This Week in Regulation for Broadcasters:  October 28, 2024 to November 1, 2024

Here are some of the regulatory developments of significance to broadcasters from the past week, with links to where you can go to find more information as to how these actions may affect your operations.

• In a Press Release dated November 1, the Radio Music License Committee announced that its arbitration with SESAC over royalty rates for commercial radio stations resulted in a modest increase in royalties.  The royalites for the period January 1, 2023 through December 31, 2026 will increase from .2557% of revenue to .2824%.  The RMLC considers this a “win” as the decision rejected SESAC’s proposal to almost double its rates.  According to the press release, SESAC’s proposal for an increase was based “upon licenses secured by other licensors of music rights, both in and outside of the broadcast radio space.”  This presumably means that the arbitrators rejected proposals to use GMR rates as a benchmark for those of SESAC. With proceedings to determine the ASCAP and BMI royalties pending, the rejection of the GMR rates as a standard may be an important precedent.  The modest increase in SESAC’s fees is retroactive to January 1, 2023, so all licensees can expect a “true-up” payment for the higher rates when all details of the new license are finalized.  Look for more details on the implementation of the new rates in the near future. 
• The FCC released a draft Order to be considered at its next monthly Open Meeting on November 21 to establish final rules for FM booster stations to originate a limited amount of program content.  In April, the FCC approved “geocasting” or “zonecasting,” allowing up to 3 minutes per hour of programming on boosters for news, advertising, or other content different than that on the primary station (see our article here).  Currently, such operations are allowed only through experimental authorizations but, if this draft Order is adopted, the process will be simplified, not requiring prior approval but instead only requiring that FM broadcasters notify the FCC, using a form to be developed by the FCC’s Media Bureau, of their intention to begin program origination on an authorized booster 15 days before that operation begins.  The draft Order also adds rules formalizing other restrictions that were adopted in the FCC’s April order – including capping the number of originating boosters that a single FM or LPFM station can operate at 25 and extending the FCC’s political advertising and political file requirements to originating boosters.  
• A petition for reconsideration was filed against the FCC’s September grant of the applications approving Audacy’s ownership reorganization which allowed it to emerge from bankruptcy (see our discussion here).  The petitioner argues that the FCC failed to explain how waiving its foreign ownership rules to expedite Audacy’s emergence from bankruptcy was in the public interest. 
  • Chairwoman Rosenworcel responded (here and here) to further Congressional inquiries (here and here) about the FCC’s approval of the Audacy’s recent transfer of control.  The Chairwoman again explained that Audacy’s post-bankruptcy foreign interests did not require prior FCC approval because those interests were warrants conveying no ownership or voting rights until they are exercised, and the exercise cannot happen until FCC approval.  The Chairwoman explained that this procedure was the same as that used in several other broadcast bankruptcies approved by the FCC in recent years (including those of iHeart, Cumulus, and Alpha).   
  • Audacy filed its petition for declaratory ruling seeking approval for those foreign investors to hold up to a 49.99% interest in the company (though they currently hold only about 27%).  In granting the Audacy applications, the FCC required Audacy to file this petition within 30 days of the company’s emergence from bankruptcy.  Audacy states in the petition that foreign individuals and entities will hold only minority ownership interests in Audacy once their warrants are exercised, and that a U.S.-based corporation will remain the company’s single majority shareholder.    
• A Florida federal court extended by 14 days its temporary restraining order barring the Florida state government from threatening TV stations over political ads relating to a state ballot issue.  As we discussed here, here, and here, the Court blocked the Florida state government from threatening broadcast stations with criminal prosecution for running political ads supporting an amendment to the Florida Constitution to protect abortion rights, finding these threats violated the stations’ First Amendment rights.  The restraining order was set to expire on October 29 but was extended while the Court ruled on a separate request for a preliminary injunction to bar such threats. 
• The FCC announced the tentative selectees in four groups of mutually exclusive applications (applications that cannot all be granted consistent with the FCC’s technical rules) for noncommercial educational FM station construction permits filed during the November 2021 filing window.  The FCC previously determined the tentative selectees in 3 groups under its points system analysis, but needed to reassess its prior selections after objections were filed against the tentative selectees, and it needed to reassess another when the group’s tentative selectee withdrew its application.  In this week’s decision, the FCC found that, in two groups, there were two tentative selectees tied in the point system analysis, and it gave the tied applicants 90 days to propose a time-sharing arrangement to share use of the channel, or the FCC would impose one.  The FCC selected new tentative selectees for the other two groups. 

On our Broadcast Law Blog, we highlighted  the upcoming regulatory dates and deadlines affecting broadcasters in November and early December.