(LEGAL) Performance Royalties: The State Of Play

8-1-2014

There is much afoot these days in the world of copyrights and performance rights and royalties. Any radio station owner knows about the license fees collected by ASCAP, BMI, and SESAC, which pay royalties to composers and publishers. Less familiar are royalties collected by performers and the recording industry. For musical recordings, radio stations pay SoundExchange when streaming music over the Internet, but not for over-the-air broadcasts. The logic has been that the recording industry already reaps a huge benefit from having its records played over the air. In fact, traditionally the money stream has flowed in the opposite direction, with radio stations, DJs, and PDs being paid to play recordings on the air. There?s even a name for it: payola.

Performance Tax
The term ?performance tax? is used for the perennial attempt to impose, through legislation, a requirement that radio stations pay royalties for over the-air broadcasts of musical recordings. Through the years these attempts have been thwarted, and even now there are already 224 U.S. representatives co-sponsoring a resolution against it.

But this year there appears to be additional momentum for the performance tax. The House Subcommittee on Intellectual Property held hearings on music licensing, and Rep. Jerrold Nadler, ranking member of the subcommittee, said, ?I am developing legislation to address the various problems in existing law in one unified bill.? He went on to say that the most glaring problem is that ?rights holders of sound recordings receive absolutely no compensation when their music is played over the air on terrestrial, meaning AM/FM, radio.?

With an introduction like that, it sounds more like a witch hunt than a hearing. However, there appears to be a new tactic, namely a top-to bottom review of the copyright laws (rather than just the singular issue of radio paying to air recordings). Although broadcasters still appear to have the votes in Congress, others quietly worry that a radio performance fee is just a matter of time.

Songwriter Equity Act
Even before the Congressional hearings in June, there was a House bill attracting attention ? the Songwriter Equity Act. This legislation charges the Copyright Royalty Board with setting fair songwriter (ASCAP and BMI) royalty rates for digital music services by broadening the pool of evidence that rate courts like the CRB may examine. At first, this sounds like a money grab by composers and publishers against Internet streamers like Pandora, but it could open the door for the CRB to adjust any perceived inequities between songwriter and artist rates on the backs of broadcasters.

Geofencing
Although radio stations do not currently have to pay performance fees for recordings broadcast over the airwaves, they do pay for simulcasts of the station?s programming over the Internet. This goes back to passage of the Digital Millennium Copyright Act in 1998, when there was debate over the royalty radio broadcasters should pay for streaming their content. The DCMA provided that any retransmission of a broadcast signal was exempt from the sound recording copyright royalty, provided that the broadcast is not ?retransmitted more than a radius of 150 miles from the site of the radio broadcast transmitter.?

Broadcasters argued that the exemption extended to retransmissions over the Internet. The recording industry argued that ?transmission? must be a terrestrial broadcast (like a translator) and cannot include streams, which have a global reach well beyond the 150-mile radius. In its final ruling, the Copyright Office determined that Internet simulcasts are not exempt from copyright liability.

However, this year a radio group filed a declaratory judgment complaint in federal court, claiming they use a technology called ?geofencing? to restrict Internet retransmissions of their broadcast signals to a 150-mile radius, and therefore they should be exempt from streaming royalties. A favorable ruling would provide precedent for other stations that seek only a local audience for their Internet streams, but could impact aggregators like iHeartRadio because some stations would then want to restrict the radius of their streams.

What can you do about the increased pressure being applied for new licensing fees? Station owners should reach out their counsel and the NAB, but also to the Radio Music Licensing Committee and to their state broadcast associations for information and ways to have their voices heard. Radio is a vital medium that serves the public in ways no other service does. Lawmakers need to be constantly reminded of that. And as broadcasters increasingly look to stream their content on the Internet and streaming companies like Pandora are moved to purchase radio stations to become more like broadcasters for copyright reasons, the lines will continue to blur. So it?s up to the radio industry to keep the message clear.

Frank Montero is the managing partner of the Washington, DC law firm of Fletcher, Heald & Hildreth and can be reached at montero@fhhlaw.com.

(8/1/2014 10:57:18 AM)
"Lawmakers need to be constantly reminded of that'.
Let's face it - money wins in Washington and in most other places too. But especially in Washington. So the money grab by the labels is being preceded by a money grab by lobbyist and lawmakers. So to win, this is going to cost us a lot of money for lobbyists. The only reminder our lawmakers need is a check.

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Insurance Company Off the Hook for Hefty Legal Fee

9-5-13

Entercom's Insurance Company does not have to pay over $800,000 in legal fees for former part-time morning show assistant Mathew Carter, according to Courthouse News Service. Back in 2007 Jennifer Strange died of water intoxication after participating in a "Hold Your Wee for a Wii" contest at KDND-FM. Carter was handing contestants the water.  

Strange drank 1.5 gallons of water during the morning-show stunt. Her family sued Entercom Sacramento and several of its employees. A jury eventually awarded the family more than $16.5 million in damages.

Strange's family eventually dismissed Carter from the suit. However, during his defense he opted to hire his own attorney rather than one provided by Entercom's insurance company. He racked up over $800,000 in legal fees and submitted a bill for that amount. A Sacramento County judge found that Carter's rejection of the insurance company attorney "was not reasonable and therefore costs and fees incurred by Carter to defend himself were not 'necessary expenditures'" under labor code.

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Is Pandora Getting Sidetracked by Too Many Legal Battles?

7-3-13

As the consumer continues to go mobile for music, the drama over how much artists and publishers should be paid for that shift to digital continues. It certainly appears to be a complicated and expensive headache for Pandora. On many fronts, Tim Westergren and company are trying to lower the fees it pays to play music, including asking for help from Congress, to save the Pandora business model. Pandora was also pounded by the aging rock band Pink Floyd who said Pandora was trying to cut their pay. That certainly got big play in the press. And, as Pandora wages war with ASCAP, it's also cutting much more expensive side deals with labels.

Under a consent decree Pandora is paying 4.3% to ASCAP (BMI and SESAC). However, to the chagrin of Pandora, some labels are pulling out of that consent decree, and that may mean Pandora is in violation of copyright law if it plays an artist from that label. The company is awaiting a ruling on that from the ASCAP rate court. Warner/Chappell Music and BMG Chrysalis have already pulled digital rights from ASCAP as of July 1st. Sony/ATV and the EMI Music also pulled their digital rights but cut a side deal with Pandora so the service could keep playing their music.

A Universal Music Group spokesperson tells Billboard, "We can confirm that UMPG has worked out an arrangement with Pandora that we believe is in the best interest of our writers while ensuring Pandora access to our music through the end of the year." Billboard says the deal represents the highest rate Pandora has ever paid to the music publishing sector. It's a short-term deal which could still be squashed by the ASCAP rate court which could say no such deals are allowed until the current consent decree expires at the end of 2015. Pandora founder Tim Westergren says about his dealings with ASCAP and BMI, "In November of last year, following a lengthy negotiation, Pandora agreed with ASCAP to a new rate, an increase over the prior amount, and shook hands with ASCAP management. Not only was our hand-shake agreement rejected by the ASCAP board, but shortly thereafter we were subjected to a  steady stream of ?withdrawals? by major publishers from ASCAP and BMI seeking to negotiate separate and higher rates with Pandora, and only Pandora.

Pandora has also tried to claim it is now a broadcaster by purchasing a South Dakota radio station hoping that would allow them to get the same low rate negotiated by the Radio Music Licensing Committee. The RMLC represents radio and has negotiated a fee of 1.7% of gross revenue for both over-the-air and digital royalties. ASCAP has said Pandora is not a broadcaster simply because it purchased one radio station.

Read the full Billboard story HERE
Read Tim Westergrens full Blog on the subject HERE

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(LEGAL) FCC Protects You From Yourself April 1st

3-29-13
Broadcasting is a unique business.  After all, in what other business would it be deemed funny to play April Fools jokes on customers.  Think if you were the butt of the joke while eating a restaurant meal (surprise, it?s not really edible - barf!), or fueling your car (boom!). 

Yet radio stations in the past on April 1st have treated their listeners to pranks that have caused significant distress, diverted police resources from legitimate crises, and posed a substantial threat to public safety. 

The FCC?s broadcast hoax rule (Section 73.1217) prohibits the broadcast of false information concerning a crime or a catastrophe when: (1) the broadcaster knows the information is false; (2) it is foreseeable that the broadcast of the information will cause substantial public harm; and (3) the broadcast of the information does, in fact, directly cause substantial public harm.

Rather than writing the usual ?Groundhog Day? type of column that appears every year at this time from communications attorneys warning against April Fools Day stunts that violate the FCC?s broadcast hoax rule, I would rather take the approach of what is allowed on April 1st.  Such an approach, however, is difficult.  Even if the broadcast hoax rule itself, which is paraphrased above, is not specifically violated, there are many other April 1st stunts such as joke contests, or use of EAS tones even if to warn of sunshine and blue skies, that would violate FCC rule sections and policies. 

The FCC?s broadcast hoax rule, adopted in 1992, is specific.  The prohibited ?public harm? that occurs as a result of the broadcast of false information concerning a crime or catastrophe must begin immediately.  Further, it must cause direct and actual damage to property or to the health or safety of the general public, or diversion of law enforcement or other public health and safety authorities from their duties. 

The FCC says that ?the public harm will be deemed foreseeable if the licensee could expect with a significant degree of certainty that public harm would occur.?  Further, the FCC states that a ?crime? is any act or omission that makes the offender subject to criminal punishment by law, and a ?catastrophe? is a disaster or imminent disaster involving a violent or sudden event. 

The broadcast hoax rule was adopted expressly to prohibit broadcast hoaxes that are harmful to the public.   A radio broadcast that is harmful to the public also invariably exposes the station to potential civil and criminal liability. 

Interestingly, the FCC, in adopting the prohibition against broadcast hoaxes, gave as an example of a broadcast that would not be covered under the rule, a broadcast about amoebas invading the city, stating that this was an ?obvious hoax?.  On the other hand, the FCC noted that the broadcast of a mock nuclear attack on the United States with a siren sounder, was not an obvious hoax and merited a $25K fine.  Likewise, a false report of a nearby volcanic eruption merited an admonishment to a radio station prior to the adoption of the actual hoax rule (this was a Los Angeles station ? perhaps if the station had been in the middle of Kansas it would have been obvious?). 

In adopting its hoax rule, the FCC stated that it was not its intent to ?restrict harmless pranks, or to deter broadcasts that might upset some listeners but do not pose a substantial threat to public health or safety?.  Unfortunately, these words of the FCC come as close as anyone can come to saying in today?s regulatory environment what is acceptable for a radio station April Fools Day prank.  If a station is wrong and receives an Enforcement Bureau inquiry letter as a result of a broadcast hoax, the joke will be upon it.  

John F. Garziglia is a Communications Law Attorney with Womble Carlyle Sandridge & Rice in Washington, DC and can be reached at (202) 857-4455 or jgarziglia@wcsr.com. Have a question for our "Ask The Attorney" feature? Send to edryan@radioink.com.

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(LEGAL) Was Tampa Trial Really About 1st Amendment

1/31/13
by John Garziglia

The Bubba/MJ trial brings to mind the too-often quoted observation attributed to George Bernard Shaw ?never to wrestle with a pig. You get dirty, and besides, the pig likes it.? There is no doubt in my mind that both Bubba and MJ, at least during some phases of their legal fiasco, both had moments of ecstatic enjoyment over the woes being inflicted upon the other.  Indeed, what could be more fun than competitive air personalities extending a radio war into a trial that is covered by all of Tampa media.   

Before launching into more somber observations about this lawsuit and trial, and the lessons it holds for radio (if any), I have to commend Bubba?s attorneys.  Bubba?s legal team was obviously able to communicate to the jury that what went down between Bubba and MJ was part of radio?s competitive landscape, and not horrible acts that needed to be redressed through a lawsuit.  

I also have to confess that I am not at all sure that both Bubba and MJ were not punking us all into believing in the legitimacy of their lawsuit, and that it was not just a ratings stunt.  I suspect that at least at some points in the saga, each was egged on by the prospect of more listeners and notoriety.   Keep in mind that this is the case that produced newspaper headlines during the course of the trial such as ?Attorney arrested for DUI claims he was victim of honey-trap after paralegal from other side bought him drinks and asked him to move her car?.

Bubba was quoted after the trial that ?[t]his is a landmark case for media. This is for Saturday Night Live and Rush Limbaugh and Glenn Back and, oddly enough, MJ himself.?  Somehow, I am not so sure of that.  No new law was created.  The case, on its facts, went to trial and went to the jury.  The jury made factual determinations that what was alleged did not constitute defamation and that there were no damages.  This is not new law.  This is applying existing law to the facts.  It tells us what we already know, which it is difficult, at best, for a public figure such as a radio air personality and his wife that had commensurate notoriety to claim defamation when each appeared to willingly engage in the mud fight (see the pig lesson above). 

There is a fine line in any entertainment endeavor between the boring and the exciting, the uninteresting and the captivating, and the forgettable and the memorable.  Any performer that goes too far over the line toward being exciting, captivating and memorable may run the risk of legal consequences.   Just look at Lenny Bruce and Howard Stern as examples.  Entertainment is always a double-edged sword. 

The Bubba/MJ trial is just a variation of the risk that every radio station, and every air personality, incurs every day with most elements of programming.   Yes.  Surprise!  Radio station air personalities can be sued for defamation for what they say. 

So, rule number one for any air personality that engages in programming elements that might conceivably engender a lawsuit is to have as much liability insurance as can be afforded.  In the facts of the Bubba and MJ case, we have a pretty good example of programming elements that might engender a lawsuit (hint: Bubba calling his competitor?s wife a ?whore? is a good example).  With defamation actions, it is the cost to cover the defense of any lawsuit that is one of the primary purposes of insurance. 

Bubba prevailed and won with a jury verdict.  But the trial itself likely cost Bubba hundreds of thousands of dollars in legal fees to reach that result.   As for MJ, for the sake of his attorneys, I hope that he was current in his payment of legal bills as it appears that MJ just threw a lot of money and many moments of his life down a deep litigation hole without any recovery, either for his pocketbook or to his presumed reputation. 

So what is next?  Will Bubba and MJ now get together and make a TV reality series out of the legal proceedings films to recoup some of their legal fees.   Will each ultimately have a return on their investment because of all of the resulting TV and media exposure? 

There will be many in our industry that will decry the baseness and vulgarity of the radio programming that was put on trial.  Ultimately, of course, it is not the decision of the air personality, but rather the decision of the radio licensee, that controls such radio programming.  The FCC continues to have a heavy hand on certain elements of programming such as hoaxes, rigged contests, vulgarity and indecency.  The reckoning for radio stations comes every eight years at license renewal time. 

Allegations of offensive programming, even if not ultimately actionable by the FCC under its license renewal standards, have the potential to hold up a license renewal grant for months or years.  It is the prospect of such delayed license renewal action, and not a lawsuit between competing air personalities, that is possibly the ultimate check on such radio war mayhem getting completely out of control.

John F. Garziglia is a Communications Law Attorney with Womble Carlyle Sandridge & Rice in Washington, DC and can be reached at (202) 857-4455 or jgarziglia@wcsr.com. Have a question for our "Ask The Attorney" feature? Send to edryan@radioink.com.

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(LEGAL) Back To The Future

12-10-2012

We go to conferences to hear seminars about it. Countless people blog about it. And more than a few water cooler confabs have taken it up as the subject of the moment. We study the technology for clues. Follow the relevant legislation. And we wonder if financial statements offer the biggest clues. We're talking about the future of radio, of course. And it's our good fortune to have broadcast attorney John Garziglia to give us a clear peek through the keyhole.

Radio Ink asks:  With the New Year just around the corner, it's time for a little crystal ball gazing. What about our radio industry? What do you see by peering into the future?

John Garziglia says:  21st century radio has arrived. We just have not noticed it yet.

Thinking back though, few noticed when FM made its entry a half-century ago. 21st century radio will be audio, video, and graphics content-on-demand on mobile devices.

I am excited about the potential for radio broadcasting from the ?Mobile TV? technology developed by the Open Mobile Video Coalition which allows for robust delivery of both audio and video on demand. It is worthwhile for radio broadcasters to read two recent releases from the OMVC. Start with the OMVC Press Release on Non-Real-Time Content. Then read the underlying document titled OMVC Non-Real Time Mobile DTV Use Cases. Neither is lengthy. Imagine the possibilities several years from now if thousands of portable devices and car radios have the capabilities described in these articles.

The initial staggering realization about TV today is to question the sanity of those who designed today?s 8-VSB and ATSC DTV standard and utterly failed to consider that consumers might like to receive on-demand video and audio in portable and mobile devices. That is a failure of imagination and design that one day will be looked back upon in amazement.

But I digress. We all can agree, I believe, that the future of radio is content-on-demand.

The central question is what technical platform will deliver mobile content-on-demand. The analog and digital iterations of today?s radio broadcasting technology cannot deliver mobile content-on-demand. While cell-phone-based 3G and 4G do deliver mobile content on demand, a cell phone infrastructure that currently cannot deliver reliable telephone service to much of the nation is a doubtful platform for future massive data delivery. Also, there is the significant cost issue of that 3G and 4G data delivery.

Broadcasting is the only delivery mechanism in our foreseeable future that has the capacity to deliver substantial amounts of unwired content to mobile mass audiences. The OMVC Mobile TV broadcasting platform may be the combined audio and video platform that radio broadcasters in particular have been waiting for.

Why would TV broadcasters not themselves take advantage of this new platform? Some may, but many in the TV industry are stuck in the mentality of program delivery to consumers when and how the TV station and video content owners want it, not when and how consumers want it. This attempt to maintain the status quo is illustrated by the way the TV industry strikes out against every new DVR/PVR scheme, and just about any other new content delivery scheme that attempts to allow consumers to use its media on demand.

I see radio broadcasters as more agile and sure-footed than TV broadcasters when it comes to delivery of content paired with advertising messages that attract consumers. Radio has been waiting for a mobile delivery platform such as the OMVC Mobile TV platform. OMVC Mobile TV delivers audio along with any kind of video. So, ?radio with pictures,? including album art, station logos, and more, is no problem for the OMVC Mobile TV platform.

So, how does this affect radio broadcasters? In a nutshell, the existing TV spectrum and TV licenses may be the new platform for what we now know as radio broadcasting.

Forward thinking radio broadcasters may want to consider thinking about the acquisition of a TV station in the future. Yes, the FCC rules now prohibit many radio-TV cross-ownership combinations, but that is likely to change.

For smaller radio markets, rather than a full-power TV station, there is the possibly of acquiring a digital LPTV station, many of which have substantial power. Many LPTV stations are there for the taking as almost none have ever made any money (sort of like FM in the beginning), and the radio-TV cross ownership rules do not apply to LPTV ownership.

There are, of course, substantial risks to acting on my prognostication. Many LPTV stations may be re-allocated out of existence with the upcoming TV spectrum auction. There will be substantial expenditures keeping a TV station on the air until substantial numbers of Mobile TV devices are in listeners? hands. Ultimately, there could be too many stations doing Mobile TV technology, and owning a TV station early may not represent an advantage for early adopters. And, of course, this OMVC Mobile TV technology could be one of tomorrow?s failed technologies.

But, if OMVC Mobile TV devices begin to proliferate in large numbers, I believe that has the potential to be an entirely new business platform for radio broadcasters. It will be an on-demand broadcasting platform that melds audio and video information, entertainment, and advertising content potentially delivered to an entire market population without data restrictions or service drop-outs. That on-demand audio, video, and graphic content delivery will very much be 21st century radio. 

John F. Garziglia is a Communications Law Attorney with Womble Carlyle Sandridge & Rice in Washington, DC and can be reached at (202) 857-4455 or jgarziglia@wcsr.com. Have a question for our "Ask The Attorney" feature? Send to edryan@radioink.com.

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(LEGAL) Keeping Your Rates Straight

11-2-2012

It's election time and that means a boon for advertising. But be careful with those rates. Sometimes, even when you act with all good intentions, things can go awry and you're faced with a moral decision. Fortunately, we have our resident legal expert John Garziglia to help you sort through just such dilemmas.

Radio Ink asks:  We just discovered we did not charge the lowest unit rate to a candidate running for local mayor. We did charge lowest unit rate to the incumbent mayor who won the election. Neither candidate knows. What should we do?

John Garziglia says:  If a candidate was entitled to the lowest unit charge for a class of time and was overcharged, the overcharge must be promptly refunded. 

 The FCC requires that stations periodically review their political time buys during the election season to determine whether refunds are required, and to issue any refunds promptly. The FCC expects stations to issue refunds to candidates before the election in order to allow candidates to maximize their campaign funds.

While a candidate may not be aware of an overcharge, the FCC requires broadcast stations to keep political files for two years. Therefore, anyone reviewing a station?s political file may see that one candidate was charged one rate for a particular class of time, and the opposing candidate was charged a different rate for the same class of time.

No station should wish to take the risk that an inspection of its local public file, by a member of the public or by an FCC inspector, would reveal an apparent lowest unit charge violation. The dollar amount of the overcharge to be refunded likely pales in comparison to what the station might spend defending itself at the FCC for failing to review political time buys and refund any overcharges.

With the election being just days away, now is the time for stations to review their political files for any overcharges. Charges in excess of the lowest unit charge can and do happen for a variety of reasons. For stations that sell broadcast time on an auction or quasi-auction basis, the lowest unit charge for a particular class of time will always be a moving target. Even for stations that try to hold rates, there is always the possibility of a particular class of time clearing at a lower rate than anticipated.

The FCC will take a dim view of any radio station that waits until after the election to identify and refund charges in excess of the lowest unit charge. Conversely, a station that does its review of political charges now, prior to the election, and immediately rebates or refunds overcharges will be doing exactly what the FCC expects of stations. 
Overcharges will happen. Radio stations are required to periodically review political time buys and immediately issue refunds for overcharges where required.

John F. Garziglia is a Communications Law Attorney with Womble Carlyle Sandridge & Rice in Washington, DC and can be reached at (202) 857-4455 or jgarziglia@wcsr.com. Have a question for our "Ask The Attorney" feature? Send to edryan@radioink.com.

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Entercom Makes Legal Move

11-1-2012

Entercom says General Counsel and Executive VP Jack Donlevie is retiring from the company in 2015 and will step down as General Counsel on January 1, 2013. Donlevie will stay on as Executive VP and continue to work full-time for Entercom, gradually scaling down his responsibilities until his retirement. Andrew Sutor, Entercom?s current VP and Corporate Counsel, will be promoted to Senior VP and General Counsel, effective January 1, 2013.

Donlevie joined Entercom in 1984 as Vice President-Legal and Administrative, serving in that position from 1984 to 1989. In 1989, he was promoted to his current position as Executive Vice President and General Counsel. At that time, he was also appointed as a director of Entercom?s Board. He earned a B.S. in Engineering from Drexel University and earned his J.D. from Temple University School of Law.

Prior to joining Entercom in 2002, Andrew Sutor was an associate in the Business Law Department of Saul Ewing, LLP, based in Philadelphia.  He has a J.D. from the Villanova University School of Law and a B.A. in both Economics and Political Science from the University of Pennsylvania.

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Google's Self Driving Cars Legal in California

9-25-2012

All Things D and CNN are reporting that California Governor Jerry Brown stopped by Google Tuesday to sign a bill that legalizes self-driving cars. The bill establishes safety guidelines and performance standards for autonomous vehicles operating on California?s roads and highways. Self-driving cars can now be tested on public roadways ? as long as a licensed human driver is seated at the wheel and able to take over in the event of a malfunction.

?Today we?re looking at science fiction becoming tomorrow?s reality,? Gov. Brown said. ?This self-driving car is another step forward in this long march of California pioneering the future and leading not just the country, but the whole world.?

Read the entire post at All Things D HERE

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(LEGAL) Giving Candidates Reasonable Access

9-14-2012

(by David Oxenford)

In recent days, on our blog, we?ve been writing about political broadcasting topics in anticipation of the November election. We provided a refresher on the basics of lowest unit charges on Monday, and equal opportunities on Wednesday.  Today, we?ll look at reasonable access ? how much time must stations sell to political candidates (or give to them if they would rather meet their obligations through free time, which few stations are willing to do).

Reasonable access requires broadcasters to make reasonable amounts of time available to candidates for Federal office ? in all classes and dayparts on all commercial broadcast stations (noncommercial stations were exempted by Congress about a decade ago when candidates started to demand free time on these stations). With the expected onslaught of political advertising coming up in most battleground states, stations fearful of having to devote all of their commercial time to election advertising wonder just how much time is reasonable?
The FCC leaves the determination as to what is ?reasonable? to the reasonable discretion of the station, as long as access is provided to all classes and dayparts on the station.  The discretion, though, is to be exercised in coordination with the political candidates themselves. For Federal candidates, stations should not put up-front limits (e.g. in a political rate card or on a political disclosure statement) as to how many spots they will sell to any Federal candidate in any specified period of time. Instead, stations are supposed to engage in a give and take with the candidate, accessing the candidate?s needs and desires and weighing them against the needs of the station to provide advertising to other clients.  After hearing the needs of the candidates, it is up to the station to reach a determination as to what is reasonable. If stations give candidates at least some access to all classes and dayparts on their stations, even if it is not as much as the candidate wants, stations have traditionally been given the benefit of the doubt by the FCC.

In assessing what is reasonable, stations can look at a number of factors. The factors include the number of other races in a station?s coverage area, the amount of time that the candidate has already purchased, the timing of the request, and the demands for time by other non-political advertisers. Thus, stations in a rural area that covers a single Congressional district may have obligations to provide more time to any single candidate than stations in a major metropolitan area, where there may be multiple Federal Congressional races each seeking access.  The amount of time that needs to be provided to any single candidate may also be less very close to the election, when the demand from other candidates is likely to be the greatest.  Stations do not need to provide wall-to-wall political advertising.
The only daypart where an exception is made is news - where the FCC has said that stations do not need to provide candidates access to their newscasts.  They can provide that access, or they can provide access only to certain portions of the newscasts.  This exception was provided as the FCC feared that some political ads could be confused with news content.  However, full-time news stations cannot use this exception to totally exempt themselves from reasonable access - as all broadcast stations have a statutory obligation to provide some access.  Nor can a company that owns a cluster of radio stations take Federal political ads on only certain stations.  While a station owner might think that a candidate may not really want to buy a particular music station, if the candidate demands access to that station, reasonable access must be provided even if the owner believes that the ads would be more appropriate on their news-talk station.  
It is a common misconception that candidates can come in and demand the exact time that they want for their ads ? getting placement on specific programs on specific days and even at specific times. In fact, stations have much discretion to direct candidate?s ads to times comparable to that requested by the candidates, and to manage access to particular programs on particular days, as long as the station, during the course of the election, accords some access to all classes and dayparts. By offering the candidate a spot in next week?s episode of a popular program if this week?s episode is sold out, or by placing the ad in a program that offers a similar audience, the obligation to the candidate can be met.
Like many other areas in political broadcasting, this is not an easy dance, and the devil is in the details, but with practice and diligence, a station can manage the process. One thing that makes the process somewhat easier is that state and local candidates do not have a right of reasonable access. As we have written before, while stations can afford time to state and local candidates (and, if they do, all other political rules apply including lowest unit rates and equal opportunities), stations do not have to provide such access. Stations can refuse to sell time to candidates in particular races (as long as they treat all candidates in the same race in the same way), while selling time to other state and local races.  Stations can also limit state and local candidates to specific days or dayparts, again with the caveat that all candidates for the same race are treated in the same way. As there is no right of access for state and local candidates, stations can establish up-front limits on the amount of time that they sell to these candidates -setting limits on the number of spots per day or per daypart that they will sell in particular state and local races. 
Next week in our series on the FCC's political broadcasting rules, we'll start with an article on the no censorship requirement, which will include an explanation of why we see so many ads making claims that we know are making claims that are simply not true.

David Oxenford represents broadcasting and digital media companies in connection with regulatory, transactional and intellectual property issues. He has represented broadcasters before the Federal Communications Commission, the courts and other government agencies for over 30 years. He regularly counsels clients on all aspects of broadcast law including the rules dealing with political broadcasting, multiple ownership, noncommercial broadcasting, technical operations and various aspects of content regulation.

Read David Oxenford's blog HERE

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(LEGAL) Phone Rules? Is There Any Flexibility?

8-30-2012

The FCC has been laying down hammer quite a bit lately when it comes to violating the telephone broadcast rule. We wanted to test the waters a bit with broadcast attorney John Garziglia to see if there was any flexibility with the rule. So we asked, "What if a caller is recorded (without their knowing), then, after the call, they are told it was recorded?" The caller says, "Okay fine, air it," which is also on tape. Then, the person files an FCC complaint.

John Garziglia says:  Fines issued by the FCC recently in the range of $16,000 to $25,000 for violating the FCC?s telephone broadcast rule certainly suggest that a refresher course in the rule may be in order. 

In a nutshell, the FCC?s telephone broadcast rule, Section 73.1206, requires an explicit  notification to the other party to the call, before either broadcasting, or recording a telephone conversation for later broadcast use. There is one exception to explicit notification, that being when the other party to the call may be aware or presumed to be aware from the circumstances of the telephone conversation that the call is, or is likely to be, broadcast. 

Let?s take up the exception first. Clearly, if the telephone call is to or from a station employee such as a newsperson phoning in a news story, prior notification to the newsperson is not required. But, if the newsperson is standing next to a news source and hands the cell phone to that source, and the source is put on the air without notification, it is possible that a violation of the FCC?s rule has occurred. Likewise, if a newsperson is calling local officials for actualities for later broadcast, a newsperson must inform the called party prior to initiating the recording of the call. 

Another exception is present for radio talk shows and request lines where the stated purpose of the telephone number is clearly for the broadcast of received telephone calls. A reasonable-person standard is used by the FCC.  Would a reasonable person expect that a telephone call to the telephone number may result in the telephone call being broadcast or recorded for later broadcast? A telephone call placed from a talk show or request line is not covered by the exception. 

So, what is not covered by the exception and what can subject a radio station to tens of thousands of dollars in FCC fines? Clearly, a contest run by many stations some years ago in which the public is advised to answer their phones ?I listen to WXXX? is not covered if the station expects to be able to broadcast the calls as they are placed. Nor are cold calls placed to contest winners, hoping to get the excited screams and gasps recorded and subsequently broadcast on the air. Even if the contest entry form advises entrants such a call might be made, there is no telling who will answer a winner?s telephone number. 

But, such benign calls are not usually the types that garner FCC complaints. Rather, most FCC telephone broadcast rule complaints involve telephone conversations that have the effect on the called or calling person of embarrassment, anger, or making the person appear to be an idiot. 

Thus, in a recent FCC rule violation, a call was broadcast by the station misrepresenting itself as a local hospital to a woman telling her that her husband had died in a motorcycle accident. Later in the call, the station informed the woman that the call was a "joke." Another fine was issued for a station call in which the morning personality broadcast a call pretended to be an intruder hiding under a called person?s bed, and a second call in which the personality pretended to be a loan shark collecting on a debt. Other FCC fines have been issued for radio stations calling competing radio stations and putting personnel from the competition on the air without their knowledge. The FCC did not see the humor in any of these calls.

It is also worth mentioning that state law may also cover the recording of telephone conversations. In a dozen or so states, if a telephone conversation is recorded even without an intention to broadcast it, all parties are required to consent, not just be notified. Each station should apprise itself of its own state law, as well as the FCC?s telephone broadcast rule, in formulating its internal policies on rolling tape (or whatever taping a call is now called in our digital age). 

With any FCC complaint proceeding, the process of responding to the FCC?s inquiry is often more expensive than the potential FCC fine levied. If the FCC receives what it deems to be a valid complaint, it will send a multi-page letter to the radio station asking for a stack of affidavits and documentary information. Failing to fully respond to the FCC?s letter is grounds for additional substantial fines, so an FCC licensee has no choice but to respond. 

Finally, in answer to Radio Ink?s question above, notification after recording is not compliance with the FCC?s rule, even if the other party to the conversation consents after-the-fact to the recording and broadcast. Also, recording the notification is also presumably not in accord with the FCC?s telephone broadcast rule as the rule prohibits recording until such notification is given, although a case might be made that a recording of the notification was not the ?recording of a telephone conversation for broadcast? as there was no intention of broadcasting the notification. For smaller station operations, it is false economy to share talk show, shopping show, or request line telephone numbers with general station business telephone numbers, as it is far too easy for a caller to be unintentionally put on the air in such circumstances. 

It is helpful to keep in mind that complaints filed with the FCC are often spurred by a member of the public who is embarrassed or insulted by the broadcast of a call. Thus, if your newsperson is going to call an official and get something other than a pabulum press release actuality, be certain your news person informs the called party in advance of the recording being made for possible broadcast. If you really want to risk allowing your personalities to do outgoing ?joke? phone calls, have a witness to each call who can swear under penalty of perjury that the called party was clearly informed that the call would be broadcast or recorded for later broadcast. Full compliance with the FCC?s telephone broadcast rule is usually the best way to avoid potential issues.

John F. Garziglia is a Communications Law Attorney with Womble Carlyle Sandridge & Rice in Washington, DC and can be reached at (202) 857-4455 or jgarziglia@wcsr.com. Have a question for our "Ask The Attorney" feature? Send to edryan@radioink.com.

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(DIGITAL) Avoid Legal Trouble And Get More Done

8-27-2012

I worked for CBS several years ago. I know just how hard they try to avoid legal trouble. So I can only imagine the [expletive deleted] storm that occurred internally, leading up to the $10K fine that the FCC levied on CBS?s Urban AC in Charlotte, WBAV. You can read broadcast attorney David Oxenford's analysis of the situation for Radio Ink here.

This news is certainly being circulated to radio staffs all over the country with the instructions to be extra-careful that we do what we say we?ll do when we run contests. Instead of adding to anyone?s workload, here?s how you can use your digital tools to simplify your workday when it comes to special content and events that you?re promoting on all your different platforms.

RULES POSTED ONLINE ARE THE ONLY RULES

Once you post the copy of your contest rules, make that the only copy you work with. If you have a special Web page for the contest (and you should), link to the rules from it. Produce the rules promo for on-air from the online rules, and make sure everyone who might need them has a link. That means don?t circulate a different document with the rules once they?re posted. Consider the rules at the website the only real rules.

WRITE LESS, LINK MORE IN EMAIL

WBAV got in trouble because the contest dates in email, on the website, and on-air didn?t all line up together. Let?s solve the email part right now: send out less-wordy emails. For the ?Carolina Cuties? contest that resulted in a fine, all you would say in your email is, ?Do you have Charlotte?s cutest baby? You could win blah-blah-blah and show off your kid on v1019.com. Learn how to enter and win ?Carolina Cuties? here.? The word ?here? is a link back to the special Web page you?ve already created for this contest. That Web page shows what you can win and how to enter, and has a link to the official rules. You?re centralizing the information, which means less of a chance of someone freelancing on important details.

By the way, a huge benefit of writing less and linking more in your email is that people then tend to open them up and read them more often!

WEEKLY FOCUS MEETING

I know, the last thing you want is another meeting. But this one will actually save you time throughout the week.
Hold a weekly half-hour focus meeting for those, and only those, who are your key content providers. Those are the people who really impact what happens on the air, on your website, and in social media. Keep the list as small, yet inclusive, as you can. Then, each week, run through the major topics you?re going to focus on in the coming week: contests, concerts, appearances, special programming, key personality show bits, whatever. Talk about how they fit together: ?We?ll announce this contest on Facebook and in email a day before we start promoting it on the air on Thursday. That means the Web page needs to be ready Tuesday morning so we can see it, and the promos need to be done by Wednesday. I?m writing the copy and I?ll have it to you later today.? Brainstorm, coordinate, and prioritize. It?s project management for all your content platforms, and this will focus everyone?s to-do list for the week, leading to less confusion and fewer sloppy mistakes all around.

Chris Miller has been a major-market PD in Atlanta, Portland and Cleveland. He now operates Chris Miller Digital, which he launched. Visit his website at www.chrismillerdigital.com.
Contact Chris via e-mail, chris@chrismillerdigital.com or 216-236-3955.

For more articles from Chris Miller go HERE.

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(LEGAL) Should You Care About TV's Public File Fight

7-13-2012

TV broadcasters are aggressively fighting the FCC's requirement that television station local public files be put online. Three days ago, the National Association of Broadcasters filed with the U.S. Court of Appeals seeking an injunction against the FCC to keep the August 2, 2012, effective date for such online posting from occurring.

The most significant argument that the NAB is making at the Court of Appeals is that the nationwide Internet publication of political lowest unit charge data will effectively transform the television advertising market by giving every advertiser and agency, as well as the competition, pricing information that will put television stations at a competitive disadvantage.

It can be expected that whatever happens with television station political files will sooner or later be applied to radio stations. Therefore, it is worth considering how the changes now about to come into effect for television stations could impact radio.

Much of the FCC's rationale for the television station local public file rule changes rest upon making it easier for the public to access information concerning its broadcasts. The FCC specifically notes the burden of having to visit a station's main studio in order to review local public files. 

If the FCC is going to change its local public file rules to require Internet posting, maybe it is also time for the FCC to review other mid-20th century regulatory anachronisms which place burdens upon both the public and broadcasters. Two such anachronisms immediately come to mind.

For instance, if the availability of the Internet is widespread enough for local public files, perhaps it is also time for the FCC to recognize that the Internet has become ? in the 21st century ? the primary source for seeking employment vacancy information, and recognize that broadcast stations using the Internet to distribute job vacancy information is sufficient for compliance with the FCC's EEO wide outreach requirements. Indeed, the FCC looks foolish in saying out of one side of its mouth that posting job vacancy information on the Internet fails to achieve wide dissemination, while proclaiming out of the other side that all local public file information must be posted on the Internet for easier access. Indeed, from the public's perspective, broadcast station job seekers would be far better served by having every radio station job opening posted on the Internet rather than having to rely on job vacancy information published in a "shopper" or thinly-read newspaper.

Additionally, it may be time for the FCC to recognize that requiring broadcast stations to have a main studio with two warm bodies during business hours serves no public interest purpose and is a regulatory dead weight on smaller broadcast station operations. In the 21st century, station personnel may be reached by telephone, cell phone, and email. Most radio station websites are visited far more frequently by the public than any physical main studio location. From the public's perspective, in our 21st century, a radio station's main studio with live bodies present during normal business hours has little benefit to the quality of programming presented.

But, back to the central issue of posting local public file material online, including the political file: The litigation brought by television broadcasters on this issue may dramatically change whatever the FCC eventually orders for radio. While broadcasters have acceded to date to depositing rate information into the physical public file knowing that rarely does anyone look at it other than competing political candidates, the posting of rate information on the Internet for anyone to see and collate is entirely different.

The NAB's court filing makes cogent anti-trust arguments against broadcast stations being required to post political rate information on the Internet. Whether the court will find these arguments persuasive will presumably be answered in the next several weeks, assuming that the court issues a decision prior to the August 2 commencement date for television station local public file postings. 

Past that, however, whichever way the court decides both the FCC and Congress need to consider whether it is in anyone's interest for just broadcast stations to post on the Internet the actual rates at which broadcast station time is sold. Or, put another way, if it is in the public interest for the amount of political dollars being spent on various media to be so posted, then all newspapers, magazines, billboards, websites, cable, and satellite should be likewise required to report political spending in the same way as broadcast stations. 

Sooner or later, broadcast stations will hopefully achieve First Amendment parity with other media which may result in the striking down of many of the current political broadcasting rules. If it is contrary to the First Amendment to make newspapers sell political space at a lowest unit charge, or to require newspapers to report advertising purchases by politicians and issue advocates, then it should be equally contrary to the First Amendment to require broadcast stations to do so.

Fore more articles from John Garziglia go HERE
You may also like David Oxenford's BLOG

John F. Garziglia is a Communications Law Attorney with Womble Carlyle Sandridge & Rice in Washington, DC and can be reached at (202) 857-4455 or jgarziglia@wcsr.com. Have a question for our "Ask The Attorney" feature? Send to edryan@radioink.com.

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(LEGAL) What Are Your Legal Liabilities of Internships?

Radio Ink asks:  What are the legal liabilities of a station for having internships, independent contractors, and the like, involved with the operations of a radio station...and how can a station protect itself from such liabilities?

John Garziglia says:  A discussion of interns and independent contractors raises a huge variety of both FCC and non-FCC issues for radio stations. Let's try to briefly go through the issues with the caveat that for confronting any of these issues, the advice of an experienced attorney or human resources person is the next step.

First, must interns be paid? The Fair Labor Standards Act has six criteria for identifying when an intern (usually called a "learner/trainee" rather than an intern) may be unpaid.

Those criteria for whether an intern must be paid include: whether the training is similar to a vocational school, whether the training is for the benefit of the intern, whether the intern displaces regular employees and works under the close observation of a regular employee, whether the employer derives an immediate advantage from the activities of the intern, whether the intern is entitled to a job at the conclusion of the internship, and whether the employer and intern understand that no wages are to be paid.  While not all six factors are equally considered,  generally the internship experience must look more like a training or learning experience than look like a job for an intern not to be paid.

It is also worth noting that while unpaid internships are common in the radio industry, the U.S. Department of Labor takes a narrow view on the issue of unpaid interns. Depending on what the intern does,  it is often difficult to make an airtight case that the internship qualifies as one that can be unpaid.

Past the issue of whether an intern is paid or unpaid, further issues arise as to whether an unpaid intern is covered under a station's workers' compensation insurance. Questions that can arise include whether it is advisable for unpaid interns to sign a hold-harmless agreement, an indemnity agreement, or a release of liability. Unpaid internships can also present issues of employment discrimination, harassment, ADA, wage and hour compliance, unemployment compensation, and other employment-related issues.

With independent contractors, the primary issue is whether the worker is actually that -- an independent contractor.  The more a relationship with a worker looks like an employer/employee relationship, the more likely it is that the relationship will be regarded as employer/employee by courts and taxing authorities.  

Some of the criteria used for determining if a worker is an independent contractor are:  is the worker required to follow specific instructions, are there a set number of hours to be worked, who supplies the equipment needed to accomplish the work, must the work be performed on the employer's premises, is the worker trained by the employer, is the work part of the employer's regular business, how long does the relationship last, can the employer assign additional projects to the worker, is the person paid in the same manner as employees, can the worker hire assistants, does the worker provide services to more than one unrelated entity, does the worker make his or her services available to the general public, is there a written contract delineating rights and responsibilities, can the relationship be terminated at will, and is the worker making any investment into facilities or equipment and will the worker realize a profit or have a risk of loss? 

While none of these criteria as to whether a worker is an independent contractor standing alone are definitive in and of themselves, they usually do point in one direction or another.  For instance, at one end of the spectrum is a radio station's "contract engineer" who divvies up his or her time among a dozen or so different station groups, brings along his or her own tools, and is paid by the project. The station's contract engineer under these circumstances is almost certainly an independent contractor. On the other end of the spectrum, a station's engineer who works only for that radio station, is supplied tools by the radio station and is paid on an hourly or weekly basis, is almost certainly not an independent contractor. 

Regarding a worker as an "intern" or as an "independent contractor" can also have FCC ramifications. The FCC's EEO rule is fairly specific in that any worker in a position whose regular work schedule is 30 or more hours per week working for the station is to be regarded as a full-time employee for EEO wide outreach and record-keeping purposes. While there is not much FCC case law on the dividing line between interns, independent contractors and full-time employees, there will be great FCC woes to the station owner that tries to game the system by disregarding interns and independent contractors who would otherwise be in positions of full-time employment. The FCC will take a dim view of any radio station that regards those who should be full-time employees as either independent contractors or interns in order to evade the FCC's EEO wide outreach responsibilities.

There are tax ramifications for incorrectly regarding a worker as an unpaid intern or an independent contractor. John Pueschel, my law firm's labor and employment guru, warns that "right now, state labor and tax departments are paying a lot of attention to this issue. Due to the tax revenues created by the employment relationship (which are avoided in the contractor relationship), in many places, labor departments and taxing authorities are working together to investigate these contractor arrangements and recover unpaid wages and taxes."

John advises that when either unpaid interns or independent contractors are brought on board, there should be appropriate documentation (an offer letter, internship agreement, or contractor agreement, for instance) so that both parties acknowledge the nature and terms of the relationship. The documentation will be valuable if the relationship is ever challenged in a court or an administrative action.

There are also a variety of other significant issues that can arise. Consider, for instance, the required coverage the radio station enjoys with workman's compensation insurance, and whether the station wishes to be without that umbrella of protection if an independent contractor or unpaid intern gets horribly injured on the job. Or consider the gray areas that arise if a young unpaid intern is harassed or molested on the station's premises since the station's liability insurance may not cover claims made by an unpaid intern.

The closing thought is that the use of unpaid interns or independent contractors as workers at a radio station to do duties that otherwise would likely be performed by regular employees should be carefully considered by radio station managers and owners. Before any such workers are brought on board, knowledgeable legal and human resources advisors should be consulted to be sure that the radio station is not engaging in either questionable hiring practices, or an activity that could subject station ownership to significant unintended consequences or liabilities.  For specific advice in this area, John Pueschel of my firm can be reached at (336) 721-3726.

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(LEGAL) What Are Your Legal Liabilities of Internships?

Radio Ink asks:  What are the legal liabilities of a station for having internships, independent contractors, and the like, involved with the operations of a radio station...and how can a station protect itself from such liabilities?

John Garziglia says:  A discussion of interns and independent contractors raises a huge variety of both FCC and non-FCC issues for radio stations. Let's try to briefly go through the issues with the caveat that for confronting any of these issues, the advice of an experienced attorney or human resources person is the next step.

First, must interns be paid? The Fair Labor Standards Act has six criteria for identifying when an intern (usually called a "learner/trainee" rather than an intern) may be unpaid.

Those criteria for whether an intern must be paid include: whether the training is similar to a vocational school, whether the training is for the benefit of the intern, whether the intern displaces regular employees and works under the close observation of a regular employee, whether the employer derives an immediate advantage from the activities of the intern, whether the intern is entitled to a job at the conclusion of the internship, and whether the employer and intern understand that no wages are to be paid.  While not all six factors are equally considered,  generally the internship experience must look more like a training or learning experience than look like a job for an intern not to be paid.

It is also worth noting that while unpaid internships are common in the radio industry, the U.S. Department of Labor takes a narrow view on the issue of unpaid interns. Depending on what the intern does,  it is often difficult to make an airtight case that the internship qualifies as one that can be unpaid.

Past the issue of whether an intern is paid or unpaid, further issues arise as to whether an unpaid intern is covered under a station's workers' compensation insurance. Questions that can arise include whether it is advisable for unpaid interns to sign a hold-harmless agreement, an indemnity agreement, or a release of liability. Unpaid internships can also present issues of employment discrimination, harassment, ADA, wage and hour compliance, unemployment compensation, and other employment-related issues.

With independent contractors, the primary issue is whether the worker is actually that -- an independent contractor.  The more a relationship with a worker looks like an employer/employee relationship, the more likely it is that the relationship will be regarded as employer/employee by courts and taxing authorities.  

Some of the criteria used for determining if a worker is an independent contractor are:  is the worker required to follow specific instructions, are there a set number of hours to be worked, who supplies the equipment needed to accomplish the work, must the work be performed on the employer's premises, is the worker trained by the employer, is the work part of the employer's regular business, how long does the relationship last, can the employer assign additional projects to the worker, is the person paid in the same manner as employees, can the worker hire assistants, does the worker provide services to more than one unrelated entity, does the worker make his or her services available to the general public, is there a written contract delineating rights and responsibilities, can the relationship be terminated at will, and is the worker making any investment into facilities or equipment and will the worker realize a profit or have a risk of loss? 

While none of these criteria as to whether a worker is an independent contractor standing alone are definitive in and of themselves, they usually do point in one direction or another.  For instance, at one end of the spectrum is a radio station's "contract engineer" who divvies up his or her time among a dozen or so different station groups, brings along his or her own tools, and is paid by the project. The station's contract engineer under these circumstances is almost certainly an independent contractor. On the other end of the spectrum, a station's engineer who works only for that radio station, is supplied tools by the radio station and is paid on an hourly or weekly basis, is almost certainly not an independent contractor. 

Regarding a worker as an "intern" or as an "independent contractor" can also have FCC ramifications. The FCC's EEO rule is fairly specific in that any worker in a position whose regular work schedule is 30 or more hours per week working for the station is to be regarded as a full-time employee for EEO wide outreach and record-keeping purposes. While there is not much FCC case law on the dividing line between interns, independent contractors and full-time employees, there will be great FCC woes to the station owner that tries to game the system by disregarding interns and independent contractors who would otherwise be in positions of full-time employment. The FCC will take a dim view of any radio station that regards those who should be full-time employees as either independent contractors or interns in order to evade the FCC's EEO wide outreach responsibilities.

There are tax ramifications for incorrectly regarding a worker as an unpaid intern or an independent contractor. John Pueschel, my law firm's labor and employment guru, warns that "right now, state labor and tax departments are paying a lot of attention to this issue. Due to the tax revenues created by the employment relationship (which are avoided in the contractor relationship), in many places, labor departments and taxing authorities are working together to investigate these contractor arrangements and recover unpaid wages and taxes."

John advises that when either unpaid interns or independent contractors are brought on board, there should be appropriate documentation (an offer letter, internship agreement, or contractor agreement, for instance) so that both parties acknowledge the nature and terms of the relationship. The documentation will be valuable if the relationship is ever challenged in a court or an administrative action.

There are also a variety of other significant issues that can arise. Consider, for instance, the required coverage the radio station enjoys with workman's compensation insurance, and whether the station wishes to be without that umbrella of protection if an independent contractor or unpaid intern gets horribly injured on the job. Or consider the gray areas that arise if a young unpaid intern is harassed or molested on the station's premises since the station's liability insurance may not cover claims made by an unpaid intern.

The closing thought is that the use of unpaid interns or independent contractors as workers at a radio station to do duties that otherwise would likely be performed by regular employees should be carefully considered by radio station managers and owners. Before any such workers are brought on board, knowledgeable legal and human resources advisors should be consulted to be sure that the radio station is not engaging in either questionable hiring practices, or an activity that could subject station ownership to significant unintended consequences or liabilities.  For specific advice in this area, John Pueschel of my firm can be reached at (336) 721-3726.

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(LEGAL) What if Your Headline Act Bails?

6-7-2012

Garziglia says:

For this question, I turned to Bernard Coleman, an attorney in my law firm who has the really fun job of representing musicians, producers, recording artists and everything related to the music industry (actually, he has the second best job as a lawyer ? representing broadcasters remains the best lawyer job!)

Bernard predictably observes that the issues raised by Niki Minaj cancelling out of Summer Jam can impact radio stations as either concert promoters or sponsors. Bernard tells me that, in order to limit liability when an artist or performer becomes a no-show, consider taking the following precautions:

First, always include contract terms that specifically address cancellations. When a listener purchases a ticket for an event, he or she enters into a contract with the seller of the ticket.  The law allows for parties to a contract generally to negotiate a contract?s terms.  Include any terms important to your radio station in the contract. 

Contract terms can be written on the ticket itself.  Take a look at the back of any sports event ticket and you will see fine print.  The terms are generally valid as long as they are conspicuous to the buyer at the time of sale. 

By purchasing a ticket, a listener agrees to the terms of sale. The law will generally honor the terms as written on the ticket.  nclude on the ticket all terms that you want to enforce. Simple phrases such as ?date and time subject to change?, ?radio station not responsible for cancelation of event?, ?event may be canceled or postponed by promoter, team, band, or venue?, ?no refunds?, or ?refunds will only be issued in the event that . . .? will help a radio station limit its liability in the event that the concert or event needs to be cancelled or postponed. 

If tickets are being sold by a third-party vendor (like Ticketmaster), be sure you are aware of the third-party vendor?s terms and conditions of use. Courts have upheld vendor?s terms, regardless of whether the customer actually read them, as long as the terms and conditions were conspicuous at the time of purchase. Therefore, before choosing a third-party vendor to sell tickets to a station event, review their terms and conditions to ensure that they protect the stations? interests.

Second, when scheduling multiple performers for the same concert, event or festival, state that artists are subject to change.  Just like with terms pertaining to cancellation, include terms on the ticket that address the possibility that an artist may not show up and must be replaced.  For instance, include the simple phrase ?artists subject to change? on the ticket and all promotions and advertisements. Therefore, the purchaser of the ticket is agreeing to purchase the ticket with the knowledge that there is no guarantee as to who may perform.

Third, be knowledgeable about the laws and requirements in your state.  Each state has different laws pertaining to the sale of tickets for events and concerts. For example, New York law requires that all advance proceeds from the sale of tickets to entertainment events be held in an escrow account and that, with some exceptions, each ticket purchaser is entitled to a refund of his or her ticket price in the event that the concert or show is cancelled or rescheduled. This may or may not be the law in your state. If you are unsure about your state?s requirements, contact a local business or entertainment attorney. 

Finally, purchase contingency insurance in addition to general liability insurance. Several risk management companies, such as Aon Risk Solutions, offer contingency insurance that will transfer the risk of unforeseen events from you to them. Contingency coverage policies can include protection from the impact that adverse weather may have on revenue sources such as parking, concession stand and food sales and attendance, and expenses related to the cancellation, postponement or abandonment of an event.  

As a sports and entertainment attorney, Bernard has the perspective of artists and performers in questions that arise such as the Niki Minaj cancellation. With any big event, hope for resounding success but at the same time prepare for the worst.  Bernard can be reached in my Atlanta office at (404) 962-7576.

John F. Garziglia is a Communications Law Attorney with Womble Carlyle Sandridge & Rice in Washington, DC and can be reached at (202) 857-4455 or jgarziglia@wcsr.com. Have a question for our "Ask The Attorney" feature? Send to edryan@radioink.com.

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(LEGAL) What Are The Rules on Spirits Advertising?

There was a time that beer was the only alcoholic beverage being advertised anywhere. Now, you see alcohol of all kinds being advertised everywhere. That prompted a GM to send us a question about the rules to advertise spirits. Are there any anymore? Do you have to watch what you say in an ad? Here's broadcast attorney John Garziglia with the answer.

John Garziglia:
Surprisingly, there are no federal regulations on beer, wine and liquor radio advertising.  The broadcasting industry and the sellers of alcoholic beverages themselves largely self-regulate such advertising.  

The Federal Communications Commission has no alcoholic beverage advertising rules or regulations other than the rules that apply to all advertising such that there must be accurate sponsorship identification.  For instance, when it is the local beer distributor running spots rather than the brewery itself, a sponsorship ID tag is often required at the end of the produced spot for an accurate sponsorship identification.

Until the early 1980s when it was eliminated as a potential restraint on trade, the broadcasting industry through the NAB code had in its standard of good practices a prohibition on the advertising of hard liquor for member stations.  On the advertiser side, in 2003 the Beer Institute imposed self-regulation with a commitment not to broadcast advertising in any radio program in which 30% or more of the audience is under the age of 21.

The Beer Institute self-regulation is the responsibility of advertiser and not radio stations.  There would be no direct FCC regulatory ramifications from a radio station taking alcoholic beverage advertising even if its audience was predominately under 21. 

As with any advertising, radio stations must remain aware of state and local laws.  In the area of alcoholic beverage sales and consumption, the United States continues with a patchwork of state and local laws mostly directed at the advertiser.  Some of these restrictions, such as bans on happy hour ads, may impact how beer, wine and liquor may be advertised in a particular locality.

It is worth noting that alcohol consumption and tragedies often go hand-in-hand.  As with any advertising, if a horrible event was to occur and somehow a claim could be made that pervasive or reckless radio advertising of an intoxicating product, particularly to underage or vulnerable persons, was done by a deep-pockets broadcaster without regard for consequences, a radio station could find itself defending a lawsuit no matter how meritless such a lawsuit might ultimately be determined to be. 

Finally, it must be mentioned that any kind of significant advertising of products generally viewed as harmful by a portion of the population might form the basis for an FCC objection at license renewal time.  While it is doubtful that such an objection would do anything more than delay the grant of a radio station license renewal application, having the objection filed and answering it is likely something radio stations would rather avoid.

Therefore, to the extent that advertising is run that the public thinks should be limited, a radio station does take a risk that, at license renewal time, members of the public or public interest groups, will voice their opinions to the FCC.  While it is unlikely that beer or wine advertising on a professional team sports show would inspire such objections, running beer commercials in a high school sports broadcast or commercials for alcohol beverages that are marketed to a younger demographic, could provoke such license renewal objections.  Thus, just because there are no specific FCC restrictions, that does not mean that some restraint by radio stations in the running of alcoholic beverage advertising is imprudent.

Fore more articles from John Garziglia go HERE
You may also like David Oxenford's BLOG

John F. Garziglia is a Communications Law Attorney with Womble Carlyle Sandridge & Rice in Washington, DC and can be reached at (202) 857-4455 or jgarziglia@wcsr.com. Have a question for our "Ask The Attorney" feature? Send to edryan@radioink.com.

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(LEGAL) Recording Calls Is No Joke To FCC

A message was sent by the FCC last week that even recording telephone conversations that do not air are subject to a fine if the caller does not know, before the recording begins, that he or she is being taped. The FCC has proposed to a $2,000 fine for WWEG-FM in Hagerstown. Back in May of 2011, morning team Phil and Arianna made a call with the tape recorder running. Here's attorney David Oxenford's take on the matter.

According to the Notice of Apparent Liability issued by the FCC, the recording was stopped after the radio station announcers identified who they were, and the person who was called said that he did not want to be recorded.  What was taped was essentially the station employees calling the individual and saying hello, saying that they were from the radio station, telling the individual that he was being recorded, and the individual telling the employees to stop recording -- which they immediately did. The recording was ended before anything substantive was said, and it was never broadcast on the air.

Nevertheless, the station was fined $2,000 because these initial stages of the conversation were recorded with the intent to use the recording on the air. According to the Commission, the FCC's rules require that when a conversation is either broadcast on the air, or recorded for purposes of broadcast, the consent of the person being recorded must be obtained before the tape starts rolling. As with an over-the-air broadcast, if the tape is running when the person being called by the station says "hello," in the Commission's view, the station has violated the rule -- even if the tape is never used.
The station argued that this position makes the recording of telephone conversations not very entertaining, as the greetings and introductory comments in any call have to be done twice -- once before the tape starts and a second time after approval for the recording has been obtained. The FCC adopted this rule about 30 years ago, even though many states allow the recording of a telephone call as long as one party to the call consents to the recording.

Seemingly, the FCC's rule even makes recording for news purposes by the station more cumbersome, as consent needs to be obtained before any recording is done (see the case we wrote about last year, where the Commission held that the taping of a call without permission, even in the context of the discussion of a public issue, was impermissible). The fine imposed in this case makes very clear that the Commission remains ready to enforce this rule whenever a complaint is filed.

Oxenford is a partner in Davis Wright Tremaine's Washington, D.C. office. He has represented broadcasters for over 25 years on a wide array of matters from purchases and sales of broadcast properties, and the negotiation of programming agreements, to regulatory matters.

Read his blog HERE

(5/21/2012 8:55:50 AM)
1) Why does the FCC even have this power?
2) Has anyone ever heard of the TV show "Off Thier Rockers", "Candid Camera", "Punked"? All recorded with intent to broadcast before consent.
3) Newspaper, magazine / written media, you never know when you're on the record or off!
4) Most states require that only one person needs to know that their conversation is being recorded. Why is there disparady between federal and state? (Money in the form of fines?)
5) Let's stop these fund raisers. Time to get before congress and fix this broken machine.

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(LEGAL) RMLC Settles With BMI. Where's SESAC?

The Radio Music Licensing Committee has announced a settlement with BMI over music royalties for the public performance of musical compositions for the period 2010-2016. Terms have not been announced, so we can't provide the details, yet. But as we wrote recently, when the RMLC announced the terms of its agreement with ASCAP, we would assume that the terms would be somewhat similar to the ASCAP deal. If no settlement had been reached with BMI, the case would have gone to a "rate court," in Federal District Court, to see what the fair market value of the performance right was.

As analogous rates often form the basis for rate court determinations of fair market value, the settlement with ASCAP would no doubt have been an issue for BMI, as it would appear to set a benchmark rate for the public performance of musical compositions. However, we will have to wait to see what the filings say before we can determine if, for sure, the rates will decrease relative to prior rates to the same extent that they did for ASCAP.It is worth reflecting on how RMLC came to reach deals with ASCAP and BMI, and to explain why there is no reference to a SESAC deal. I've already heard several people suggesting that an agreement with SESAC may be next -- when in fact that is not something that is imminent, as can be explained by the differences between ASCAP and BMI on one hand, and SESAC on the other.

ASCAP and BMI are both governed by anti-trust consent decrees that have been in place for over 50 years. Under both decrees, these organizations have to enter into agreements to set royalties for all similarly-situated users of music in various categories of businesses -- categories including radio, TV, websites, background music, restaurants, bars, hotels, performance venues, and practically every other place where music is performed for the public. If no agreement can be reached on a voluntary license, a "rate court" decides on the royalties. Essentially, that means that a US District Court in New York has a trial to set the rates. Both ASCAP and BMI had agreements in place with the radio industry that expired at the end of 2009. Negotiations with the RMLC have been ongoing since the last agreements expired (see our article here). The settlement just announced with BMI, and that announced a few months ago with ASCAP, were voluntary agreements to avoid the rate court proceeding. Such proceedings can be very expensive, take a long time and, as with any litigation, the outcome can be unpredictable.

SESAC, on the other hand, has never been subject to any antitrust consent decrees. They were never thought to be large enough to merit antitrust scrutiny. While some TV stations have brought an antitrust action against SESAC, seeking to have some kind of relief from what the TV stations claim is prohibited collusive behavior, that case is still progressing, will likely take a long time and, like any litigation, the outcome is uncertain.

Unless and until some court rules otherwise, SESAC is not subject to any rate review. They are a for-profit company. And like any for-profit company, they can negotiate rates and charge essentially what they want for their product. Like any other commercial transaction, stations can decide not to play SESAC music, and not pay them. But if they play any SESAC music, and don't have a direct license from the publisher for the rights to use the music, they need to get an agreement with SESAC. While SESAC has general licenses for broadcasters, and most pay roughly the same amounts, as this is a commercial transaction, the deals can be negotiated by the user and by SESAC to fit particular circumstances. And SESAC tends to charge separately for streaming, HD, and other music uses, so there may be some opportunity to negotiate blanket deals covering all of these services. But their rates are currently up to them, not subject to court review. See our article here for more information about SESAC.

But, for now, and the foreseeable future, SESAC is not likely to be "next" for the radio industry. As for BMI and radio, we should see what the rates are in a few weeks.

David Oxenford is a partner in Davis Wright Tremaine's Washington, D.C., office. He has represented broadcasters for over 25 years on a wide array of matters, from purchases and sales of broadcast properties and the negotiation of programming agreements, to regulatory matters. His regulatory expertise includes all areas of broadcast law including the FCC's multiple ownership limitations, the political broadcasting rules, EEO policy, advertising issues, and other programming matters. He also represents webcasters and other digital media companies, including serving as counsel to a webcast trade association, and representing Internet radio companies on copyright, music licensing, and other issues.

Oxenford is a partner in Davis Wright Tremaine's Washington, DC office. He has represented broadcasters for over 25 years on a wide array of matters from purchases and sales of broadcast properties and the negotiation of programming agreements to regulatory matters.

Read his blog HERE

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(LEGAL) Do You Need File Political Rates Online?

4-19-2012

There's a lot of discussion between TV and the government about political rates and filing those rates online with a TV station's public file. TV is worried about posting the rates for everyone to see and their is also concern about the possibility of collusion. So we asked broadcast attorney John Garziglia the following question: What should radio stations know about getting political rate information in an online public file?

The FCC?s upcoming anticipated rule change for television stations to post online the station?s political file, including the rates at which political ads were sold, was a significant subject of discussion at the just concluded NAB convention. 

The FCC is expected at its upcoming April 27, 2012 meeting to issue new television local public file requirements.  The new TV regulations are expected to require the information in a TV station?s local public file that is not now already available on the FCC?s website be uploaded to the FCC?s website, rather than being kept in a paper local public file at the station?s main studio. 

Of particular concern to TV broadcasters is the anticipated FCC requirement for an online disclosure of rate information.  Broadcasters are concerned that posting the lowest unit charges at which political time is sold will enable a compilation of commercially sensitive rate information which will adversely affect the television advertising marketplace.  Indeed, advertisers having access to a database of what is the lowest unit charge for each station?s classes of time cannot do anything other than artificially fix rates and distort the marketplace as the reported rates will fail to reflect quantity purchases as a metric of price. 

Thankfully, at least for now and likely for the upcoming election season, online political files are a television issue, not a radio issue.  While it is likely that sooner or later, the FCC will require that radio broadcasters likewise put radio local public files online, for now, there is now no requirement to do so.  There is likewise no restriction against a radio station putting its local public file online if desired, provided that a computer terminal is made available by which members of the public may access that online political file. 

As the political season amps up and radio stations hopefully enjoy some of the political ad dollars that will be spent by candidates and political action committees, it is useful to review some of the FCC?s political file requirements.  First of all, the FCC expects that radio stations will immediately put into a station?s political file all requests made for political broadcast time.  Although the FCC has not defined precisely what ?immediately? means, with the time for opposing candidates to request equal opportunities being seven days, immediately likely means the same day of the candidate ad buy or request for time, or first thing the next morning at the very latest. 

The information required to be immediately put into the political file regarding requests for political time includes the station?s disposition of the request, the charge for broadcast time, the scheduling of the spots, when spots are actually broadcast, the class of time purchased, the candidate?s name, his or her authorized committee name and treasurer?s name.  Similar information for issue ads relating to any political matter of national importance must also be put into the station?s political file, along with the name and contact information for the purchaser, and a listing of its chief executive officers, or a listing of its executive committee or board members as may be applicable.  

While the FCC does not expect that a simple request for rates by a political time buyer be put into the political file, if an inquiry by a candidate?s representative includes a request for available time, that inquiry is probably required to be put into the local public file.  
The public?s knowledge of the existence of a radio station?s local public file has been heightened over the past several months with an encouragement by some public interest groups for members of the public to review a station?s local public file.  The public?s awareness will be raised even more upon the FCC?s anticipated April 27th rule change for TV stations.  Therefore, it is prudent for radio station management to review now with staff its local public file procedures and in particular, procedures for the station?s political file.  If you need to know more about the FCC?s political broadcast regulations, a complete political law manual is available for review, download and printing at www.commlaw.com.

Fore more articles from John Garziglia go HERE
You may also like David Oxenford's BLOG

John F. Garziglia is a Communications Law Attorney with Womble Carlyle Sandridge & Rice in Washington, DC and can be reached at (202) 857-4455 or jgarziglia@wcsr.com. Have a question for our "Ask The Attorney" feature? Send to edryan@radioink.com.

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