Paying close attention to deadlines, changing regulations and routine matters like public files is the best way to avoid hefty FCC fines.
Nobody wants to pay more than they should. But, that’s exactly what a number of media companies are doing these days. The industry seems to be breaking out in a rash of penalties being paid to the FCC and other regulatory branches.Many fines could be avoided if we:
- Pay closer attention to filing deadlines.
- Remain vigilant about maintaining public files.
- Keep an eye out for changes in regulatory policies.
Lee Shubert, a lawyer with the Washington, D.C., office of Katten Muchin Rosenman, and an FCC regulatory practitioner for more than 30 years, tells BCFM that there was a time when the FCC encouraged broadcasters to admit minor regulatory errors.
During that time, almost every error, except the most egregious, would be resolved by acknowledging the licensee’s candor and issuing an admonishment and reprimand not to perpetuate the violation.
About eight years ago, according to Shubert, then FCC Chairman Bill Kennard, created two new bureaus at the FCC, the Enforcement Bureau and the Consumer Information Bureau (now known as the Consumer and Governmental Affairs Bureau).
Since its inception, the Enforcement Bureau has streamlined and computerized the FCC’s fine and payment collection procedures.
In the current situation, where the federal government is running a deficit, there’s no incentive for government agencies to go easy or to remind us about changing obligations.
As the old saying goes, “ignorance of the law is no excuse.”
The first category, penalties for late regulatory filings, represents the easiest money for the FCC to collect.
The FCC is projecting that it will bring in more than $300 million in broadcast station, cable system and other regulatory fees this year. And it can assess late payment penalties of 25% of the amount of the fee “which was not paid in a timely manner.” Paying on time is the best way to avoid paying an extra 25 cents on the dollar—potentially usury under other circumstances.
Shubert says that perhaps the most offensive fines are those the FCC deals out when responses to questions on a license renewal application indicate that a station’s public file has not been maintained in a letter-perfect fashion during the last license term.
And public file issues can open you up to fines even when you aren’t applying for a license renewal. There are many groups just looking for a chance to cause trouble for you and public files are an easy target.
Earlier this week, the FCC announced a consent decree with Bresnan Communications concerning public files that the agency found to be in violation of its requirements.
A labor union had complained to the FCC that public files at several Bresnan cable systems weren’t in complete compliance. That triggered an FCC investigation. As part of the consent decree, Bresnan has agreed to make a “voluntary contribution” of $25,000 to the U.S. Treasury.
Violating Regulatory Policies
The third category concerns payments in fines for violating FCC polices, such as indecency standards and those for children’s programming and advertising.
In 2004, the allowable amount of fines the FCC can impose was increased to as much as $32,500 for “… each violation or each day of a continuing violation, but not to exceed a total of $325,000 for any single failure.”
To avoid such fines, stations must be attuned to changes in FCC policies. For example, the FCC revised its children’s programming standards last September. This “Second Order on Children’s Television” extended the standards to digital broadcasts and modified requirements affecting analog broadcasters and cable operators.
As we recently saw with Univision’s record $24 million fine, the FCC is stepping up its enforcement of children’s programming rules. We need to remain in compliance with all of the applicable rules and make sure that our quarterly children’s programming reports detail that compliance.
As at least one trade publication reported earlier this week, the FCC proposed fining six stations a total of $65,000 for violations of children’s television advertising limits and reporting requirements. “All the violations were volunteered by the stations as part of their filings for license renewal,” according to the article.
Furthermore, as reported in the press, at least one children’s programming advocacy organization is following up on the Univision consent decree with a study. Its objective will be to identify situations where a station’s or network’s categorization of children’s programming doesn’t match up with the FCC’s. That should be a clear call to check your policies in this area.
Another hotbed for FCC enforcement is indecency. The FCC posts “Complaint and Enforcement Statistics” on its Web site, including the total number of complaints and fines. Using the $32,500 per station per incident limit, the FCC issued seven fines totaling nearly $4 million in the first half of 2006.
The record year for Notices of Apparent Liability—12 cases seeking a total of $8 million—began with the infamous “wardrobe malfunction” during the 2004 Super Bowl half-time show. The exposure brought fines amounting to $3.5 million.
The chances are pretty good that the FCC will continue to take an aggressive stance on issuing NALs in the coming months.
No one likes surprises—CFOs and stockholders least of all. With so many areas of our business not easy to predict, remaining attentive to FCC polices that have fine and forfeiture implications is one area where we have greater control over the outcomes.
Regardless of our position with respect to a particular policy, as long as it’s the law, our compliance needs to be unequivocal.
Avoiding the avoidable just makes good cents.
Note: In addition to Lee Shubert, I would also like to thank Frank Lloyd, a partner and member of the Communications Section at Mintz Levin Cohn Ferris Glovsky & Popeo, for his assistance in navigating the FCC’s fines and forfeitures activities.
Mary Collins is the president of the Broadcast Cable Financial Management Association, a professional society for financial, MIS and HR executives in the electronic media. Her column appears here every other Friday. She can be contacted at [email protected] or 847-716-7000.