Monty Tayloe

The FCC Enforcement Bureau's recent spate of proposed fines against pirate radio operators has largely targeted the “low hanging fruit,” said Douglas Miller, district director of the Atlanta field office, during a Q&A session at the NAB Radio Show in Atlanta. More sophisticated pirate radio operators will take the bureau longer to track down and will require a more involved investigation, Miller said. The recent notices of apparent liability (see 1509180063 and 1509140038) against pirate operators have all involved unlicensed operators in New Jersey that were initially warned years ago, and each has proposed a fine of $15,000. They're the bureau's first efforts at a stiffer enforcement policy for pirate radio operators, Miller said Tuesday. After warnings and fines, pirate radio operators that continue to broadcast will have their equipment seized, Miller said. The targets of the recent NALs are still at the stage for fines, he said. Pirate radio had been expected to be a big topic at the show (see 1509250061).

ATLANTA -- A false perception that radio isn't doing well and has a relatively slow rate of return are making it difficult for the industry to attract investors, said radio licensees and investment analysts at the NAB Radio Show Tuesday. Recent Nielsen studies show that radio stations are doing better than potential investors think, and that webcasting competitors such as Spotify and Pandora aren't doing as well, said Entercom CEO David Field. “We're not telling the story of radio nearly well enough,” said Connoisseur Media CEO Jeff Warshaw.

The Expanding Opportunities For Broadcasters Coalition will dissolve Wednesday, as expected (see 1411280041). That will avoid conflicting with FCC incentive auction anti-collusion rules and because the rules for the reverse auction are largely in place, said Executive Director Preston Padden on a press call Monday. Most of the licensees in the coalition will participate in the auction, he said, though they remain anonymous. Coalition members collectively own 87 stations, and they're “highly confident” that the auction will be successful and clear 125 MHz of spectrum, Padden said. Sprint's announcement over the weekend that it won't participate in the auction (see 1509280059) has “no effect” on that confidence or the auction's success, he said. He said the absence of dynamic reserve pricing, the relaxation of channel sharing rules, and a pricing plan partially based on interference were the most important factors encouraging his members to participate in the auction. Since pricing is based only partially on interference, Padden conceded that “we didn’t get everything we wanted.” He said he will be working as a consultant on the auction to private companies in the wake of the EOBC’s dissolution.

With the fate of the FCC policy on grandfathered joint sales agreements uncertain, broadcasters involved in such deals haven’t done much to unwind them yet, industry officials told us. The deadline to unwind existing JSAs is December 2016. The proposed bill to allow grandfathering, an ongoing appeal in the U.S. Court of Appeals for the D.C. Circuit and the possibility of a change in administration make that date far from certain, broadcast attorneys said. “We don’t know who a President [Donald] Trump would put on the FCC,” said Drinker Biddle broadcast lawyer Howard Liberman.

The FCC AM revitalization draft order and FCC Chairman Tom Wheeler's views on the AM translator application window are expected to be the primary topics at the NAB Radio Show in Atlanta opening Wednesday. Radio broadcasters also are concerned about enforcement or rules against pirate radio stations (see 1509240066) and recent proposals by Commissioner Mike O'Rielly, the possible application of online political file rules to radio, and the progress of the effort to get active FM chips in smartphones. So said industry lawyers in interviews this week. “They're going to be asking, 'Where is the AM revitalization?'” said Womble Carlyle radio attorney John Garziglia, of broadcasters at the upcoming show.

A proposal to loosen FCC foreign ownership rules and change the way transactions with foreign buyers are handled by other federal agencies is likely to find favor with industry and could get traction at the commission, said attorneys familiar with the FCC's foreign ownership process. Outlined by Commissioner Mike O'Rielly in a blog post last week, the proposal would increase the transparency of the review process for deals involving foreign-owned companies. Since part of that process involves review by the numerous federal agencies outside the FCC that make up "Team Telecom" (a working group of representatives from the departments of Justice, State, Defense and Homeland Security, among others), the commission and the parties to a transaction don't always know the status of deals involving foreign companies, O'Rielly said. Easing the process for foreign companies to do business here would lead to similar overtures for U.S. companies doing international business, he said.

Amid FCC Chairman Tom Wheeler’s vocal opposition to an AM-only FM translator window, groups and other commissioners are working to have the measure passed as part of the AM revitalization draft order (see 1509170041), industry and agency officials told us. Wheeler said Thursday that he views the AM-only window as a spectrum giveaway (see 1509170041). NAB and industry officials believe a majority of the other commissioners favor the proposal.

Proposals to include an AM-only window for FM translator applications in the AM revitalization draft order amount to a request for free spectrum, FCC Chairman Tom Wheeler said during a news conference Thursday. “It’s not the general policy of this agency to give away free spectrum.” Wheeler said the other proposals in the draft order are modifications to allow AM to function better that “make a lot of sense” and should be considered separately from the translator window issue. During a subsequent news conference, Commissioner Ajit Pai disagreed. “An AM only translator window is not a giveaway,” Pai said, saying the proposal has wide support among broadcasters and in Congress. Pai said his office is discussing the proposal with other offices and he is hopeful the commission will approve an order that includes the window. Many AM broadcasters are pushing for such a window to allow them to take advantage of the lower interference and larger audience of the FM band (see 1509160036).

The FCC unanimously approved updated rules for broadcast contests that will allow TV and radio stations to publicize contest rules on the Internet as an alternative to broadcasting them, as was expected (see 1509040043). “Updating our rules to allow use of the Internet to disclose contest information is a common-sense move that will benefit both broadcasters and consumers,” Chairman Tom Wheeler said in a written statement.

It turns out after all that for broadcasters planning to stay in the business, the proximity of the FCC incentive auction isn't a deterring mergers and acquisitions, attorneys and financial analysts told us this week. They referred to a $2-billion-plus deal unveiled last week, Media General/Meredith (see 1509080061), and the $400-million-plus Gray Television/Schurz (see 1509150075) deal unveiled this week. Many incentive auction observers had speculated that broadcast M&A would slow as the auction approached (see 1411280041).