This is an article from Radio Business Report from October 7, 2009. I wish I had invested in some of the winners!

Bigger picture, maybe this means lenders will be coming back, and so will advertisers. Here’s hoping!

Posted by: cinnamonlaw | May 16, 2009

“Performance Tax” for Radio Closer to Reality

The battle between performing artists and radio station owners intensified this week when the House Judiciary Committee voted 21-9 in favor of sending the Performance Rights Act to the full House of Representatives for a vote.  That bill would, according to Open Congress, impose a flat fee in lieu of payment of royalties for radio stations with less that $1.25 million in annual gross revenues.  PC Magazine reports the sliding fee scale would be as follows: $500 payment per year for stations making less that $100,000; $2,500 for stations making between $100,000 and less than $500,000 and $5,000 for stations making between $500,000 and less than $1.25 million.  Stations $1.25 million or more will have to negotiate a separate deal with the Copyright Royalty Board.   These fees will be in addition to the fees radio stations already pay to ASCAP, SESAC and BMI.  Radio and Records offered a wonderful summary of the debate among the Members of Congress who debated the measure.

As one might imagine, the NAB is opposed to the measure and the RIAA is in favor.  The most interesting thing for me is to note how the tables have turned over the course of  time.  Record labels and their artists have used radio stations to boost sales since radio was invented.  “Payola”, the illegal practice of compensating radio stations for playing certain songs, was rampant.  Record companies understood that more airplay over radio invariably led to the sale of more records.  And in terms of places to get your recordings promoted, radio was the only game in town.

Fast forward to the age of computers, satellite and internet, and RIAA is betting that the dynamic has changed.  RIAA believes it no longer needs radio to promote artists and their recordings, so it is looking to destroy the symbiotic relationship between artists and radio stations by charging radio stations to play music (over and above the ASCAP, BMI and SESAC fees stations already pay).

The folks at Techdirt summed this up nicely:

“[T]he most damning argument against the recording industry’s demand for money here is the fact that, for decades, the industry has (illegally) had the money go in the other direction. The system of payola has shown, quite clearly, how much the recording industry values airtime, in that it’s willing to pay radio stations to play its music.

So, can anyone explain why it’s illegal for record labels to pay radio stations to play music, but it’s okay for Congress to force radio stations to pay the record labels for playing their music? It defies common sense.”

For radio stations, this could not come at a worse time.  Advertising revenues are down, cash for upgrades for station improvements or to purchase or sell stations is very tight.  The NAB is not taking this lightly and has set up its own webiste in opposition to the performance tax.  The radio industry has had to beat back teh performance tax questions before, but it seems to have more momentum this time.  How many stations in smaller cities and towns would turn to “all talk” because of the econimic impact (or maybe just the principle) of this new tax?  I hope we don’t have to find out.

Posted by: cinnamonlaw | May 14, 2009

FM Application Freeze in Preparation for Sept. 2009 Auction

Effective immediately, the FCC will not accept applications or petitions for rule making or counterproposals in rule makings that propose to modify the reference coordinates of any of the 122 allotments that will be in play during Auction 79 which is scheduled to start on September 1, 2009.   This freeze will automatically end the day after the long-form filing deadline for successful bidders in Auction 79.

In addition, the FCC will not accept ANY FM minor modification applications during the short-form (FCC Form 175) application filing window for Auction 79 which is scheduled to run between June 16, 2009 and June 25, 2009.

A copy of the text of the FCC’s Public Notice can be found here.

Posted by: cinnamonlaw | May 14, 2009

The Story of the “Fleeting Expletive”

The Radio Act of 1927 (the precursor to the Communications Act of 1934) provided that “No person within the jurisdiction of the United States shall utter any obscene, indecent, or profane language by means of radio communications.”  At that time, AM radio was the only means of “broadcasting” available.  FM radio, television, cable TV, satellite TV and satellite radio and the myriad of programming choices they provide were not part of the equation when that law was enacted.

Defining what language should be prohibited from broadcast  has been a challenge.  The late George Carlin started a firestorm in the 1970s when his “Seven Dirty Words” monologue was aired over a radio station owned by the Pacifica Foundation.   The FCC issued a determination that the language in Carlin’s monologue was indecent, and any future broadcasts of that kind of language would be subject to sanctions.  Pacifica took legal action, claiming the First Amendment protected Carlin’s monologue, but the Supreme Court disagreed and sided with the FCC.  Congress clarified that the prohibition against indecent speech applied only between the hours of 6 a.m. and 10 p.m.  TheFCC really only pursued action against broadcasters who used such language in a willful or repeated manner inside the forbidden window when children were most likely to be listening.

After receiving complaints about certain award show broadcasts where celebrities were caught on camera uttering a single expletive, the Commission changed its policy and decided that even isolated single word utterances (i.e., “fleeting expletives”) would be actionable  and subject to Commission sanctions.  Broadcasters headed to court once again to challenge the FCC’s position.  The case ended up in the Supreme Court as FCC v. Fox Television Stations.

The “big elephant in the room” as Justice Ginsberg referred to it during oral argument, was the question of whether the Commission’s sanctioning of “fleeting expletives” was prohibited by the freedom of speech provided in the First Amendment.  The Supreme Court’s decision left that issue unanswered for now.  Instead, the decision concluded that the FCC’s decision to change its policy to begin the sanctioning of “fleeting expletives” was not “arbitrary and capricious” because the FCC had provided sufficient justification for its change in policy.

The case was then remaneded to the Second Circuit Court where the question of the constitutionality of the FCC’s new policy of sanctioning feelting expletives in consistent with the First Amendment.

Take this poll.

Posted by: cinnamonlaw | May 14, 2009

FM Auction Set for September 1, 2009

The FCC has released a Public Notice announcing that a total of 122 commercial FM construction permits will be up for bidding in an auction that will commence on September 1, 2009.  You can find a list of all 122 available permits and the minimum opening bid for each of the permits here http://fjallfoss.fcc.gov/edocs_public/attachmatch/DA-09-810A1.pdf

The window for filing short-form applications with the FCC to particpate in the auction is scheduled to open on June 16, 2009, and close at 6 p.m. eastern time on June 25, 2009.  Upfront payments must be made by wire transfer to the Commission no later than 6 p.m. eastern time on July 31, 2009.

You can contact us for more information or with any questions on the FCC auction procedure.

Posted by: cinnamonlaw | April 30, 2009

Hello world!

I have threatened to do this for some time, but because I view myself as only “middle of the road” computer literate, I have wavered.  Also, broadcasting has not been the most active industry from an FCC standpoint lately, except for the conversion from analog to digitial television.  All of that has changed…or is changing.  So you can read my take on new rules and decisions that impact broadcasters.  Hope you enjoy and feel free to comment!

For more information about me, you can visit my website, www.cinnamonlaw.com, or e-mail me at Scott@Cinnamonlaw.com.

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