CommLawBlog : Broadcast & Communications Lawyers & Attorneys : Fletcher Heald & Hildreth Law Firm : Telecommunications, FCC Regulation, Communications Act

Feds revise triggers for automatic merger and acquisition review

Last year saw some successful (NBC/Comcast) and some not so successful (AT&T/T-Mobile) merger applications in the communications sector.  And with hope for continued improvement in the overall economic climate springing eternal, it’s possible that more large scale mergers may be in the pipeline. With that in mind, potential merger/acquisition candidates should be aware that the federal government has performed its annual ritual of announcing the thresholds it will use for automatic federal review of mergers and acquisitions. 

If a transaction exceeds a certain amount, both the Department of Justice and the Federal Trade Commission must scrutinize the deal and render an opinion about any anti-trust concerns raised by the deal.  In addition, as AT&T is acutely aware, when a large merger involves communications assets, the FCC also has no problem sticking its nose into the deal.  In fact, the FCC has its own SWAT team (formally called the Office Of General Counsel Transaction Team) to review deals.  Unlike the DoJ and the FTC, the FCC’s team is not automatically required to review deals of certain size; they could theoretically refrain from involving themselves in deals that pass the triggers described below. Note, though, that the FCC’s SWAT team – as well as DoJ and FTC – can choose to investigate smaller deals coming in below the triggers.

Readers considering a merger or acquisition should bear in mind that after February 27, 2012, the administration automatically will be sending at least two agencies to take a closer look at transactions where either:

the total value of the transaction exceeds $272,800,000; or

the total value of the transaction exceeds $68.2 million andone party to the deal has total assets of at least $13.6 million (or, if a manufacturer, has $13.6 million in annual net sales) and the other party has net sales or total assets of at least $136.4 million

When negotiating deals, all parties would be well-advised to bear these thresholds in mind. Once those lines are crossed, the prospect of additional (and considerable) time, expense and hassle to navigate the federal review process is a virtual certainty.

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Back in December we reported on the expansion of the Medical Device Radiocommunication Service (MedRadio) to permit use of 24 megahertz of spectrum in the 413-457 MHz range for wideband devices implanted in the body. The new rules have now been published in the Federal Register, which means that they become effective on February 27, 2012.

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[Blogmeister’s note: Kevin Goldberg, our resident Swami when it comes to predicting Supreme Court decisions, is also our guru (Swami? Guru? Yes, he’s that multicultural) for all things trademark. Since it’s That Time Of The Year, we asked him to re-visit the NFL’s perennial effort to control the use of the term “Super Bowl®”. The Swami initially larded his response with tons of references to Tim Tebow in a transparent attempt to attract all kinds of hits to his post. But we’re obviously above the kind of cheap ruse that would depend on repeated use of the name “Tim Tebow” to improve CommLawBlog®’s hit stats. Accordingly, we have edited out of Kevin’s post the name “Tim Tebow” (who plays for the Denver Broncos® – who aren’t even playing in the Super Bowl® this year. Everybody knows it’s the New York Giants® and the New England Patriots®, featuring Tom Brady).]

Football is a game of numbers. Here are some interesting Super Bowl®-related numbers for you:

455      The number of trademark applications that have been filed listing the “National Football League” as the applicant/owner

141      The number of federally registered trademarks owned by the “National Football League”

9          The number of trademarks containing the word “Super” that are owned by the National Football League

11        The number of international classes in which these trademarks exist

Ideally you’ve figured out by now that this post serves as our annual reminder – for the fourth year running – that the National Football League takes its trademarks very seriously. The league uses those marks to protect its exclusive right to use the term “Super Bowl®”. As the NFL®  sees it, that right extends not only to the game itself, but also to a mind-numbing range of stuff from clothing to jewelry to party invitations/napkins/decorations/posters to sporting goods to a concert series to things like . . . television broadcasting services.

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FCC adopts process to assure that Native American tribes get first dibs on commercial FM channels allotted pursuant to Tribal Priorities

For nearly three years the Commission has been working to develop mechanisms to promote new radio stations serving Native Americans. The process has been gradual, to say the least. Starting in 2009 with a proposal to create a Section 307(b) priority for Native Americans, the Commission has taken a series of steps looking to facilitate the entry of “Tribes” (a collective term used by the FCC to refer to federally-recognized Native American Tribes and Alaska Native Villages) into the ranks of broadcast owners.

In the closing days of 2011 the Commission took one more step in that process by creating a short-cut available to Tribes seeking new commercial FM stations primarily serving Tribal Lands. The new approach – which might also create opportunities for non-Tribal entrepreneurs willing to work with Tribal applicants in certain capacities – is designed to assure Tribal applicants the first opportunity to apply for such stations, free from competition from non-Tribal applicants. But the path blazed by the Commission imposes its own considerable set of hurdles.

The short-cut was necessitated by the fact that the allotment process for commercial FM channels is different from the process for allotting AM or noncommercial FM channels. For AMs and noncom FMs, a party who identifies the availability of a channel can get a lock on the channel simply by filing an application for it. In the case of commercial FM channels, on the other hand, the first step in the process merely allots the channel; after that, the channel is made available to the highest bidder at an auction, regardless of whether that highest bidder is a Tribe. 

And there’s the problem.

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Entercom proposes that required disclosure of licensee-conducted contest rules be made on-line, rather than over-the-air.

The promotions department at KOST (and at least some other Clear Channel stations) should be sending “thank you” notes to the folks at Entercom Communications Corp. As we reported just last week, KOST was recently spanked to the tune of $22K for violating the FCC’s contest rule (Section 73.1216) in part by failing to broadcast all the material terms of a contest it was running on its website. (The fact that KOST was a recidivist violator of the contest rule didn’t help it much.) 

But now Entercom (which owns more than 100 radio stations) has filed its own petition for rulemaking asking the Commission to bring the contest disclosure requirement into sync with “how the majority of Americans access and consume information in the 21^st century.”  That would be the Worldwide Web, of course. 

According to Entercom, “Americans expect to instantly access information at their fingertips by merely logging on to a website”. That being the case, if the FCC wants to be sure that potential contest participants are advised of the contest’s rules, it should be enough that those rules be available on-line.  Any required over-the-air disclosures can thus be limited to announcements that full contest rules are available on station websites.  (Any web-averse Luddites out there can be taken care of on request by e-mail or fax.)

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Meet the new year, same as the old year, as webcasting royalty regimen remains largely unchanged.

“Evergreen” stories – The kind of stories that recur regularly. Stories like “NFL reminds non-paying universe never to utter the words ‘super bowl’”.  You’ve seen them before.

And if you haven’t yet figured it out, you’re reading one right now.

Welcome to the annual reminder materials that have to be filed with SoundExchange under the statutory license applicable to the digital transmission of sound recordings. This applies to webcasters and streamers.

The fact that this is an evergreen, of course, doesn’t mean you should stop reading right now. Quite the contrary. An evergreen – well, at least this evergreen – comes back every year because it relates to stuff that merits attention every year. 

And the webcasting requirements are especially right for the over-and-over-and-over evergreen treatment because I know that, no matter how often I expound on the subject – here on CommLawBlog, at broadcast conferences, in e-mail outreach – there are broadcasters out there who still don’t get it. Maybe they’re unaware of the requirements, maybe they’re aware of but confused by them – or maybe they regard the requirements as something less than “real law”, despite the fact that those requirements have become more and more ingrained into the fabric of the radio industry with each passing year.

Whatever. My mission is to do what I can to lay out the annual SoundExchange filing requirements so that everybody that has to comply with them can know what to do. 

Let’s get to it.

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Contest rule violations fetch $22K fine

Almost three years ago we reported on a decision by the Enforcement Bureau indicating that on-line contests conducted by broadcast licensees are subject to the broadcast contest rule if the contest is promoted on the air. The station that got whacked back then was KOST.

Fast-forward three years. The folks in the Enforcement Bureau have issued another fine for pretty much the same misconduct. And check it out – one of the wrong-doing stations is none other than KOST! C’mon, guys – really?

This time around, the station (along with several other commonly-owned stations) ran an on-line contest calling for contestants to make video commercials (for Chevys) and submit them on-line. A panel of “impartial judges” would then review the entries and pick up to 20 finalists that would be posted on the participating stations’ websites for listeners to vote on. No aspect of the contest involved on-air activity (e.g., “listen-to-win”, “be the tenth caller”, etc.), BUT the contest was promoted on the air. 

And that was enough to trigger the broadcast contest rule (Section 73.1216), which requires (among other things) full on-air disclosure of all material elements of the contest. The licensee conceded that it didn’t broadcast the rules. The rules were available on the station’s website – but the Commission requires that the rules be broadcast, so the fact that they were available on-line (or elsewhere) doesn’t mean diddly. That’s Violation Number One.

Upon further review of the contest rules that were posted on the website, the Commission noted an interesting fact. Entries were permitted up to the “close of the Contest Period”. The “Contest Period” was defined as February 11-March 21. So far, so good.

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Earlier this month we reported on the Notice of Proposed Rulemaking (NPRM) issued in the Commission’s 2010 Quadrennial Review of its media ownership rules. The NPRM has now been published in the Federal Register, which in turn establishes the deadlines for comments and reply comments. Comments are due no later than March 5, 2012. Reply comments are due by April 3.

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Taft Snowdon, whose death we noted with sadness last November, will be remembered in a memorial service in Washington on Saturday, January 28. We have received the following information about the service from Taft’s family, and we are happy to pass it along to anyone wishing to pay their respects to our departed friend and colleague.

A memorial service will be held at 4pm on Saturday, January 28^th at St Johns Church, 3240  ‘O’ Street, NW in Georgetown (not Grace Church as originally planned). There is limited parking available.

Following the service we would like you to join us at Dumbarton House,  2715 Q Street, (not Dumbarton Oaks), which is a fairly challenging uphill walk for the stalwart - probably better to carpool or take a taxi as the parking there is even tighter.  (Some on-street parking should be available along 28th Street.)

For those of you looking for accommodation, we have been able to obtain preferential rates at the Georgetown Inn, in the heart of Georgetown.  Please book through Courtenay Altaffer on 540-368-5633 as soon as possible - she advises grabbing a reservation which can be cancelled later if necessary.

For everyone who has inquired, we thought it would be appropriate to suggest a donation to The Grace Outreach Committee (Grace’s Table) at Grace Church, 1041 M St, Washington, DC 2007, or the African Wildlife Foundation - www.awf.org/memorial, in Taft’s name, instead of flowers.

However much we would love to see you, no one should feel any obligation to come to Washington on the day.  We have already been overwhelmed by the heartfelt reaction to this unexpected tragedy, which has brought us all together (and are thankful to the Rev John Graham of Grace Church for having been able to arrange a larger church to accommodate us).

Thank you for your calls and messages of sympathy.  They have provided much comfort and confirmation of how much Tee was loved and admired.

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On January 10, the Swami and the Blogmeister took a field trip to the Supreme Court to catch the Fox/ABC indecency argument. Here’s their report.

[Blogmeister note: Last year the Supreme Court agreed to consider the constitutionality of the FCC’s broadcast indecency policies in the context of two cases, one involving comments made during awards shows aired by Fox Television, the other involving an episode of NYPD Blue on ABC. Check our previous posts for more background. The argument before the Supremes was held on January 10. Kevin “the Swami” Goldberg and Blogmeister Harry Cole attended.]

Blogmeister:  I think we can agree that, from the perspective of a broadcaster, the argument was disappointing. After the Second Circuit’s sweeping endorsements of First Amendment rights for broadcasters in Fox and ABC, it was a let-down to hear the far more cautious tone of the Supreme Court Justices.

Swami: Disappointing – maybe. I also thought “demoralizing” at first – but on further reflection, I don’t think this is a lost cause by any means. 

Blogmeister: Interesting. But before we ask you to gaze into your crystal ball and come up with a prediction of the vote, how about your thoughts on the overall arguments? For instance, what happened to the FCC’s interest in protecting children’s innocent ears from the evils of vulgar words? Pacifica was based in large measure on precisely that interest, but there was virtually no discussion of that at all during the argument. Instead, the government harped repeatedly on the notion that broadcasters have been given the use of their spectrum for free by the government, and they have derived “billions and billions of dollars” from that spectrum.

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This time, a ground-penetrating radar gets the nod

The FCC has issued yet another in a long series of waivers for ultra-wideband imaging devices.

This time the product is an instance of “ground-penetrating radar” (GPR), one of eight species of ultra-wideband equipment approved by the FCC back in 2002, each with its own set of technical restrictions. This particular GPR unit is towed behind a truck at highway speeds to inspect roadbeds and bridges for hidden defects.

The device fails to comply with two of the detailed rules that govern ultra-wideband devices: it generates a wide bandwidth by quickly stepping from one frequency to another, rather than transmitting on many frequencies at once; and it complies with the applicable emissions limits only when the frequency stepping is active, rather than stopped on one frequency, as the rules require. The waiver applicant, Curtiss-Wright Controls, Inc., explained why these departures are necessary to achieve better performance, and why they do not increase the threat of interference to other spectrum users.

Two opponents argued, in effect, that a waiver would allow manufacturers to concentrate radio-frequency energy in sensitive bands, including the band used by GPS satellites. The FCC responded with conditions on the waiver that prevent the device from using any one frequency for longer than 2 microseconds at a stretch, and more than 0.033 percent of the time overall. Other conditions require the device to avoid certain sensitive bands. With those limitations in place, the FCC determined, the Curtiss-Wright device will be no more interfering than a compliant GPR.

We have written before about the disadvantages of regulating by waiver: delays in getting a product to market (the Curtiss-Wright proceeding took 19 months, about par for the course), high legal expenses, unpredictability as to outcome and, in the end, a confusing patchwork of permitted and non-permitted devices. Not that the FCC should stop granting waivers to applicants that make a good case. Given the fragmented nature of the ultra-wideband rules, the waivers are the only way the industry can evolve to meet customers’ demands. Far better, though, would be an overhaul of the ultra-wideband rules that drops unnecessary restrictions and distinctions, and instead authorizes any ultra-wideband device that presents no realistic threat of interference. We understand that would take political finesse, as certain influential spectrum users have a history of overstating the risk of interference to their respective services. But we think the task is worth the effort. A single, coherent set of rules would be a big boost to an industry that, from the beginning, has shown an enviable flair for technical innovation.

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Despite – or, supposedly, because of – its own 2010 channel-sharing proposal, FCC summarily rejects similar 2008 approach advanced by ION

As part of its push to “repurpose” television broadcast spectrum for wireless broadband use, the FCC has, since 2010, been promoting the idea of channel sharing.  The idea is that two or more TV stations would share one 6 MHz broadcast channel, each having its own program stream.  One of the primary keys to enticing broadcasters to take the bait is that each station stream would have cable and satellite must-carry rights.

Attentive CommLawBlog readers may have thought that that proposal rang a bell – because (as we reported back in 2008) not only had somebody come up with the idea before, but that somebody had formally proposed its own license-sharing deal with features very similar to the approach the Commission is now pushing. 

In November, 2008, an assignment application (FCC Form 314) was filed proposing a “share-time” arrangement for a bunch of TV stations licensed to ION Media Networks.  A new company, Urban Television, LLC, would acquire “share-time licenses” permitting it to broadcast on the ION channel.  ION would continue to be the licensee of, and would continue to operate, its existing stations on the same channels.  (According to the application, Urban is owned 49% by ION and 51% by BET Founder Robert L. Johnson’s RLJ Companies.)

While the application was remarkably sparse on technical details – the contract between ION and RLJ was only two pages long, for crying out loud, and the summary of the transaction was only four (double-spaced, at that) – the basic idea boiled down to splitting up a single station’s 6 MHz channel into multiple, separately-licensed digital streams capable of accommodating  separately-owned TV stations.  As proposed by Urban Networks, each stream would be designated a “television station” and so would be entitled to the same mandatory cable and satellite carriage afforded to every full power station. Urban Networks sweetened the pot by offering a slew of new opportunities for minority entrepreneurs to participate in broadcast ownership and programming.

The broad strokes of Urban’s technical proposal were pretty close to the Commission’s repacking concept – separate licenses within a given 6 MHz channel, and cable and satellite carriage for everyone.

The FCC invited comments, and then proceeded to ignore the proposal even while advancing its own version of channel-sharing. 

But now, after a three-year wait, the Commission has summarily dismissed the Urban Networks applications.

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FHH’s Frank Jazzo and the FCC’s Bobby Baker headline a comprehensive refresher course

With the Iowa caucuses and the New Hampshire primary already fading in the rear-view and the bright lights of Election Night peeping up over the horizon, there can be little doubt: Campaign 2012 has kicked into high gear. The prime primary season is coming on fast, and the real deal election will not be far behind – so if you’re a broadcaster and you haven’t yet developed your plan for dealing with the political broadcasting rules, time’s a-wastin’.

Anyone looking for a refresher course need look no further: we here at Fletcher Heald (in cooperation with a number of state broadcast associations) recently presented a webinar surveying the political broadcasting rules. Led by Frank Jazzo, the presentation featured Bobby Baker, the FCC’s guru on all things political. (Technical note: Bobby’s formal title is Assistant Chief of the Media Bureau’s Policy Division.) For more than an hour and a half Frank and Bobby reviewed the most important aspects of the rules, providing useful tips on how those rules work in the real world. (Frank and Bobby also took a few questions from the audience.)

If you missed the show, you can still catch it in re-runs.  Access the full audio-visual experience by clicking here to get to the WMV recording of the program. (Once you click on the link, you should be prompted to open the file; it’s a big file, and may take a couple of minutes to load.) If you only want to review a PDF of the underlying PowerPoint presentation, click here.

One other alternative – make arrangements for Frank (or another member of the FHH team) to provide you and your organization your own webinar.

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A run-down on what the new rules governing “loud” television commercials require, and when those requirements will kick in

Back in December, 2010, the CALM Act (short for “Commercial Advertisement Loudness Mitigation Act”) was signed into law, giving the FCC precisely one year to get its regulatory keister in gear and adopt rules mandated by the Act. We are pleased to report that the Commission met that deadline, with two days to spare. In a Report and Order adopted on December 13, 2011, the Commission established a set of complex technical rules and procedures intended to reduce the problem of “loud” commercials on television.

The CALM Act is intended to lower the volume (or, more accurately, the “loudness”) of televised commercials. We won’t have a sense of whether or not the new rules will work for another year or two (and maybe not even then). As discussed below, even the Commission acknowledges that the CALM Act will not necessarily eliminate the perception that some commercials are loud.  But regardless, TV licensees and MVPDs are now under the gun to bring themselves into compliance with the new rules by December 13, 2012 (although, also as discussed below, some stations may be eligible for an additional year or so to bring themselves into compliance).

In crafting the technical specs, the Commission had little heavy lifting to do. That’s because Congress directed the Commission had to deal with the problem, i.e., by mandating a “recommended practice” (RP) devised by the Advanced Television Systems Committee (ATSC). The ATSC, of course, is the international non-profit organization largely responsible for the design of the DTV standards now in place in the U.S. So pretty much all the Commission had to do on that front was explicitly incorporate the RP – known as ATSC A/85 RP to the cognoscenti – into the rules. (Fuzzy on ATSC A/85 RP? Check out our earlier post on the CALM Act.)

The real problem confronting the Commission was how to craft an enforcement system that divvies up the compliance responsibilities appropriately. And props to the Commission: the system they came up with, although a bit complicated, seems to do the trick.

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