Repp Law Firm

FCC Adopts Foreign Government-Provided Programming Sponsorship ID Rules

The FCC has adopted in April 2021 a Report and Order, FCC 21-42, adding Sponsorship Identification requirements for “Foreign Government-Provided Programming,” incorporating some modifications from the earlier-circulated draft, which reduces some of the burdens on broadcasters.  I recommend that you review your outstanding, or contemplated, agreements for the “lease” of time on your broadcast station(s) and identify next steps to ensure compliance with the new sponsorship ID and diligence requirements.

Effective Date:  While the Order is to be effective 30 days after release in the Federal Register, most of the new requirements require OMB approval, which could take significantly longer than the typical, approximately-30 days for Fed Reg release.

Applies to “Leases” of Blocks of Time, e.g., TBAs and LMAs:  Broadcast stations with a TBA (time brokerage agreement), LMA (local marketing agreement) or any “lease” of a block of time (of any length or duration and whether or not reduced to writing) for some form of compensation should take note, as the Report and Order requires that such broadcasters undertake due diligence and come into compliance within six months of the effective date.  Moreover, new TBAs/LMAs/Leases should, at signing, and then upon renewal of the agreement, comply with the new requirements.

Noncommercial stations:  Due to the current restrictions on programming agreements for noncommercial (“NCE”) stations, NCEs “may broadcast programs produced by or at the expense of, or furnished by persons other than the licensee, if no other consideration than the furnishing of the program and the costs incidental to its production and broadcast are received by the licensee.”  Therefore, the Commission explained that NCE stations complying with these existing restrictions in their programming agreements should not fall within the ambit of the new foreign sponsorship identification requirements.  Nevertheless, I recommend that NCE stations review their programming agreements to ensure compliance.

Section 325(c) Permit Holders:  the new sponsorship requirements apply to Section 325(c) permit holders (programming produced in US, broadcast by foreign station, for reception in US).  Required foreign sponsorship disclosures to be uploaded to the International Bureau’s IBFS system.

Definition of “Foreign Governmental Entity”: The FCC’s definition is mostly by reference to the Foreign Agents Registration Act of 1938 (“FARA”) and includes: (i) “government of a foreign country”; (ii) “foreign political party”; and (iii) “agent of a foreign principal.”  The definition also includes (iv) “United States-based foreign media outlet” as defined in Section 722(a) of the Communications Act of 1934. 

Trigger for Foreign Disclosure:  The new disclosure requirements apply only to broadcast material aired by a broadcast station pursuant to the lease of time on the station that has been sponsored, paid for, or in the case of political programming or any program involving the discussion of a controversial issue, if it has been furnished for free as an inducement to air by a “foreign governmental entity.”  A “lease” of time is not meant to apply to traditional, short-form advertising, however, as before advertising and other programming remains subject to existing sponsorship identification requirements (47 CFR §73.1212) and must contain a clear indication of the sponsor of the ad.

Barter/Network Programming:  The FCC explained that the foreign sponsorship identification rules will be triggered if any money, service, or other valuable consideration is directly or indirectly paid or promised to, or charged or accepted by a broadcast station in the context of a lease of broadcast time in exchange for the airing of material provided by a foreign governmental entity.  The FCC also noted its general sponsorship ID precedent that “[i]In barter-type arrangements, which can include network affiliation agreements, the program supplier provides the station its program, which the station purchases by allowing the program provider to use some or all of the station’s advertising airtime during the program.  Thus, in barter arrangements the broadcaster effectively purchases programming in exchange for valuable consideration in the form of advertising time, thereby immunizing the exchange from the sponsorship identification requirement.”  Yet, with no record of foreign governments employing barter or network distribution avenues, the FCC reserved for clarification in the future, if warranted, whether barter-type arrangements are subject to the foreign sponsorship requirements.

Reasonable Diligence:  The broadcast licensee must exercise “reasonable diligence” to determine if an entity or individual that is purchasing airtime on the station, or providing any “political program or any program involving the discussion of a controversial issue” free of charge as an inducement to broadcast such material on the station, is a foreign governmental entity, such that a disclosure is required under the foreign sponsorship identification rules.  The FCC specifies these minimum diligence requirements:

The FCC strongly encourages licensees to include a provision in their lease agreements requiring the lessee to notify the licensee about any change in the lessee’s status that would trigger the foreign sponsorship identification rules.  The FCC also expects, similar to payola/plugola diligence, that licensees will exercise reasonable diligence to ascertain whether consideration has been provided in exchange for the lease of airtime or in exchange for the airing of materials directly or indirectly to the station, as well as whether anyone involved in the production, preparation, or supply of the material has received compensation, and that an appropriate disclosure will be made about the involvement of any foreign governmental entity.

Lessee’s and Programmer’s Obligations:  The FCC has determined that the lessee, whether or not it is an FCC-licensee, holds an independent obligation to communicate to the licensee of the subject station the lessee’s knowledge of any payment or consideration provided by, or unpaid programming received as an inducement from, an entity or individual that triggers the foreign sponsorship identification rules.  This obligation applies also to any person “who, in connection with the production or preparation of any program…” or “who supplies to any other person any program” to convey any information such person may have about the provision of any inducement to broadcast the program in order to necessitate a sponsorship identification disclosure by the licensee.  Such non-licensee individuals must disclose to their employer, the person for which such program is being produced (e.g., the next individual involved in the chain of transmitting the programming to the licensee), or the licensee itself, their knowledge of any payment or “valuable consideration” provided or accepted by a foreign governmental entity.

Content and Frequency of Required Disclosure of Foreign Sponsorship:  The text of the required disclosure must be as follows, with the disclosure to use one of “sponsored” or “paid for” or “furnished”:

“The [following/preceding] programming was [sponsored, paid for, or furnished,] either in whole or in part, by [name of foreign governmental entity] on behalf of [name of foreign country].”

For televised programming, the visual disclosure must be in letters equal to or greater than four percent of the vertical picture height and be visible for not less than four seconds to ensure readability.  Radio disclosures must be “audible.”  The disclosure be made at both the beginning and conclusion of the broadcast station programming, except that, for any broadcast of 5 minutes duration or less, only one such announcement must be made at either the beginning or conclusion of the program.  Moreover, for programming of greater than 60 minutes in duration, an announcement must be made at regular intervals during the broadcast, but no less frequently than once every 60 minutes.

Multicast Streams: These standardized disclosure requirements apply equally to any programming transmitted on a broadcast station’s multicast streams.  For radio, that includes HD2, HD3 and HD4 channels.

Public File:  A broadcast station licensee must place in its online public inspection file (“OPIF”) the actual foreign government programming sponsorship disclosure and the name of the program to which the disclosure was appended.  In addition, the licensee must state the date and time the program aired.  If there were repeat airings of the program, then those additional dates and times should also be included in the OPIF.  Also, to the extent the foreign programming consists of “a political matter or matter involving the discussion of a controversial issue of public importance,” licensees must obtain and disclose in their OPIFs a list of the persons operating the entity providing the programming, as currently required for any such matters.

The foreign sponsorship uploads to the OPIF must be made on the same quarterly basis as Issues/Programs Lists (that is, by the 10^th day after the end of each calendar quarter:  April 10, July 10, October 10, January 10).  The OPIF uploads must be to the standalone folder marked as “Foreign Government-Provided Programming Disclosures.”  These uploads must be maintained in the OPIF for a two-year period.  

FCC Multiple Ownership Rule Changes Reinstated:  April 2021

The US Supreme Court has overruled the Third Circuit in the Prometheus multiple ownership proceeding, finding that “The FCC’s decision to repeal or modify the three ownership rules was not arbitrary and capricious for purposes of the [Administrative Procedure Act].”

The two ownership rules that were repealed by the FCC in 2017 (and now, with the Supreme Court decision, can finally be taken off the books) are the Newspaper/Broadcast Cross-Ownership Rule and the Radio/Television Cross-Ownership Rule.

Thus, daily newspapers can now own or have an attributable interest in local broadcast TV and radio stations (subject only to the distinct Local TV and Local Radio Ownership limits) and vice versa – broadcasters can invest in or own local daily newspapers.

As to the now-affirmed repeal of the Radio/Television Cross-Ownership Rule, local television and radio combinations will now be permissible so long as the respective Local TV and Local Radio Ownership Rule limits are met.  The Radio/Television Cross-Ownership Rule had been diluted previously, so that in the largest markets, one entity was permitted to own, in combination, either two television stations and six radio stations or one television station and seven radio stations.  Now, it’s just a question of whether that market’s Local TV Ownership Rule is met and whether that market’s Local Radio Ownership Rule is met, without looking at the TV-Radio combination.

The modified ownership rule reinstated by the Supreme Court is the Local Television Ownership Rule.  The modified Local Television Ownership Rule eliminated the 8-Voices test and allows a case-by-case review of combinations involving two Top-4 rated TV stations.

The Supreme Court also reversed the Third Circuit’s action vacating the FCC’s 2018 Incubator Order and the definition of an “eligible entity.”

Note that the Local Radio Ownership Rule – or its AM/FM subcaps -- was not at issue here.  However, the FCC should breathe easier that it can loosen or modify its broadcast ownership rules going forward.  That is not to say that would happen under the current administration, which might feel freer, given the deference given to the agency by the Supreme Court, to tighten broadcast ownership restrictions.

All-Digital AM

In October 2020, the FCC  adopted a Report and Order authorizing voluntary All-Digital AM (attached), to be effective 30 days after Fed Reg publication (except for new 73.406 – notification to the FCC -- which requires OMB approval).  Some highlights:

In this Report and Order, we adopt rules to allow AM radio stations to broadcast an all-digital signal using the HD Radio in-band on-channel (IBOC) mode named MA3.1 A voluntary conversion to all-digital broadcasting will benefit many AM stations and their listeners by improving reception quality and listenable coverage in stations’ service areas. 

AM broadcasters overwhelmingly support the proposal to allow all-digital AM broadcasting,35 as do broadcast engineers;36 technology companies,37 and some individual listeners.38 No broadcasters opposed the all-digital proposal and only nine individuals opposed it.39

We adopt the proposal in the NPRM to allow AM broadcasters, at their discretion, to broadcast using the HD Radio all-digital MA3 mode.41 The record establishes that all-digital AM has the potential to significantly aid in the revitalization of the AM service. Commenters overwhelmingly agree that all-digital operation can alleviate many of the problems stemming from hybrid operation, allowing AM broadcasters and listeners to take full advantage of the potential benefits of digital broadcasting.42

Importantly, commenters believe that all-digital operation will increase the format choices that AM broadcasters can offer to their audiences, including the option of music programming (in full stereo if using enhanced mode).46 Hubbard asserts that all-digital operation will also allow AM broadcasters to provide program and station information along with the main audio stream more reliably than in hybrid mode.47 Finally, commenters note that the all-digital mode is designed to potentially support an HD-2 second programming stream.48 Having these capabilities will help “level the playing field with FM analog and digital broadcasts, doing much to remove the disparity between AM and FM signals from the listener’s perspective.”49

We reject assertions that we should mandate some or all AM stations to continue broadcasting in analog because all-digital broadcasting would disenfranchise analog listeners.50 The AM hybrid mode, authorized in 2002, was designed to ensure continuity of service during the early stages of the digital transition.

While we are mindful of the possibility of some consumer disruption, we conclude—based on the record evidence before us—that all-digital service represents a significant and perhaps singular opportunity to preserve the AM service for future listeners. In this respect, we emphasize that all-digital operation is purely voluntary; broadcasters can determine for themselves whether their listeners are ready for all-digital radio.