2013 proved to be a transformative year for the media industry. We saw the M&A market heat up, with Sinclair, Gannett, Tribune, and Gray all growing their broadcast portfolios, while iconic names such as Belo, Fisher, and Allbritton either departed or entered into agreements to depart the broadcast field. This past year saw digital rights emerge as a key issue at negotiating tables and in courtrooms, with ongoing disputes about online rights, mobile rights, and recording and time-shifting rights. And the debate over music royalties continued, with new private agreements regarding performance royalties becoming more common and continuing uncertainty about Congressional involvement and SESAC rate increases.
On the regulatory front, the FCC welcomed two new members – Thomas Wheeler replaced Julius Genachowski as Chairman, and Michael O’Reilly replaced Robert McDowell as Commissioner. Former Chairman Genachowski advanced the planning for a first-of-its-kind broadcast incentive auction, but was unable to complete the 2010 Quadrennial Review of media ownership. Meanwhile, Mignon Clyburn’s stint as Acting Chairwoman was anything but dull, tackling issues including AM radio revitalization, foreign investment in broadcasting, the “UHF discount” for national television ownership, and the sports blackout rule.
The media landscape promises to continue its evolution in 2014. Below, several of our attorneys weigh in on their expectations for the year ahead.
Media Ownership – Dick Wiley: My prediction on media ownership for 2014 is similar to one I made this fall: that the FCC would not complete its 2010 Quadrennial Review but, instead, wrap it into a new study starting in 2014. Obviously, the agency’s inability to finish the pending Quadrennial within four years is very disappointing. But that failure does not lie at the feet of Chairman Wheeler, given his belated confirmation in October.
However, I am optimistic that the FCC will initiate action reasonably soon. And, given the Chairman’s comments about the importance of broadcasting (which I share), my hope is that some easing of long antiquated and counterproductive ownership regulations might be considered – in particular, newspaper/broadcast cross-ownership and duopoly. The Commission recently has indicated that JSAs and SSAs may receive increased scrutiny. But, if so, I respectfully suggest that the current duopoly rules correspondingly need revision in order to facilitate – in the public interest – the delivery of news and informational programing in smaller and mid-sized markets.
So, looking to the New Year, hope springs eternal!
Retransmission Consent – Todd Stansbury: Retransmission consent will continue to attract attention throughout the coming year. The FCC maintains an active docket in a proceeding launched in 2011 to consider possible changes to the “good faith negotiation” rules. The FCC will also collect comments in a just-announced rulemaking to consider elimination of the “sports blackout” rule. Although the rule is not technically about retrans, that issue – and more broadly, program exclusivity rights in general – may surface in the proceeding.
Over on Capitol Hill, Congress will confront “must pass” legislation, namely, reauthorization of the license for satellite distribution of distant broadcast signals, which will expire at the end of 2014 without legislative action. Advocates for change to the existing retransmission consent regime can be expected to encourage Congress to use the satellite license bill to modify retrans rules. On the other side, broadcasters will push for a “clean” reauthorization that leaves the current rules intact. In the meantime, carriers and broadcasters have to get deals done. Regulators will likely monitor negotiations with a watchful eye, but generally stay out of the fray.
Indecency – Eve Reed: It has now been two-and-a-half years since the Supreme Court issued its second decision in Fox’s long-running battle with the FCC over the agency’s indecency policy. Some expected the Commission to take at least some action within a reasonably short period of time after the Court acted. This was particularly so for two reasons:
- First, the Court re-affirmed the vital importance of clear standards and notice regarding the types of speech that violate the indecency policy.
- And second, the Court confirmed that the FCC indeed has the authority to enforce the prohibition on broadcast indecency.
But despite these developments, broadcasters remain largely in the dark regarding the standards by which the Commission will judge complaints.
What has happened on the indecency front since the Court acted? Within months of the decision, the Department of Justice dropped lawsuits involving a 2003 Fox broadcast of “Married by America” that included scenes featuring pixilated nudity. Shortly thereafter, then-Chairman Genachowski reportedly directed the Enforcement Bureau to focus only on the most “egregious” cases of alleged indecency. Then, after the Boston marathon bombing, Boston Red Sox player David Ortiz (aka “Big Papi”) spontaneously uttered the F-word during a pre-game ceremony in honor of those who tracked down the bombing suspects. Genachowski quickly tweeted that Ortiz had “spoke[n] from the heart” and that he stood “with Big Papi and the people of Boston,” causing many to wonder whether the agency had silently adopted a “post-bombing-speaking-from-the-heart” exception. And most recently, in April of this year, the Media Bureau issued a Public Notice referencing the previous directive to focus on “egregious” cases and seeking comment on whether the full Commission “should make changes to its current broadcast indecency policies or maintain them as they are.”
The suggestion to focus on “egregious” cases may well signal an appropriate shift back to a regime under which only the most serious – and therefore obvious – violations are subject to indecency enforcement action. But, as the comments filed by many on both sides of the line agreed, the insertion of the adjective “egregious” into the indecency policy debate fails to provide clear notice regarding content that the agency will find violates the indecency laws. The Commission can and should do more next year, if nothing else by issuing official guidance for broadcasters to use when evaluating program content for compliance.
Federal Shield Law – Kathy Kirby: The odds of passing a federal law protecting journalists and their sources may not be terrific given the crowded legislative calendar. Still, the moment seems right. Although many states have media shield laws, efforts to pass a federal one have floundered, usually over national security concerns. However, the Department of Justice’s admission that it secretly subpoenaed Associated Press phone records and searched the email records of Fox News’ James Rosen sparked bipartisan outrage and, ultimately, bipartisan cooperation in crafting a new Free Flow of Information Act. Last fall, the Senate Judiciary Committee passed the legislation in a 13-5 vote and sent it to the full Senate for consideration. The media coalition supporting the federal shield law will resume efforts to make it a priority item for Senate Majority Leader Harry Reid (D-Nev.) to bring to the floor when Congress reconvenes.
Critics of the legislation have suggested that the fact that the Senate is debating who can be considered “real reporters” and “legitimate” journalists should be chilling to us all. That’s a point well taken. But the need for protections is clear, and the compromise bill appears to have found an acceptable way of bringing within its coverage a wide range of newsgatherers and is flexible enough to allow for emerging forms of journalism. As voted out of committee, the Free Flow of Information Act does not purport to have the federal government define who is a “journalist” or “journalism” for all purposes, but only the subset of journalists entitled to the law’s protections. The legislation also provides for a safety valve, covering those who a federal judge decides “should be able to avail him or herself of the protections of the privilege, consistent with the interests of justice and the protection of lawful and legitimate newsgathering activities.” As far as balancing First Amendment and national security interests, the bill would circumscribe the privilege in cases where national security is at stake, particularly when a journalist has confidential information that would prevent an act of terrorism or other significant harm to national security.
While we have a long way to go—the full Senate still must pass the bill and the House also must act—this is the closest we’ve been to passage of a federal shield law since 2009. President Obama has indicated he will likely sign the measure if Congress presents it to him. That would go a long way toward enabling journalists to provide the public they serve with the spirited, independent journalism that is the lifeblood of American debate and democracy. And speaking of facilitating journalists’ ability to do their jobs—I sadly predict 2014 will be another year without audiovisual coverage of most federal court proceedings, including those of the U.S. Supreme Court.
Broadcast Incentive Auctions – Dick Bodorff: 2014 promises to be an active year in the FCC’s broadcast incentive auction proceeding. In a recent blog post, FCC Chairman Tom Wheeler announced a timeline for the incentive auction proceeding, which includes an order this spring followed by several public notices, with the goal of conducting the auction in the middle of 2015. Having publicly committed to this timeline, Chairman Wheeler and the FCC’s Incentive Auction Task Force now face substantial pressure to deliver. We expect that the Commission will issue a detailed and lengthy order on the incentive auction, covering a variety of issues such as eligibility in the reverse and forward auctions, implementation of the requirement to make “all reasonable efforts” to preserve broadcast coverage areas, a proposed 600 MHz band plan, and acceptable channel sharing agreements.
Given that the staff will not present its recommendations to the commissioners until early 2014, the details of the order remain up in the air. All indications at this point suggest that: (1) the Commission will adopt a descending clock auction, where broadcast stations will be offered an initial value to relinquish their UHF spectrum and that value will decline in subsequent rounds; (2) the FCC will adopt some form of a variable band plan, allowing for reallocation of different amounts of spectrum in different parts of the country, but one that also attempts to account for interference concerns raised by NAB and other broadcast interests; and (3) the FCC will try to promote channel sharing by, among other things, easing community of license restrictions for channel sharing stations. Of course, until the Commission issues its order, nothing is set in stone, and we expect details to remain a work in progress right up until the release.
Top-Level Domains – David Weslow: New top-level domain names will launch for public use in 2014, with domains ranging from .company to .media to .video coming online. The launch of new top-level domains will be the culmination of a program development and application process that has taken nearly nine years—and which has the potential to substantially alter the Internet landscape encountered by consumers and businesses around the world. Significant cross-platform advertising campaigns, coupled with news media coverage, will increase consumer awareness of new top-level domains as alternatives to existing top-level domains such as .com, .net, and .org. Companies that applied for .brand top-level domains will begin to offer products and services through specifically tailored web addresses (e.g., billpay.brand), and all organizations that rely on the Internet will need to implement or revise brand protection strategies to address the influx of new top-level domains such as brand.industry, productname.help, or company.online.
Privacy – Bill Baker: Privacy concerns arising from NSA revelations will affect privacy issues in the business-to-consumer context. Look for close regulatory attention to be paid to privacy in mobile applications, the collection and use of data about children under 13, news collection via drones, and networked devices.