2010 Quadrennial Review Unlikely to End Soon, Agree Lake and Broadcast Lawyers

LAS VEGAS -- Chances are the FCC won’t have finished the media ownership review due in 2010 by fall, with the 2010 quadrennial review likely to outlast the tenure of departing Chairman Julius Genachowski, agreed panelists including Media Bureau Chief Bill Lake. “My guess is we'll still be working on it” in the fall, the fourth anniversary of a workshop that began the 2010 review, said Lake. With the Minority Media and Telecommunications Council study (CD Feb 27 p1) of the effect of cross-ownership on minority stations due to be complete in about four weeks, it’s still possible “the commission may be prepared to take a vote” then, Lake said Tuesday at NAB’s show.

There’s little hope the quadrennial review process improves anytime soon, said broadcast lawyer John Feore of Dow Lohnes, giving odds of 1 percent this review ends before Genachowski’s last day. “The other 99 percent suggests next year or later,” said Feore. Genachowski hasn’t said when he'll leave. The review “might get rolled into the next quadrennial,” said broadcast lawyer Sally Buckman of Lerman Senter, giving zero odds that the order is approved before Genachowski departs. Another possibility is combining parts of the 2010 and the 2014 reviews, said Wilkinson Barker’s Rosemary Harold, who has represented owners of stations and newspapers in the ongoing review.

Many of the broadcast indecency complaints that agency staff recently dismissed in reducing the backlog by 1 million, or 70 percent (CD April 2 p1), “were easy ones,” said Lake. “The question arises, why wasn’t this done years ago. They were either beyond the statute of limitations, or were aired late at night,” he said of what was dismissed. Stations are getting their licenses renewed by the bureau because of the dismissals, “where we were frustrated we could not act” earlier, said Lake. He said a “little-noted paragraph” in a public notice about the dismissals sought comment on the agency’s enforcement approach. “Some thought the Supreme Court would put us out of our misery on that, but they say try again,” he said of the Fox II ruling that sent cases involving fleeting indecency back to the commission. The backlog clearing “has been impressive,” and “it’s good to know that that’s ongoing,” said Margaret Tobey, NBCUniversal vice president-regulatory affairs, from the audience. “We'd like to continue to reduce that backlog, and we'll be looking for ways to do it,” replied Lake.

"We are looking at other configurations” of the band plan in last year’s rulemaking that would split TV stations’ slots after the incentive auction between wireless frequencies, said Lake. Carriers and broadcasters had opposed the split plan. “Some aspects of the proposed band plan received very broad support,” including auctioning 5 MHz blocks, said Lake. “We'll consider very carefully” comments opposing the split, he said. “That was done, frankly, because the fact that Channel 37 is there” and “too expensive” to move, so it would be used “as a buffer zone,” said Lake of the original split plan. The agency could “easily” afford to move the radio astronomy operations in that channel, under $300 million that Congress said could be used for such purposes, said Lake. It’s “far too little” to also cover the costs to move medical telemetry operations that monitor hospital patients’ heart functions and the like, said Lake. “And the last thing we want is for people to drop dead.”

Friday’s freeze of applications for TV stations to make changes (CD April 10 p9) didn’t address what policy the agency will use for waivers, said Lake. “The commission hasn’t answered those questions. And one thing I want to make clear is that public notice hasn’t determined where the commission will come out.” With the FCC getting a few applications to “significantly increase” stations’ coverage area, “we wanted to try to preserve a stable database of what was out there” in terms of channels, said Lake. “Once that decision is made, we're prepared to process any application” that complies, said Lake. “We hope to have that decision made this year, so this is a hold that hopefully won’t last for a long time.” He was referring to the incentive auction order, which he said could include the waiver rules for processing applications. Commissioners’ offices didn’t get notice of the public notice before the bureau released it, Wilkinson Barker’s Harold said. She cited comments from others at the FCC during the show. Because the bureau has been giving scrutiny to whether Class A stations have been following rules, “Class As really need to think of themselves as being under white-glove testing procedures,” said Harold.

Sequestration has “greatly reduced” the FCC’s information technology budget, which includes work done by outside contractors, said Lake. The ongoing across-the-board spending cuts “won’t affect the ability of consumers to use our online files,” said Lake. “But our ability to fix problems as they arise in the future, or impose new requirements, is going to be limited.” Sequestration meant Media Bureau Audio Division Chief Peter Doyle had to participate on another panel using Skype, since he couldn’t travel to Las Vegas, Doyle said.

The Internet Radio Fairness Act, backed by Clear Channel and Pandora, is poised to be reintroduced this session of Congress, said radio-station lawyer David Oxenford of Wilkinson Barker, on a panel with Doyle. “I expect we will see some form of this act reintroduced, but there is a real question over whether it will be adopted.” Consideration of the bill on streaming-music royalty rates could trigger renewed congressional attention to the lack of a terrestrial performance royalty paid by radio stations, said Oxenford. “Once you start talking about audio copyright issues, the performance royalty -- the performance tax as broadcasters call it -- raises its ugly head. So there is a little bit of a downside even if it does affect streaming” by triggering the Copyright Royalty Board to lower the streaming rate, said Oxenford. There has been talk in the House of “a series of hearings on audio copyright issues” this year, “but it might take them quite a while” to get to them with higher-profile issues like immigration getting attention, said Oxenford.

Mission Abstract Data appears to be focusing on smaller radio companies that own groups of stations, with its patent litigation against larger radio groups “on hold, because there’s been a patent examination,” said Oxenford. The company that he called a patent troll has sued over stations’ use of digital music storage. “It’s a tenet of patent law that somebody can patent these broad concepts,” said Oxenford. “Be prepared to send letters, if you get these” warning notices from Mission Abstract Data, “to the folks who sold you the systems,” said Oxenford. “A lot of contracts, for the big companies, there is some indemnification language” that would help the radio company avoid liability, he added. We couldn’t reach the company to comment. “This is so unsettled -- by no means, enter into any agreement” with Mission Abstract data, said industry lawyer Harry Martin of Fletcher Heald.

In other pending litigation, it’s up in the air how the entire 9th U.S. Circuit Court of Appeals will rule in a noncommercial TV station’s appeal of an FCC ban on such outlets selling political ads, said broadcast lawyer Michael Berg. He represents a full-power station that complained to the FCC over the Minority Television Project running ads on KMTP-TV San Francisco. “This is a TV case that applies equally to radio,” he said. Because the project has dropped its challenge of an FCC ban on noncommercial stations airing ads unrelated to elections, that ban “is less likely to be struck down,” said Berg. At the en banc 9th Circuit oral argument (CD March 20 p3), “the judges pummeled the lawyers for both sides, representing the FCC and representing the noncommercial station,” said Berg. “The court could come out absolutely anywhere on this.”

FCC staff have been requiring three years’ worth of extra documentation from licensees that violated equal employment opportunity rules, said Lerman Senter’s Buckman. Such broadcasters “used only Internet postings and/or word of mouth” to recruit for employees, she noted. “And the FCC has frequently told broadcasters that limiting your recruitment to those things … is not sufficient.” The extra reporting is in addition to fines for EEO violations, said Buckman. “The licensees have to put together a lot of documentation” under the enforcement conditions, she said. NAB General Counsel Jane Mago replied that “documentation is a pain.”