In brief: media law and regulation in USA

Media

Summarise the regulatory framework for the media sector in your jurisdiction.

The United States regulates the delivery of television and audio radio signals differently depending on how those signals reach the end user. Broadcast television in the United States refers only to the delivery of signals over the air directly to a television. Cable television refers to the delivery of signals to a television through a terrestrial cable system with distinct rules from those governing over-the-air television. Direct-to-home satellite refers to the delivery of signals to a television through the use of a satellite antenna and is subject to yet another set of rules. The Federal Communications Commission (FCC) also classifies cable, satellite and similar providers as multichannel video programming distributors (MVPDs) and subjects them as such to additional rules. Over-the-top (OTT) delivery refers to the delivery of video programming over the internet. On the audio side, broadcast radio refers to the delivery of audio signals over the air, while satellite digital audio radio service refers to the delivery of audio signals over satellite. Our responses to questions about ‘broadcasting’ in this chapter refer to all of these types of delivery.

Television stations now transmit in a digital format called ATSC 1.0. The FCC recently granted them authority to transmit in a new digital format, ATSC 3.0, which will permit them much greater flexibility in the content and services they provide. Television stations will thus have considerable leeway to offer additional services subject to little or no regulation.

OTT video and audio delivery has not been definitively addressed by the FCC, and efforts for it to do so appear stalled. The FCC previously proposed to classify such providers as MVPDs, subjecting them to some (but not all) rules that now apply to cable and satellite providers. Action on this item, however, is unlikely, leaving OTT services largely unregulated for the time being. OTT delivery is also subject to copyright rules, with disputes pending or recently resolved before several courts. Recently, however, a group of cities have sued OTT providers, claiming that they should pay franchise fees as if they were franchised cable operators under certain state laws. Those lawsuits remain in early stages, and will not be resolved definitively for several years.

The FCC does not regulate the delivery of audio or video services to mobile devices as broadcasting, although US copyright laws apply. As such delivery becomes more common, however, the FCC is likely to increase its regulation of such services. For example, the FCC now requires programming delivered to most mobile devices to be close-captioned and has begun to require such devices to decode and render such captioning.

Do any foreign ownership restrictions apply to media services? Is the ownership or control of broadcasters otherwise restricted? Are there any regulations in relation to the cross-ownership of media companies, including radio, television and newspapers?

Media ownership is subject to restrictions on:

• ownership of multiple broadcast television stations in a single market;
• ownership of broadcast television stations reaching a certain percentage of the population (national ownership cap);
• ownership of broadcast radio stations within a local market;
• service to a certain percentage of the population by a single cable operator;
• ownership by a cable operator of a certain percentage of the channels it carries; and
• ownership of two or more of the top four television networks (ABC, CBS, FOX and NBC).

In November 2017, the FCC eliminated several ownership rules, including one that had prohibited cross-ownership of broadcast and radio stations within a local market and another that had prohibited cross-ownership of television and radio stations in the same geographic area. It also substantially relaxed the limitation on ownership of multiple television stations in a single market – in some cases, permitting applicants to request such combinations on a case-by-case basis. The US Supreme Court recently upheld the FCC’s deregulatory order. The FCC is considering further relaxation of local television ownership rules, as well as potential relaxation or elimination of the national ownership cap, although such deregulatory action may be less likely in light of the new President Biden administration.

Neither the FCC nor state or local franchising authorities impose foreign-ownership or other ownership restrictions on cable networks, although the transfer and assignment of cable franchises almost always requires the prior consent of the franchising authority (but not the FCC). The FCC restricts the acquisition of local exchange carriers by cable operators in the same area and vice versa.

US World Trade Organization (WTO) commitments in basic telecommunications reflect US statutory restrictions on foreign ownership of broadcast licensees. In its commitments, the United States also took article II (most favoured nation) exemptions for one-way satellite transmissions of direct-to-home and direct-broadcast satellite services and digital audio radio services. Regardless of WTO status, section 310 of the Communications Act prohibits a foreign government, corporation organised under foreign law, non-US citizen or representative of a foreign government or non-US citizen from directly holding a broadcast licence. Section 310(b)(3) limits direct foreign ownership in a US corporation holding a broadcast licence to 20 per cent, a limitation the Communications Act does not permit the FCC to waive. Section 310(b)(4) prohibits indirect foreign ownership in a broadcast or aeronautical licensee in excess of 25 per cent unless the FCC finds that greater foreign ownership would serve the public interest. Historically, the FCC did not knowingly authorise indirect foreign ownership of a broadcast licensee in excess of 25 per cent. In November 2013, however, the FCC announced that it will review applications for approval of foreign investment in the parent company of a US broadcast licensee above the statutory 25 per cent benchmark on a ‘fact-specific, individual case-by-case’ basis. In May 2015, the FCC granted an application involving Pandora Radio for greater than 25 per cent indirect foreign ownership of a radio station. In September 2016, the FCC amended its foreign ownership rules for broadcast licensees, including changes to:

• permit indirect foreign ownership up to 100 per cent upon a public interest finding;
• permit a previously authorised non-controlling foreign investor to increase its interest to 49.9 per cent without additional approval; and
• permit a previously authorised controlling foreign investor to increase its interest to 100 per cent without additional approval.

In enforcing all of these ownership rules, the FCC applies a complicated set of attribution rules that include a broad range of financial or other interests denoting ownership, control and influence.

What are the licensing requirements for broadcasting, including the fees payable and the timescale for the necessary authorisations?

Television and radio stations are licensed individually. Cable systems are not licensed by the FCC, but instead are franchised by state and local governments. Cable systems, however, often use satellite or wireless infrastructure licensed by the FCC. Direct-to-home satellites and certain satellite earth stations are licensed by the FCC. Licence applicants must pay an application fee that depends on the asset to be licensed. OTT internet video services are not licensed by any federal or state regulator.

As new licences are often unavailable or difficult to obtain, entities typically obtain broadcast and satellite assets through an assignment of the licence or a transfer of control of the entity controlling the RF licence, subject to the consent requirements mentioned earlier. Assignment or transfer of control of cable franchises is usually subject to franchising authority consent.

OTT services are not licensed and will not be licensed even if the FCC classifies them as MVPDs.

Are there any regulations concerning the broadcasting of foreign-produced programmes? Do the rules require a minimum amount of local content? What types of media fall outside this regime?

The United States does not regulate the carriage of foreign-produced programmes or impose local content requirements (except for low-power over-the-air television broadcasters). Cable operators must often carry public, educational and governmental programming chosen by the local franchising authority. Satellite carriers are subject to a similar public interest allocation. Over-the-air television broadcasters must air certain amounts of children’s programming. Over-the-air television and radio broadcasters (but not cable and satellite carriers) are also subject to certain restrictions on indecent programming.

How is broadcast media advertising regulated? Is online advertising subject to the same regulation?

The Federal Trade Commission (FTC) (among other entities) prohibits all entities from engaging in false and misleading advertising, regardless of the medium used. Advertisements covering topics that are heavily regulated may be subject to additional regulations, regardless of whether the ads appear on television, online or elsewhere. For example, advertisements for political candidates must include disclosures required by the Federal Election Commission and, in some instances, state law; advertisements for pharmaceuticals must meet stringent Food and Drug Administration requirements related to drug advertising.

Over-the-air television, cable and satellite providers are subject to FCC restrictions on advertising in children’s programming and advertising of tobacco products. Over-the-air and cable television providers are further subject to FCC restrictions on the advertising of lotteries and certain games of chance, although this rule does not apply to truthful advertisements regarding casinos where casinos are legal. These restrictions do not currently apply to streaming online video. In 2013, the FCC adopted rules implementing the CALM Act, prohibiting commercial advertisements from being louder than the programming that surrounds them. These rules apply to broadcast television stations, pay-television programmers, and cable and satellite carriers, but not (yet) to internet video services. The FCC also requires broadcast stations to make public certain information about spots they sell for political advertisements.

Online advertisements are subject to a few additional restrictions beyond those that apply to advertisements generally. Under the Children’s Online Privacy Protection Act (COPPA) and the FTC’s COPPA rules, advertisers cannot use online ads to knowingly gather personally identifiable information from children aged under 13, to gather personal information through an online ad directed towards children, or to gather personal information through an online ad placed on a site directed towards children. Additionally, for advertising via email, the FTC’s CAN-SPAM rules require that senders of commercial email identify emails as an advertisement, provide information about the identity and location of the sender, and provide a functional opt-out mechanism, among other requirements.

Are there regulations specifying a basic package of programmes that must be carried by operators’ broadcasting distribution networks? Is there a mechanism for financing the costs of such obligations?

Cable operators and direct-to-home satellite providers are subject to must-carry obligations concerning the signals of over-the-air television broadcasters in their operating area. OTT internet providers are not.

Full-power, commercial broadcast television stations must submit an election to each cable or satellite carrier serving the station’s local market every three years. Those that elect must-carry receive automatic carriage (with some exceptions) but cannot demand compensation. Those that elect retransmission consent have no right to carriage, but also cannot be carried by distributors in the absence of a written agreement. In many cases, distributors must pay such carriage rights, particularly for popular network affiliates. Neither the must-carry nor the retransmission consent regimes cover copyright issues, which are handled under separate, highly complex statutory licences. The FCC’s recent order permitting television stations to transmit in ATSC 3.0 specified that cable and satellite operators need not carry signals in these new formats.

Is new media content and its delivery regulated differently from traditional broadcast media? How?

New media content is very lightly regulated compared to content delivered by over-the-air broadcasting, cable and satellite. That said, as new media delivery begins to compete with and replace more traditional modes of delivery, the government will likely increasingly apply regulations. For example, disabilities access rules now require full-length video programming delivered using IP to be closed-captioned if that programming is also delivered with captions via over-the-air broadcasting, cable or satellite. These rules also require a wide range of devices that are capable of playing video delivered over IP networks to display closed captions. In addition, the FCC has adopted rules covering the accessibility of user interfaces for devices used to access video programming. These rules impose similar obligations on devices that receive content via IP networks and devices that receive content via more traditional delivery modes. FCC classification of OTT providers as MVPDs would add to this regulation by applying retransmission consent, programme access and other rules to such entities.

Also, in 2014, the US Supreme Court determined that an entity that picks up free, over-the-air broadcast signals cannot send those signals to its customers over the internet without receiving copyright authorisation. Subsequent decisions have clarified that such entities cannot employ the statutory copyright licence reserved for cable systems.

When is the switchover from analogue to digital broadcasting required or when did it occur? How will radio frequencies freed up by the switchover be reallocated?

The switchover for most broadcast television stations occurred in 2009. The FCC reallocated that spectrum to commercial mobile services, some of which will be auctioned and some of which has been allocated to a nationwide public safety network. The switchover for low-power stations, however, remains ongoing, and some such stations still transmit in analogue. Television stations have sought authority to voluntarily transmit in a new format, ATSC 3.0. Any such transmissions will involve issues similar to those raised by the switchover of analogue to digital. Low-power stations must complete the transition to digital broadcasting 12 months after the completion of the post-incentive auction transition.

Does regulation restrict how broadcasters can use their spectrum?

No, but broadcasters must retain at least one channel of free, over-the-air broadcast programming, and remit 5 per cent of any income derived from ancillary services. As a practical matter, broadcasters transmitting in the current format, ATSC 1.0, have found it difficult to offer non-broadcast services. The new proposed format, ATSC 3.0, promises to give broadcasters more flexibility to offer such services.

Is there any process for assessing or regulating media plurality (or a similar concept) in your jurisdiction? May the authorities require companies to take any steps as a result of such an assessment?

The United States does not expressly regulate media plurality, viewpoint diversity or similar concepts. US ownership restrictions (eg, cross-ownership prohibitions) for particular media sectors serve to protect viewpoint diversity indirectly.

Provide a summary of key emerging trends and hot topics in media regulation in your country.

The FCC recently relaxed or eliminated certain ownership restrictions.

Numerous television broadcast ownership groups have sought permission to combine. We expect many additional such requests in the coming months.

Law stated date

Give the date on which the information above is accurate.

1 April 2020