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.

Who do the new rules apply to? The new rules apply to digital full-power broadcast television licensees and multichannel video programming distributors (MVPDs) (e.g., cable, satellite, etc.). There is one exception. As we all know, the CALM Act is intended to lower the volume on loud commercials. Accordingly, the new rules do not apply to noncommercial television stations because, by definition, noncoms don’t broadcast commercials – unless, of course, those stations are providing commercial material on one of their digital streams. In that case, the new rules would apply to that commercial matter. (Note: Lest there be any doubt, political commercials are indeed “commercials” for CALM Act purposes.)

When do the new rules apply? Although adopted last month, the new rules will not take effect until December 13, 2012. And (as we’ll get to below) the Commission has already announced the availability of waivers that could relieve qualifying station/MVPDs of CALM Act obligations for up to two years beyond that. But don’t be lulled into an undue sense of complacency: now would be a good time to familiarize yourself in detail with the CALM Act rules and take the steps necessary to assure that, when the time comes, you’re in compliance.

What needs to be done to comply? The goal of the CALM Act is to eliminate, or at least discourage, “loud” commercials” by implementation of the RP.  As a preliminary matter, all stations/MVPDs must (a) have the equipment necessary to pass through RP-compliant programming and (b) be able to demonstrate that that equipment has been properly installed, maintained and utilized to ensure compliance with the RP.  The equipment permits the station/MVPD to adjust the commercial’s “loudness” to conform with the RP before the commercial is inserted in the programming. This requirement should not impose any huge burden, as such gear is generally necessary for the provision of any audio at all. Still, stations/MVPDs should have their technical staff review their equipment to assure that it conforms. Note also that merely having the gear on hand is not enough. The gear must be properly installed, maintained and utilized.

Demonstrating compliance.

It’s difficult to prove, today, that a commercial you ran a month or two ago wasn’t “loud”. The FCC does not indicate how you might do so, but presumably there are ways. If you can prove that a particular commercial alleged to have been too “loud” was in fact fully compliant with the RP, that would be all you would need to answer an FCC inquiry about that particular commercial. As an alternative, the Commission offers a couple of mechanisms that will afford TV/MVPD operators a way of avoiding liability even if they can’t reach back in time to provide conclusive evidence of non-loudness.

Commercials, of course, can find their way into a transmission by one or two (or three) ways. A station/MVPD can insert the spot itself, or the spot might arrive at the station/MVPD already embedded in programming produced elsewhere. (The third alternative involves commercials inserted locally by third parties under an arrangement with the station/MVPD.) The FCC’s compliance approach distinguishes among these different situations.

Inserted commercials. With respect to commercials inserted by the station/MVPD, the Commission will deem the operator “in compliance” if, in response to an FCC inquiry about local insertions, the operator can:

  • demonstrate that the equipment described above has indeed been installed, maintained and utilized in a “commercially reasonable” manner “to ensure continued proper operation”; and
  • certify either that (a) it has no actual knowledge of any violations of the RP or (b) any violation of which it is aware was corrected promptly after it came to the operator’s attention.

Note that an operator who knows of a violation but fails to correct it cannot properly certify that it has utilized its equipment “in a commercially reasonable manner”.

Embedded commercials.  Embedded commercials are more problematic. The TV/MVPD operator can’t control the relative audio levels in already-produced programming delivered to them. While the operator could theoretically use real-time processing equipment to ride herd on audio levels, the practical availability and utility of that approach are dubious. Accordingly, the Commission has devised an elaborate “safe harbor” approach for embedded commercials. That approach is designed to split the compliance burden between the TV/MVPD operator and the originating programmer (although, as Congress mandated, the TV/MVPD operator is the one who bears the ultimate responsibility for compliance).

The “safe harbor” system requires, first, that TV/MVPD operators obtain “certificates of compliance” from their programmers confirming that the programs are RP-compliant. The certificates must be “widely available”, i.e., available to all stations and MVPDs, possibly through a website posting. Since lack of a certification could discourage TV/MVPDs from transmitting the programming, the program’s producers should have an incentive to provide the proper certification. (Note that the Commission stops short of dictating the period to be covered by such certifications, but for a TV/MVPD operator to be able to rely on any particular certification, that certification must be in effect.)

Even in the absence of a certificate of compliance from a programmer, TV/MVPD operators may still transmit that programmer’s programming. The catch here is that all such non-certified programming must be “spot-checked” annually for two years by “large television stations” and “very large MVPDs”. “Large MVPDs” will have to conduct more limited spot-checks, while small operators (TV or MVPD) need not perform any spot-checks unless they receive an FCC inquiry, in which event they will have 30 days to complete the required spot-check.  (In FCC-speak, a “large television station” is any station with more than $14.0 million in annual receipts in calendar year 2011, as set out in the BIA Kelsey Inc. Media Access Pro TV Database. “Very large MVPDs” are those with more than 10 million subscribers nationwide as of December 31, 2011, according to the NCTA. Merely “large MVPDs” have more than 400,000 subscribers but fewer than 10 million.)

The first round of annual spot-checks will have to be completed by December 13, 2013.

An annual spot-check is not a minor undertaking. It involves monitoring 24 uninterrupted hours of programming with an audio loudness meter set up per RP specification and follow-up review of the resulting records to determine if any commercials violated the RP. If (as is likely to happen with TV stations and some MVPDs) no single 24-hour period contains representative programming from all program suppliers, the annual spot-check much consist of loudness measurements over a seven-day period, totaling no fewer than 24 hours, capturing at least one program, in its entirety, from each non-certified programming transmitted as part of the operator’s overall program schedule.

The less exhaustive spot-check to be conducted by “large MVPDs” (as opposed to “very large MVPDs”) must encompass 50 percent (chosen at random) of the noncertified channels carried on any of the MVPD’s systems.

Two pieces of good news about spot-checks. First, MVPDs need not spot-check any broadcast programming (since any non-certified programming there will already be subject to spot-checking by large TV stations). Second, if the first two years’ worth of spot-checks come back clean, no further checks of that program need be performed. If a spot-check turns up noncompliance, however, the spot-check clock is reset, and the programmer in question must be checked for another two years. Also, if a spot-check performed in response to an FCC inquiry turns up noncompliance, the spot-check clock gets reset for another two years there, too.

Third-party local insertions. The Commission recognizes that commercials may enter the transmission stream by means of third-party insertions. This involves arrangements between the TV/MVPD operator and the third-party pursuant to which that third-party provides a service to the TV/MVPD operator, often placing equipment at the TV/MVPD’s site. In such cases, the TV/MVPD itself isn’t inserting the commercials, but it’s still much closer to that process than in the embedded commercial context. The FCC’s response: the TV/MVPD operator can enjoy “safe harbor” status for such third-party inserts as long as the third-party certifies that (a) all commercials it is inserting comply with the RP and (b) they are being inserted in compliance with the RP. Of course, the TV/MVPD must have no reason to believe that that certification is false. If an FCC inquiry rolls in the door, the TV/MVPD will have to go through the spot-check drill, as outlined above.

The Complaint Process. The Commission will not be independently monitoring compliance with its CALM Act rules. Rather, it will rely on consumers to bring potential noncompliance to its attention. Complainants will be able to submit information to the Commission on-line. They will be expected to provide enough details to allow the Commission to take appropriate action. But the receipt of a single complaint is not likely to trigger any FCC response. Instead, the Commission will be on the look-out for “patterns” or “trends” in incoming complaints that “suggest a need for enforcement action.” However, the Commission has provided no indication of what will be enough to constitute a “pattern” or “trend”. On the positive side, though, the Commission has said that, once a “pattern” or “trend” has surfaced, the agency “will be conscious of the greater resources available to large entities when determining where to address our initial inquiries.”

If a “pattern” or “trend” pops up on the FCC’s radar, the Commission may open an official inquiry. As part of that inquiry, it may notify one or more TV/MVPD operators of the situation. If the operator(s) so notified wish to remain in the “safe harbor” relative to embedded commercials, the operator(s) must perform a spot-check of the channel or program specified by the Commission within 30 days of the FCC’s notification. While the spot-check requirement can be expensive, even small operations will still have to perform the spot-check regardless of cost if they get the notice from the Commission. However, to do so they may borrow or contract for use of the necessary equipment; that is, they won’t have to buy the gear necessary for the spot-check process.

If a spot-check (whether annual or in response to an FCC inquiry) turns up evidence of non-compliance, the TV/MVPD operator must notify the FCC and the programmer within seven business days and provide the programmer with information about any relevant complaints. Additionally, the TV/MVPD operator should check its own equipment, to confirm that that equipment s not the source of the non-compliance. Within 30 days a follow-up spot-check must then be performed, the results of which must be reported to the Commission and the programmer. If the follow-up check comes up clean, the TV/MVPD will still be in the “safe harbor” with respect to that program; if the follow-up check continues to show non-compliance with the RP, then the TV/MVPD is no longer in the “safe harbor” for that program, and the TV/MVPD will be liable for any future commercial loudness violations in that programming, regardless of any certification or previous problem-free spot-checks involving that programming.

Waivers. Congress specified in the CALM Act that the FCC must provide one-year waivers (renewable for a second year) upon a showing of “financial hardship” arising from having to obtain the equipment necessary to comply with the rules. The Commission has adopted a streamlined approach for “small” TV stations and MVPD systems. If you’re a TV station located in TV markets 150-210 or if you have no more than $14 million in annual receipts, you’re a “small” TV station for these purposes; you’re a “small” MVPD system if you have fewer than 15,000 subscribers (as of 12/31/11) and you aren’t affiliated with a larger operator serving more than 10% of all MVPD subscribers. 

If you qualify for the “small” operator’s waiver, you need only send the FCC a certification that (a) you meet the definition of “small” TV/MVPD operation and (2) you need the extra year to “obtain specified equipment in order to avoid the financial hardship that would be imposed” you had to get the equipment sooner. You must identify or describe the kind of equipment in question, but you don’t need to specify model number.

Entities that don’t qualify as “small” must provide: (1) evidence of their financial condition; (2) cost estimate for obtaining the necessary equipment; (3) a “detailed statement explaining why its financial condition justifies postponing compliance”; and (4) an estimate (with support) of how long it will take to comply.

Waiver requests, which will have to be filed through the FCC’s ECFS electronic filing system, will be due no later than October 14, 2012, i.e., 60 days prior to the effective date of the rules.

The Commission also retains its general authority grant waivers to deal with unforeseen circumstances.

Wrap-up. Importantly, the Commission recognizes that the passage of the CALM Act and the implementation of these rules in its wake will not necessarily mean the end of consumer complaints. As the FCC admits, “while it may seem to some consumers that a commercial is loud, the commercial may, nevertheless, comply with the RP.” What the Commission does not admit is that the passage of the CALM Act (and the publicity attendant to that passage) may have created exaggerated expectations in the minds of consumers. New reports about the CALM Act – and, indeed, some of the Commissioners’ own statements – may have created the impression that the era of loud commercials is gone.

That would be a misimpression.

To a great degree the perception of loudness is in the ear of the beholder, and is dependent on a wide range of objective and subjective factors. The CALM Act cannot eliminate the perception of loudness. It can merely impose a means of controlling some – but by no means all – aspects of loudness.

So we can expect complaints about “loud” commercials to continue to roll in.

The FCC’s approach seems reasonably well-designed to distribute among the various interested parties the responsibility for addressing such complaints. For many TV/MPVD operators, the initial burdens – and possibly even the ultimate burdens – seem reasonably light. But all TV/MVPD operators should recognize that the loudness problem is still with us and will remain with us for some time to come. That being the case, care should be taken to comply with the FCC’s new rules sooner rather than later so that, if and when complaints are filed, you will be able to demonstrate that you have done what you were supposed to do to prevent excessively “loud” commercials.