2000 YEAR IN REVIEW

Are you playing Russian Roulette with your License?

As we began the year 2000, the Federal Communications Commission had just renamed their "Field Offices" to the FCC’s Enforcement Bureau under the direction of David Solomon in Washington D.C.’s FCC Headquarters. And boy, did this newly reorganized department hit the streets running! With an increased number of inspectors all across the country, inspections and fines were issued in what could potentially be called a "record year".

As we learned in September at the National Association of Broadcasters Convention held in San Francisco, the FCC doesn’t keep the money from fines collected from broadcasters. All the money is transferred to the United States Treasury Department. Just in case any of our readers are curious, this means that the FCC doesn’t gain anything by issuing fines. Again, we will reiterate, they are not paid a commission. The FCC would rather see broadcasters in full compliance than play the role of "traffic cop" to broadcasters.

However, year 2000 inspections and violations resulted in millions of dollars in fines and forfeitures from radio, television, cable, cellular and telephone companies nationwide. What will 2001 bring, with the Enforcement Bureau’s second year under its new direction?

The following are excerpts from our column here in Radio Shopper. Just as all entertainment entities compile a year in review of our best movies, television programs and music, we decided to give you a recap of FCC Enforcement Bureau Activities!

First Quarter 2000: (Jan/Feb/Mar)

The other day I read that the first teacher over 100 years ago handed the first homework to its students. It was the very next day that the well known excuse of "My dog ate my homework" came about.

… you might have a paragraph for instance if some inventory is missing and of course the Public File is in disarray and somebody will have to come and organize the file to meet full compliance. Sometimes amounts of $10,000 or more will be held back in escrow until these matters are cleared up. Many items in the inventory can be missing: computers, audio equipment and even CD’s and larger items such as lease on the transmitter site that only has 6 more months to go and new one was never signed.

A new form (314) which is used to buy and sell radio stations was modified in the latter part of 1999 and you need to use this new FCC Form when you buy or sell your station(s). The two parties, seller and buyer must sign the application. Here is where we learn just how important the "Public File" is.

Applicants must certify that they have complied with the rules regarding publication of the local notice on this matter. Years ago you had to send this "Proof of Publication" to the FCC as part of your application. Now under this new form you only have to insert that "Proof of Publication" in your Public File. In this new FCC Form 314 application the seller is checking a box that the assignor will comply with this requirement. The FCC fine for missing paper work is $3,500. The questions about how many times this notice is to be in the paper or how many times you have to read the notice on the air is found in Worksheet #1 of this new 314 form.

In worksheet #2 of this application there requirements that you must sign if the deal your making also includes a "Local Market Agreement" where the buyer will take over right away pending the FCC transfer. Again more details as to what is to be in that LMA agreement.

Again this "LMA" has to be in your Public File. Missing paper work would result in another $3,500 fine. You see during the LMA, the seller of the station is still the licensee/owner and must remain in control of the programming, engineering, and maintain that station’s Public File.

(If your year 2001 plan is to buy another station, and you haven’t bought on in some time, I would suggest you use an FCC attorney and find somebody like my self that can help you with your Public File and full FCC Compliance before and after the sale.)

(From March 2000 Column in Radio Shopper) I visit Radio stations all the time. Many broadcasters place into their Public Files warning letters from their attorneys about Public Files. These letters do not have to be in the file, so I collect them and will now share some of them you in an attempt to warn you of the downside of not keeping up your Public Files.

"A by-product of radio deregulation several years ago has been a stepped-up effort on the part of the Field Operations Bureau, to ensure compliance with the Public File requirements. Reports from a number of sources indicate that public file violations are becoming much more frequent, and more often than not, inspectors will find one or more items missing from the public file at almost every station they inspect".

My Comment:

This letter to a broadcast group was sent before the recent change in November of 1999 that the local field offices of the FCC have now changed to Enforcement Bureau offices. The fine for No Public File is $10,000 and just for missing documents is $3,500. This fine is for each station. If you have 3-5 stations in your cluster, then it’s easy for the FCC inspector to fine all stations in one visit.

Letter #2

"Recently, the Commission announced that Public File infractions constituted one of the most frequent violations noted by the personnel making routine inspections’.

Letter #3

"All broadcast stations are required by the FCC to maintain a Public File, and this file is the most tangible means by which the public and the FCC can review a stations broadcast practices. Your station manager should instruct all staff members who maintain the Public File those members of the public have an absolute right to inspect that file.

Letter #4

"Given the step-up enforcement efforts, we would urge you to take the time to do a complete inventory of your Public File and check against the list of materials required to be retained in it by Rule Section 73.3526".

(From May 2000)

At the recent NAB convention in Las Vegas in April 2000 was David Solomon the head of the new Enforcement Department. All the old Field offices (a total of 25 around the nation) are now Enforcement Bureaus and the FCC has asked for an increase in Compliance inspectors to inspect stations. There is a new attitude with the Enforcement Bureau. Instead of just trusting the Broadcasters, it seems that it will be Trust but Verify. And that’s the reason for more inspectors.

I believe that the days of the overnight jock doing Public Files is over.

(From June 2000)

One of the first lessons we learn about engines is maintenance. Anyone who owns a vehicle knows the importance of checking the oil, and scheduling regular oil and filter changes every 3,000 miles to keep their engines in top performance. This practice is also valuable in an effort to avoid costly repairs should your engine dry up from having no oil to keep it running. When you make certain that your vehicle has had the proper maintenance, you have peace of mind and confidence that your engine will run smoothly for another 3,000 miles. If you don’t take care of your vehicle you risk having to make very costly repairs when the engine seizes. Many times, instead of stations completing "preventative maintenance" on their Public File in order to keep compliant with FCC Rules and Regulations, they wait until the FCC shows up for an inspection.

(From July 2000)

"A broadcast station’s public inspection file must be maintained in accordance with strict FCC requirements."

That is an excerpt from "Public Inspection File Requirements for Radio and Television Broadcast Stations" by Koteen & Naftalin L.L.P. in Washington D.C. It is the first sentence in the Introduction.

Later on in the next paragraph: " The penalties for failure to maintain the public inspection file properly are the same as for violating any other Commission rule or regulation. The Commission may fine licensees and may impose other sanctions for failure to comply with public file requirements."

Some radio station managers have only two years radio experience, and came from the sales side. They don’t even know what a Public Inspection File is, much less where to find it.

Since I have been writing this column, I have received many emails from radio professionals. Some who are shocked at their "horror stories" about non-compliance issues, and some who are genuinely concerned and have questions.

Many years ago, the FCC deregulated the strict requirements for Public Affairs Programming. Strangely though, many broadcasters neglected to read the fine print to the ruling, and assumed that Public Affairs were done away with altogether.

Out went the idea of the Public File, and so did a great deal of the items that are required by law to be placed in the Public File.

Deregulation did NOT however, mean that a station no longer needs to keep a Public File, nor did it mean that stations didn’t have to serve the community of license with public affairs anymore.

When the station comes up for renewal, nobody knows where any of these important documents are, and the Public Files haven’t been maintained for several years.

Its important to point out the FCC has changed their Field Offices to "Enforcement Bureau Offices". It even has its own page on the FCC Government website. The FCC is gearing up for enforcing their laws on broadcast stations. It’s no joke.

Another conversation is the one with the new manager who shows concern about the state of his public file. He’s not sure if all the documentation is there, but his primary focus is to hire his sales staff and get them trained. You see he must focus on generating income for the ownership. He said that he would deal with the Public File issues at his license renewal time. That is in 2005.

Was he going to ask some one to falsify documentation? Certify that all documents pertaining to government regulations were in order? Would he even be working for this station in 2005, when the time for renewal came up?

If you are asked to be the "Chief Operator" of a station or group of stations, you know about the public file and regulations broadcasters must adhere to. Would you be willing to sign your name to a document that states, "these facts are true", when you don’t know, or even question, that the station is in complete FCC Compliance?

If you are being hired on as a manager, and don’t feel confident in your knowledge of the laws and regulations, and you know the owner wants you to mostly concentrate on revenue, ratings and market share; you’d be best served if you inquired about the status of their public file, their political file, the weekly station logs, the appointment of the Chief Operator, and what about the execution of the station’s EAS material.

(From August 2000)

Lets face it; many in the broadcasting industry do suffer a bit of ignorance. Webster defines ignorance as: "having little knowledge, education or experience". So please do not misinterpret my claim that many broadcasters are ignorant in their knowledge and education of FCC regulations as an insult. There are hundreds of brilliant programmers, managers and owners. But it is impossible to be an expert in every single aspect of the broadcast industry.

Ignorance of FCC regulations can open up a "Pandora’s Box" of problems! I am inundated with emails from the readers of this publication with questions regarding Spanish Language Broadcast requirements, to general inquiries about the new policy set in place in June regarding the posting of job openings at your station

I ran across a legal pleading last week while working on a Public File for an unnamed station in the West. This station had been fined by the FCC for violating the EEO standards by not hiring enough minorities in their seven year license renewal period. This may seem like a minor problem to you, but the FCC fined this station $25,000 for failure to comply with the regulation, after investigating a complaint and petition to deny license renewal from the NAACP.

In turn, the groups attorney’s filed a "Consolidated Petition For Reconsideration", stating that this fine was extreme compared to other fines issued by the FCC to stations for the same violation. They didn’t deny that they had violated the EEO standard, but blamed it on "poor record-keeping" during this license period. They demanded that the fine be reduced to a more reasonable amount, and sited that the rules were unfair.

My question as I was reading this document was: "How much money in legal fees did this group pay to avoid the FCC’s penalty, and could it have been avoided altogether with "proper record-keeping". Again, the word "ignorance" came to mind. (Remember, it is not as insulting a word as assumed, it only means, "uneducated").

Is it prudent business to place the responsibility of your public file and record keeping in the hands of your receptionist or overnight disc jockey? How well will they complete this task, and how loyal will they be to the license of the station?

It is important not to consider the FCC as an enemy. Their job is to make sure all broadcast licensees follow the same standards of compliance to keep the industry manageable and fair. When an inspector visits your station, they would rather find you in full compliance than issue multiple fines. FCC Inspectors don’t work on commission.

Let me tell you about another interesting case. The legal proceedings were interesting, and the case should be used as an example of opening a Pandora’s Box of problems.

This particular group had some financial difficulties, and had a dispute with one of their creditors. The creditor did their homework, and filed a "Petition to Deny" their license renewal, stating that their Public File was not appropriately available and was missing very crucial elements.

The FCC was brought in to conduct an investigation, and found that although the Public File was at the local library for inspection by the public, the library was only open for 21.5 hours a week. This is inconsistent with requirements by the FCC, which specifically provides that the file shall be kept at a location that affords public access "at any time during regular business hours". The investigator also found that the file was deficient because a number of required documents were missing.

These missing were copies of their last license renewal application, the annual ownership reports and annual EEO reports for the entire license term; quarterly issues/programs lists; written certifications of its required public notice announcements of the filing of its license renewal application.

To add insult to injury, the station finally came to an arrangement with this creditor, and they dropped their complaint. However, due to the nature of violations uncovered, the FCC was obligated to proceed with the mandated fines issued.

So, not only did the station have to come up with the money they owed this creditor, update and complete their public files, they were continuously scrutinized by the FCC and additional fines were issued to the tune of more than $70,000.

Certainly, one disgruntled creditor can open up a "Pandora’s Box" for a licensee. Do you have any disgruntled creditors, employees, or public agencies in your city of license that would be bold enough to file a petition to deny at time of renewal?

(From September 2000)

As always, my time spent consulting radio stations on FCC Compliance brings up a lot of legitimate questions and concerns. Some of those comments I get are:

"Why doesn’t the FCC have a list of what is required to be in the Public File?"

" Why don’t they have a book on what they want us to keep?"

"I thought everything was de-regulated and we don’t have to do anything for our city of license any more".

There is a great deal of valuable information and material from FCC law firms. You can also search the Internet under FCC.gov and find the FCC Enforcement Bureau site as I mentioned in previous articles.

However, I understand that surfing the net and reading manuals on the subject of FCC Compliance is difficult when your payroll is coming due, your jocks don’t show up to work and the sales staff isn’t meeting its budget. I know that the Public File will come last on your list of priorities. You are not alone.

Now that’s talk briefly about the person that comes in just to look at the file. He could be anybody. It could be a competitor’s employee, a disgruntled former employee of the station, a political candidate, or even a local community advocate. They could just be there to make trouble for the station. Don’t snicker, its been known to happen.

He now could write the FCC a letter with just one small complaint about anything missing in the Public File and the FCC inspection flag goes up.

Now lets continue this in another manner. Suppose a year ago you had your state broadcasting association in to visit your station to perform one of those voluntary inspections. You paid the fee and the association notified the FCC. Now, according to agreement, your station will not be inspected for another guaranteed two to three years.

However, now you have moved your studio and office. If you did not notify the FCC, do you think that your "Get out of Jail Card" will help you on this one?

(From October 2000)

"We have an FCC License! Without it, we have no business." Exclaims Barry Skildelsky, an attorney and consultant from New York.

Skildelsky was one of three panelists in San Francisco during the Convention of National Association of Broadcaster’s Session titled "FCC Rule Enforcement".

The description for this session was "The FCC’s new Enforcement Bureau is active. This session lets you know which areas of radio compliance are being hit with thousands of dollars worth of fines and forfeitures. Find out the rules you must follow to keep your stations from being fined."

If you were to put your license in jeopardy for any reason at all, what difference would it make if your station was top in ratings that quarter, or had garnered the largest revenue share in your market? Who cares if you have a number one morning team if you haven’t complied with FCC regulations and have a difficult time renewing your license, or even worse, have someone file a petition to deny your renewal for just about any reason at all?

"Even the slightest complaint to the FCC will be addressed and answered." explained David Solomon, Director of the Federal Communications Commission Enforcement Bureau.

The most critical mission of the Enforcement Bureau right now is technical. Tower maintenance and Public Safety are huge issues. Proper tower maintenance, including painting, lighting and fencing are the most common non-compliance issues at the top of the FCC’s list.

Another technical issue at the top of the FCC’s list is Interference with other signals. Interference Resolution will be dealt with seriously, and the FCC is poised to issue fines and forfeitures for stations in non-compliance.

The Enforcement Bureau has about 130 to 140 inspectors in the field now, (up from 100) in 25 or more locations throughout the country. There have been a tremendous amount of "notice of violation and forfeitures" served this year, and Solomon stated that he was surprised how many violations there were in this area.

Additionally, the Emergency Alert System, and EEO Compliance made the list of critical elements to your stations overall compliance. This area is especially being taken seriously with the Enforcement Bureau.

The June general election of new EEO Compliance, which now includes the responsibility of licensee’s to post and advertise all job openings (along with proof placed in your Public File), hasn’t been taken seriously enough by broadcasters yet.

One of the questions brought before the panel was, "What are the most significant violations made by broadcasters?"

All three panelists agreed that "misrepresentation or lack of candor" were the significant violations.

For those of us who do not practice law, Skidelsky and Umansky pointed out specific definitions of what that means.

"Misrepresentation" – To lie, intent to deceive.

This ranges anywhere from lying in the process of filing your application for license renewal, (even by checking the box that states you have kept your Public File in order for the license period), to fraudulent applications, unauthorized transfer of control, etc.

"Lack of Candor" – is defined as "concealment or evasion". What you know but don’t tell can get you into trouble. Your efforts to cover up are more severe than making a simple mistake.

"Preventative maintenance of your stations daily compliance efforts and record keeping are crucial to that momentous day when you file your application for renewal". Umansky said with a smile. There is a slight chance that you never will be inspected. Just like a tornado, or a bolt of lightening, you might be missed. But, do you really want to gamble your license, or even deal with the headache of fixing a problem after it has been uncovered?

The FCC Enforcement Bureau is looking for groups of stations that are not paying attention to the rules. This was brought up on more than one occasion during this rule enforcement session. With consolidation and clustering in full swing, commonly owned stations with similar fines are being watched carefully. If it is uncovered that a specific cluster of stations in one specific market is violating similar rules, this will send a warning to FCC inspectors to look at the entire group ownership, as it would be quite possible that the ownership as a whole is not complying with FCC Rules and Regulations. Group owners beware. Give your cluster managers enough leverage and ability to keep their cluster of stations in compliance, or the entire group could be in jeopardy of FCC scrutiny.

2000 Year In Review Conclusion:

The FCC Enforcement Bureau has recently released a list of actions taken for year 2000. They are as follows: