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Reminder: EAS-Related Registration and Filing Deadline

Posted in Broadcast Regulation, Broadcast Technology

On Friday, the FCC’s Public Safety and Homeland Security Bureau issued a Public Notice reminding EAS Participants of mandatory filing deadlines related to an up-coming nationwide EAS test.  Specifically, EAS Participants deadlinemust register with the EAS Test Reporting System (ETRS) and file Form One on or before August 26, 2016.  EAS Participants have until September 26, 2016 to edit their Form One filings. Two other forms – the aptly named “Form Two” and “Form Three” – are due on September 28, 2016 and November 14, 2016, respectively.  EAS Participants may register for the ETRS system and file Form One here.

The filings are required pursuant to a nationwide EAS test scheduled for September 28, 2016 at 2:20 pm EDT.

EAS Participants must use ETRS to file identifying information every year, as well as file their results following a nationwide EAS test.  Radio and television stations (including LPFM, Class A, and LPTV stations) are required to file in ETRS, as are cable systems, DBS and SDARS services.

The Public Notice provides a link to a webinar explaining how to register for ETRS and file Form One.  Attached to the Public Notice is the revised EAS Operating Handbook, a copy of which must be located at normal duty positions or EAS equipment locations when an operator is required to be on duty and be immediately available to staff responsible for administering EAS tests.  The Handbook must be in place in time for the September 2016 nationwide EAS test.

The Importance of Preparing the First Draft

Posted in Corporate/Business, Transactions

The Deal RoomOne of the most significant points in a transaction may be one of the most overlooked – the question of who will prepare the first draft of the underlying agreement.  It is generally always a good strategic decision to prepare the first draft of a purchase agreement, regardless of whether you are the buyer or the seller.

While on the surface, many purchase agreements may look the same (they all contain basic deal terms, representations and warranties, pre-closing covenants, closing conditions, deliveries, and indemnification), good transactional attorneys have quite different starting points to use if their client is the seller or the buyer.  A seller-favorable document approaches many provisions very differently from a buyer-favorable document.

Using the right starting point is a great way to put yourself in the strongest possible position at the start of a deal.  And who doesn’t want to start off a transaction in the best position rather than from a weaker position?  Continue Reading

New E-Cig Advertising Rules To Go Into Effect on August 8, 2016

Posted in Advertising Issues

cigOn August 8, 2016, new rules issued by the Food and Drug Administration (“FDA”) will go into effect concerning radio, television and online advertisements for electronic cigarettes (“e-cigs”) and other Electronic Nicotine Delivery Systems (including e-hookah, vape pens, advanced refillable personal vaporizers, and electronic pipes), regular size or large cigars, pipe tobacco, and certain other tobacco products.  Specifically, advertisements for these products cannot contain representations that the product presents a lower risk of tobacco-related disease or is less harmful than other commercially marketed tobacco products.  In addition, as of August 8, 2016, advertisements for e-cigs and other tobacco products cannot be targeted at persons under 18 years of age.  Although these rules do not apply to broadcasters directly, broadcasters should be aware of them in order to assist their clients’ compliance efforts.

In 2018, additional advertising rules will go into effect.  Beginning on May 10, 2018, advertisements for e-cigs and the other products listed above must include a new warning that states: “WARNING: This product contains nicotine.  Nicotine is an addictive chemical.”   Advertisements for regular size or large cigars must contain either the nicotine warning or any of the following warnings:

  • WARNING: Cigar smoking can cause cancers of the mouth and throat, even if you do not inhale.
  • WARNING: Cigar smoking can cause lung cancer and heart disease.
  • WARNING: Cigars are not a safe alternative to cigarettes.
  • WARNING: Tobacco smoke increases the risk of lung cancer and heart disease, even in nonsmokers.
  • WARNING: Cigar use while pregnant can harm you and your baby or SURGEON GENERAL WARNING: Tobacco Use Increases the Risk of Infertility, Stillbirth and Low Birth Weight.

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Denied! Internet-Only Recruitment Still A No Go Under FCC EEO “Broad Outreach” Rules

Posted in Broadcast Regulation

Thumb DownThe FCC’s Media Bureau rejected a cable company’s argument this week that online-only outreach regarding its job vacancies constituted “wide dissemination of information” of its full-time jobs throughout the community.  The FCC long ago declared internet-only recruitment constitutes “inadequate” job outreach but indicated that it would revisit this policy should Internet access become more widespread.  Full Channel TV, Inc. tried to get the Bureau to do just that, citing specific percentages of households in its community with Internet access—69% of Rhode Island homes and 72% of nearby Massachusetts’s homes—and arguing that a posting on Craigslist or the company’s website reached a broader audience than one appearing in print.  The Commission was not persuaded.

In upholding a $11,000 penalty assessed after an EEO audit, the Bureau steered clear of analyzing the effectiveness of online vs. offline job postings.  Instead, the agency focused on the fact that, by the company’s own admission, there was a portion of that community neglected by an online-only job posting—31% for Rhode Island and 28% in Massachusetts. Continue Reading

FCC Announces Dates for Mandatory National EAS Test

Posted in Broadcast Regulation, MVPD Regulation

warningThe Federal Communications Commission (FCC or Commission)’s Public Safety and Homeland Security Bureau has announced that the next nationwide test of the Emergency Alert System (EAS) will take place on September 28, 2016, at 2:20 PM EDT, with a secondary test date of October 5, 2016, if necessary.

According to the FCC’s public notice:

The nationwide test will assess the reliability and effectiveness of the EAS, with a particular emphasis on testing FEMA’s Integrated Public Alert and Warning System (IPAWS), the integrated gateway through which common alerting protocol-based (CAP-based) EAS alerts are disseminated to EAS Participants. The test message will clearly state that the alert is only a test of the EAS. FEMA’s alert will be transmitted in English and Spanish and include both audio and the text of the test message, which can be used to populate an accessible video crawl. These improvements will help ensure that all members of the public, including non-English speakers and individuals with disabilities, will receive emergency information. The test will provide an opportunity to evaluate this and other measures that the FCC has adopted to address issues identified in connection with the 2011 Nationwide EAS Test.

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Upon Review, No Changes to “Totality of the Circumstances” Test for Retransmission Consent

Posted in Broadcast Regulation, MVPD Regulation

fcc-logoFCC Chairman Tom Wheeler announced in a blog post today that the Commission will not be modifying its rules implementing the good faith requirement for retransmission consent negotiations.

Under Section 325 of the Communications Act, a multichannel video programming distributor may not retransmit a broadcast television signal without the broadcaster’s consent.  The statute requires broadcasters and MVPDs to “negotiate in good faith” for this retransmission consent.  In implementing Section 325, the FCC has adopted a list of nine practices that constitute a per se breach of the duty to negotiate in good faith.  The Commission considers allegations of other bad faith practices under a “totality of the circumstances” standard.

In the STELA Reauthorization Act of 2014, Congress directed the FCC to evaluate its “totality of the circumstances” test.  Chairman Wheeler’s blog post stated that based on a review of the record:

[I]t is clear that more rules in this area are not what we need at this point.  It is hard to get more inclusive than to review the “totality of circumstances.”  To start picking and choosing, in part, could limit future inquiries.  So, today I announce that we will not proceed at this time to adopt additional rules governing good faith negotiations for retransmission consent.

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Beware: Higher Fines for FCC Violations Coming July 1, 2016

Posted in Broadcast Regulation, Indecency

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The Federal Communications Commission (FCC) has adopted new, higher, fines for violations of its rules and the Communications Act.  These new fines go into effect on July 1.

Why the change?  The FCC has long been required to update the fines that it assesses on companies that are found to have violated its rules or the Act, and does so periodically.  In 2015, however, the President signed into law the 2015 Inflation Adjustment Act, which was designed to improve the effectiveness of civil monetary penalties and maintain their deterrent effect.   The new law directs federal agencies to adjust their penalties for inflation each year, and requires agencies to publish “catch up” rules this summer to make up for lost time since the last adjustments.  The FCC was required to publish interim final rules by July 1.

What is the impact?  The maximum penalties for violating the FCC’s rules or the Act by broadcast stations have increased.  With one exception, the maximum penalty has risen nearly $10,000 from $37,500 to $47,340 for each violation or each day of a continuing violation, and from $400,000 to $473,402 for a continuing violation.  The statutory maximum penalties for violating the indecency laws have always been higher than the general maximums, and have increased accordingly.  After July 1, a broadcaster can be fined $383,038 for any single indecent broadcast (up from $350,000), up to a maximum of $3,535,740 for a continuing violation of the indecency laws (up from $3,300,000).  Common carriers, equipment manufacturers, and others regulated by the FCC also saw their maximum potential fines increase.

The changes to the broadcast maximum fines are significant, but pale in comparison to the increases implemented by other agencies. Indeed, because some agencies had not adjusted their maximum fine amounts for 10 years or more, the increases outside of the FCC were even greater.  For example, the maximum fines for violating some Federal Trade Commission requirements more than doubled, rising from $16,000 to $40,000, in rule changes that become effective on August 1, 2016.  Indeed, prior to the enactment of the new law, it was estimated that its implementation would lead to an increase in government revenue of more than $1.3 billion over the next ten years across all agencies subject to the new law’s terms.

What is the FCC focused on?  Recent broadcast-related fines have not been in areas where the FCC tends to impose the statutory maximum penalties.  However, a review of FCC Consumer Complaint Data indicates that the backlog of indecency complaints continues to grow, with more than 6500 indecency complaints pending against television stations and more than 1500 indecency complaints pending against radio stations.  Other hot-button consumer issues include loud commercials and commercials/promotions.  Regardless of what types of complaints the FCC chooses to pursue, the fact is that after July 1 violators will be subject to greater potential liability than before, making compliance with the FCC’s rules and the Communications Act all the more important.

The $88.4 Billion Question – What’s Next in the Incentive Auction?

Posted in Broadcast Regulation, Spectrum

auction-block-150x140The FCC has announced that the total clearing cost for the reverse auction (the aggregate of provisionally winning bids) is $86,422,558,704.

Under the final stage rule, the proceeds from the forward auction (net of bidding credits and impairment discounts) must be sufficient to cover incentive auction costs, which include: (1) the aggregate of broadcaster clearing costs, (2) approximately $226 million to cover the FCC’s costs for conducting the auction, and (3) $1.75 billion for the TV Broadcaster Repacking Fund.  Accordingly, the forward auction must generate $88.4 billion for the auction to close in the first stage.

Although this stage of the reverse auction is over, the quiet period remains in effect!  During the quiet period, broadcasters should not disclose any information about any station’s bids or bidding strategies.  Information covered by this rule includes, but is not limited to: (1) whether the station made an initial commitment in March; (2) whether the FCC declared the station “not needed”; (3) whether the station dropped out of the bidding at any point; (4) whether the station became frozen at any point; (5) whether the station entered into a channel sharing agreement; and (6) any non-public information that the station learned from the FCC’s bidding system (including prices and the station’s vacancy index).  The quiet period will continue until the FCC issues a public notice announcing the results of the forward and reverse auctions.

What happens next?  Forward auction applicants have until this Friday to submit their upfront payments to the FCC.  After the July 4th holiday, the FCC will issue the Qualified Bidders Public Notice, which will include additional details about bidding in the forward auction, including both practice and mock auctions that the FCC will conduct prior to the start of the clock phase.  The forward auction clock phase cannot begin until 15 business days after the FCC issues the Qualified Bidders Public Notice, so even if the FCC issues the public notice on Tuesday, July 5, the forward auction cannot begin until the last week of July.  We would not be surprised if the forward auction does not begin until early August. Continue Reading

FCC Chairman Wheeler Circulates Proposed Media Ownership Rules

Posted in Broadcast Attribution, Broadcast Regulation

fcc-logoFCC Chairman Tom Wheeler has circulated to his fellow Commissioners a proposed final rule in the 2010/2014 Quadrennial Media Ownership proceeding.  Based on an FCC fact sheet summarizing Chairman Wheeler’s proposal, the new rules would largely keep the existing media ownership regulations in place.  Although the proposed changes are few, some could be significant to broadcasters, including: (1) requiring the filing of television shared services agreements, (2) extending the ban on co-ownership of two top-four television stations in a market to network affiliation swaps, and (3) “modestly” relaxing the newspaper-broadcast cross-ownership rule.  Equally important is what the Chairman’s proposal will not do — it will not eliminate the radio/television cross-ownership rule and it will not abandon efforts to make television joint sales agreements attributable (except to make the rule “consistent with . . . Congress’s guidance on grandfathering”).

The full text of the Chairman’s proposal is not publicly available, but the details of an FCC fact sheet are available after the jump. Continue Reading

FCC Turns Up Pace of Reverse Auction

Posted in Spectrum

auction-block-150x140Beginning Monday, June 13, 2016, the FCC will conduct three rounds of the reverse auction per day, up from the current pace of two rounds per day.  Starting with round 17, Rounds will occur from 10:00 am ET – 11:00 am ET, 1:00 pm ET – 2:00 pm ET, and 4:00 pm ET – 5:00 pm ET.

For those planning vacations over the July 4th holiday, the expedited schedule is potentially significant.  Based on the UHF round decrements, the reverse auction can run a maximum of 51 rounds.  At two rounds per day, the auction could have continued into mid-July.  Under the accelerated schedule, however, Round 51 will occur on June 28th (subject to further change).

What does this mean for the forward auction start date?  We don’t know.  The forward auction will begin on the later of two business days after the close of the reverse auction or 15 business days after the FCC releases its Qualified Bidders PN.  As of this writing, the FCC still has not released the Upfront Payment PN, which is the precursor to the Qualified Bidders PN.  Accordingly, the forward auction cannot start until late July, at the earliest.

Update 3:16 pm:  The FCC has now released the Upfront Payment Public Notice, setting July 1 as the deadline for forward auction applicants to make their upfront payments.  Shortly after the upfront payment deadline, the FCC will release the Qualified Bidders PN.