftime show?
The halftime show begins with Gaga singing a mashup of “God Bless America” and “This Land Is Your Land” while standing on the open roof of Houston’s NRG Stadium. The camera pans out to reveal a sky of 300 UAS shimmering like stars behind the headliner. Still swirling around the sky, the white lights of the UAS fade to red and blue. The aircraft then shift to form the image of an American flag to accompany the patriotic number. After concluding with a line from the Pledge of Allegiance, Lady Gaga appears to jump into the stadium, and the sky fades to black. At the end of the performance, the drones return to form the logos for Pepsi (the sponsor of the halftime show) and Intel. Continue Reading
For winning incentive auction bidders who are party to a pre-auction channel sharing agreement (or their hosts), it’s time for you and your attorney to re-read the agreement and begin a dialogue with your channel sharing partner as to implementation. On the other hand, if you are not party to a pre-auction channel sharing agreement, but are interested in channel sharing, the FCC permits post-auction channel sharing, so you can start making calls to see what opportunities may be available in your market. In addition, some channel sharing agreements may still be terminable (perhaps until the release of the Closing and Reassignment Public Notice) – in these cases you may want to contact other stations in your market and assess your options to determine if perhaps a more favorable channel sharing opportunity is available. With the quiet period ending a few days ago, station owners are now actively doing their due diligence to canvass the market and see what circumstances exist post-auction.
As a refresher, under a channel sharing agreement the sharee party (who was a winning bidder in the auction) retains its broadcast license and is granted the right to use a portion of the capacity of the 6 MHz channel of the sharer/host station–most likely in exchange for a share of auction proceeds or a fixed fee arrangement. The percentage allocation of the host station’s capacity is negotiated by the parties and does not have to be 50/50. Some channel sharing agreements also permit one or both parties to enter into sub-sharing agreements to further divide up the available bandwidth among stations in the market.
For those implementing channel sharing agreements, there are a number of business issues to consider. Continue Reading
The FCC’s confidential letters to television stations that did not submit successful bids to relinquish their spectrum in the reverse auction could arrive in broadcaster mailboxes any day now. For some stations, this letter will confirm that it’s business as usual, and that they will continue to operate on the same channel after the auction. But for more than 1,000 stations, the letters could represent the beginning of a long, challenging process not only to seamlessly move to a new channel, but to do so in a manner that minimizes out-of-pocket costs and maximizes reimbursement from the FCC. Broadcasters should have a head start of 6-8 weeks before the FCC issues its Closing and Reassignment Public Notice, and it would be helpful to use that time wisely.
Perhaps the most important two things a station owner can do upon receiving its letters are organize and prioritize. For a single station owner, this will be fairly simple: review the materials from the FCC and contact your consulting engineer and/or attorney to begin the process. For a large group owner, however, it will be helpful to asses: (i) how many stations you have in each transition phase; (ii) the nature of your channel moves; and (iii) any commonalities among your stations and their repacking efforts. With this information, your can prioritize. Engineers, equipment manufacturers, and attorneys are going to be flooded with calls and e-mails, and even their most important clients (e.g., you) may need to wait in a queue. You can help these professionals help you by identifying the stations that you need them to focus on first based on your organization and your business priorities. Continue Reading
Now that television stations can openly discuss the results of their participation in the Incentive Auction, it is an appropriate time for all television stations to assess their market position and think about what comes next. In this space, we will discuss how stations with various auction outcomes should approach their post-auction transaction. Today, we begin with stations that submitted a successful bid to relinquish their spectrum.
The first two questions on the minds of many broadcasters that submitted winning bids are: (1) when will I receive my money; and (2) how much should I publicly say about my auction results?
Winning reverse auction bidders will receive their proceeds from the FCC only after the Commission issues licenses to winning forward auction bidders. The earliest that the FCC can issue those licenses is approximately one month (and likely 2-3 months) after it releases the Closing and Reassignment Public Notice. We estimate that the FCC will start releasing payments to broadcasters in late Q2 or early Q3 2017, although those dates are subject to change depending on the length of the forward auction. If the FCC does not process all of the forward auction licenses at one time, it will make payments to broadcasters on a rolling basis. The FCC will issue a public notice explaining how it will distribute auction proceeds and the steps each winning station must take to receive those proceeds. The person responsible for managing the receipt of auction proceeds must create a username and password in the new CORES. That website is found here: https://apps.fcc.gov/cores/userLogin.do. Continue Reading