OPEN MIKE BY JACK GOODMAN

Five Rule Changes The FCC Should Consider

Communications attorney Jack Goodman says now that the FCC is focused on deregulation, his wish list includes changes to ownership reports, must carry/retransmission consent elections, children’s programming reports, ancillary services reports and the local public notice rule.

Sitting at a bar last week at the NAB Show talking with TVNewsCheck Editor Harry Jessell about the prospects of broadcast deregulation, I mentioned that in addition to substantive deregulation such as modification or elimination of the FCC’s archaic ownership rules, there were lots of other rules that are confusing, complicated and burdensome, but which do the public little or no good.

Harry challenged me to list my top five procedural rule changes. No doubt other people would come up with a different list, and there are other substantive changes I would like (such as eliminating the FCC’s contest rules which merely add federal enforcement to agreements which are fully enforceable under state law), but here’s my list:

Ownership Reports — First, make them quadrennial rather than biennial. If a station changes hands, it has to file a new ownership report at that time. The minor changes in ownership that do not affect control which may occur day-to-day are not something the FCC needs to know about more often than mid-term (if then).

Second, for licensees that have attributable parent companies, the current ownership report regime requires filings at the licensee level for every level of attributable owner. That multiplies the number of reports, adding thousands — perhaps millions — of hours to the burden of filing for no substantive benefit. Instead, there should be one report at the licensee level showing all attributable owners at the next level. Parent companies and investors would then file one report showing the entities in which they directly have attributable interests.

Each company up the line would do the same, each filing only one report. When it developed the current system, the FCC apparently did not understand how a relational database works. It should correct that error now.

Must Carry/Retransmission Consent Elections Currently, stations have to send an election letter every three years by registered mail to each cable system in their DMA. Creating a list of each separate cable system and finding their address is a lot of work and does nothing for the cable operators.

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In addition, TV stations have to upload each election letter to their online public file, again for no apparent purpose. Instead, the FCC should allow stations and groups to make their elections for cable systems the way they do for DBS — send one notice to the MSO for all cable systems in the broadcaster’s markets.

Additionally, the FCC should permit electronic notification, rather than expensive registered letters. Or going further, the FCC could change the cable default election to retransmission consent as it is for DBS, eliminating the need for most stations to even make an election. And the FCC should jettison the public file requirement for election notices.

Kidvid Reports Change the quarterly reports on the amount of educational and informational children’s programming to certifications that the station has or has not complied with the three hours per week processing guideline. Does anyone actually read the pages and pages of program and schedule lists that stations have to get from their networks and upload each quarter?

Or perhaps let networks file one report for all of their affiliates. Even if the FCC does not get rid of the current burdensome system, it should abandon the rule requiring stations to publicize the location and existence of these reports.

Since the reports are in stations’ online public files, where else would someone interested in how a station served children be expected to look?

Ancillary Services Reports Every TV station must now file an annual report about any “ancillary and supplementary” digital services it provided and the amount of income it received from providing those services. If it had any income, it then must send 5% of those gross revenues to the FCC.

The overwhelming majority of stations do not provide those types of services or receive any income. The FCC could require filing only by stations that have reportable income, eliminating thousands of reports.

More substantively, to encourage broadcasters to find new ways to use their spectrum, particularly as ATSC 3.0 begins to spread, the FCC should apply the statutory 5% fee to net revenues, rather than gross income.

Local Public Notice Finally, the FCC should revise and largely eliminate the local public notice rule. If you have never looked at this rule, go on the FCC’s website and look at Section 73.3580 of the rules and see if you can understand it.

The rule is a morass of rules, exceptions to those rules and exceptions to the exceptions. Newspaper notice of applications is sometimes required and sometimes not.

Some FCC lawyers interpret the timing of required on-air announcements one way; others reading the same rules come up with a different schedule. And when stations change ownership, they must broadcast often endless lists of the officers and directors of each company involved. Perhaps all of this made sense at one time, but all it is now is a trap for the unwary.

Applications are now posted onto stations’ online public files. At most, all that they should have to do is make a short announcement like “we have filed an application to renew our license. A link to that application can be found on our website.” Any member of the public who is interested can then easily find any information they want. 

Harry, that’s my list. FCC, the ball’s in your court.

Jack Goodman practices communications law in Washington. He was previously general counsel of the National Association of Broadcasters, where he was NAB’s chief legislative counsel on the 1992 Cable Act. He can be reached at [email protected].


Comments (5)

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Gene Johnson says:

May 1, 2017 at 9:33 am

Pretty good list Jack. Here’s one for NCE entities related to their ownership reports. The FCC has repeatedly failed to provide guidance on how policies related to commercial ownership structures impact various officers and board members of NCE entities. Even the latest order reversing the need for FRN/RUFRN information for NCE Board members made a vague and oblique reference to licensees’ ability to seek attribution waivers without any apparent recognition of what that actually would involve. Take a university that may have a large Board of Trustees (or a state Board of Regents) that never gets involved in the operation of a station licensed to the university, or has multitudes of “officers” (e.g., Vice Presidents) involved in various areas of university operations having nothing to do with the station. The time it would take to prepare an attribution waiver request for those individuals far exceeds the time it would take to just list them in the ownership report, which itself is time consuming. Then there’s the question of whether or when a transfer of control of such an entity might occur given board changes over an extended period of time (e.g., several years or more). Given the way NCE entities operate, application of policies generally applicable to commercial entities don’t make a lot of sense. As you describe for the timing of on-air public notice announcements, different FCC lawyers interpret the transfer of control question in various ways. Some clarity and refinement are needed.

Tom Hardin says:

May 1, 2017 at 11:07 am

I would like a clarification on local (state wide) ownership. Should each local station have a full time employee / engineer on staff? Given the fact that most stations are being automated and most personnel are redundant?

    Gene Johnson says:

    May 1, 2017 at 6:06 pm

    The FCC is going to consider issuing a Notice of Proposed Rulemaking looking towards a modification of the main studio rule, including staffing requirements, at its May meeting. So, this one is already in the works.

Tim Darnell says:

May 1, 2017 at 11:24 am

An excellent list of modest changes.

Kristen Lynch says:

May 1, 2017 at 6:19 pm

The FCC says that the new ownership report form will require only one report for each level of ownership.


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