Last week, as we noted in our monthly look ahead at the regulatory dates of importance to broadcasters in August, the reinstatement of the rule prohibiting the duplication of programming on FM stations went into effect. The FCC Order reinstating the rule is interesting both for its substance, and for the parties pushing for that reinstatement – principally representatives of the music industry. As we note below, even though the rule is now back in effect, the NAB has asked for reconsideration of that action.
First, let’s look at what the rule provides. The reinstated rule prohibits any commonly owned or operated (e.g., through a time brokerage agreement) commercial FM station from duplicating more than 25% of its weekly programming on another FM station if there is overlap of the 3.16 mv/m (70 dbu) contours of the two stations, and that area of overlap constitutes 50% of the 3.16 mv/m predicted coverage area of either of the overlapping stations. Program duplication is not limited to simultaneous transmission of the same programming – the rule by its terms defines “duplication” to include the broadcast of the same programming any time within a 24-hour period.
We have had many questions as to whether this reinstated rule prohibits AM/FM program duplication, or duplication of the area served by an FM translator and a full-power FM station. It does not. There is a separate rule (Section 74.1232(b)) that allows the use of two translators to serve the same area carrying the same programming upon a showing of need. The FCC long ago did away with rules prohibiting AM/FM duplication. When the FCC in 2020 initially did away with the rule against FM duplication, it also did away with the prohibition on two AMs serving the same area from duplicating programming. That prohibition has not been reinstated – the reinstatement applies only to the prohibition of the duplication of programming when there is overlap of two full-power, commercial FM stations.
The FCC’s Order reinstating the rule, after 4 years where it was not in effect, did not cite any specific cases where the rule was abused in the years when it was not in effect. Instead, it relies on speculation that owners of FM stations could “warehouse” spectrum by duplicating their programming on more than one station in a market, preventing that programming from being used to provide a greater diversity of programming. The decision also suggests that duplication could allow a broadcaster to cut its costs of operation, giving it an unfair competitive advantage against other stations in the market, suggesting that this gave broadcasters an incentive to operate in this anticompetitive manner. The FCC noted that the abolition of the rule for AM stations was justified in 2020 because “FM does not face the same persistent challenges as the AM service,” and cited as justification for the abolition of the rule only for AM as including the experimentation with all-digital AM, the higher costs of AM technical operations and transmitter site retention, and other technical issues affecting AM. The reinstatement order faulted the NAB, who had supported the abolition of the rule, for not providing specific factual support for the argument that FMs are facing the same issues as AM operators.
The NAB last week filed a Petition for Reconsideration, asking that the FCC review the decision to reinstate the prohibition for FM stations. The NAB cites the lack of evidence over the 4 years that the rule has been gone of any public interest harm from the abolition of the rule. The petition also argues that the FCC should have at least asked for public comment to update the record to see what was happening in the real world so it could determine if the reinstatement of the rule really addressed any public interest concern. The NAB argues that the FCC, while citing the speculative nature of the arguments relied on in 2020 for the abolition of the rule, relied on equally speculative arguments to reinstate that rule – arguments that could have been tested had the FCC just asked for a refreshing of the record in the proceeding. The FCC had 4 years of experience with an industry that had been freed from the confines of the nonduplication rule to test whether any of the speculative harms had occurred, and it did not choose to even look to see if there were real-world reasons to bring back this rule.
The NAB has not asked for a stay of the effective date of the reinstatement of the rule – so it is now back in effect while the Commission considers the reconsideration request. No new program duplication can take place on FM stations without an FCC waiver, and stations that are now duplicating programming have until February 3, 2025 to comply with the new rules. Those seeking a waiver to continue duplication after that time are asked to file for that waiver by October 31, 2024.
In addition to the substance of the requirements imposed by the reinstatement of the rule, which in all likelihood affect few broadcasters because, as far as we know, few FMs have been duplicating programming since the 2020 abolition of the rule, another interesting feature of the reinstatement is the parties who sought the FCC’s action. One of the parties who requested reconsideration of the 2020 order was REC Networks, an advocacy organization usually known for arguing for LPFM interests. Perhaps one can see the logic of their interest in the proceeding as REC suggests that, if owners of FM stations were not allowed to duplicate programming, perhaps some of these stations would be sold or their licenses surrendered and those stations might end up in the hands of new potential entrants to broadcast ownership that REC represents (though, as we noted in our article here, there already is less and less demand for FM spectrum, particularly outside the major markets).
The other petitioners were perhaps more unexpected. Two music industry groups, the musicFirst Coalition and the Future of Music Coalition, joined REC in seeking reinstatement of the rule despite not having participated in the proceeding before the FCC’s 2020 decision. These groups have also recently been participating in other FCC proceedings, including arguing against any relaxation in the radio ownership rules and contending, in the FCC’s Media Marketplace studies, that there has already been too much consolidation in broadcast ownership. They have also filed comments supporting the reinstatement of the main studio rules. Their arguments are all couched as favoring new entrants into the broadcast industry, but in the ownership and marketplace proceedings they also reference the “unfair” advantage that broadcast radio has against other competitors, as radio does not pay a performance royalty for the use of sound recordings when music is played over the air (radio does pay a performance royalty for sound recordings when the programming is streamed, and it also pays the composers of music through ASCAP, BMI, SESAC, and GMR).
As the music industry’s efforts to impose an over-the-air royalty on broadcasters for the performance of sound recordings have thus far been stalled in Congress, it is almost as if the music industry is seeking to punish radio with more regulation until it relents on the performance royalty. The participation of SoundExchange, which collects sound recording performance royalties, in lobbying the FCC on these issues (see notices of that lobbying in the ex parte filings made with the FCC, here and here) reinforces this impression. It is interesting that these parties have not gone out of their way to encourage small webcasters to spring up and provide the diversity of music that they claim to desire from broadcasters (special SoundExchange royalty provisions for small webcasters having terminated almost a decade ago – see our articles here and here). One would think that they would be encouraging a financially secure broadcast industry that could afford royalties if they were to be enacted. But, instead, these groups seem to be advocating for more regulation to constrict the broadcast industry, not less to let it compete more fairly with its digital competitors.
We will be watching to see how these issues, both on the duplication rule and the broader issues, play out in the near future.