FCC Eliminates Broadcast Main Studio Rules,Related Staffing, and Program Origination Requirements;Controversial Order Passes Three-Two Along Party Lines

On Oct. 24, 2017, the FCC issued a Report and Order eliminating the Commission's rule requiring each AM, FM, and television broadcast station to maintain a main studio located in or near its community of license (i.e. the Main Studio Rule). In the same Order, the FCC eliminated existing requirements that are associated with the Main Studio Rule.

Specifically, the FCC eliminated the requirement that the main studio have full-time management and staff present during normal business hours and that the studio have program origination capability. This action may dramatically reduce the cost of operations for many broadcasters, particularly those in small and rural markets. However, the FCC did not get rid of all of the requirements related to the Main Studio Rule. It retained the requirement that broadcasters maintain a local or toll free telephone number for calls from members of the community. Stations also must maintain any documents required to be in the public file that is not part of their online public file at a publicly accessible location within the station's community of license.

The FCC's action to eliminate the Main Studio Rule was based on the finding that the cost of this rule and its related requirements outweigh the benefits, in light of current technology and market conditions. This is part of Chairman Pai's broader move to "modernize" the FCC as he outlined in a speech to the NAB back in September.

The Order suggests that the cost savings from elimination of the Main Studio Rule should result in more resources being devoted to programming, but many smaller broadcasters may need the savings just to stay in business. In any case, broadcasters will welcome the regulatory relief.

So, let's dive into what this all really means.

1. Elimination of Main Studio Rule

The Main Studio Rule (Section 73.1125(a)) currently requires each AM, FM, and television broadcast station to maintain a main studio that is located either: "(1) [w]ithin the station's community of license; (2) [a]t any location within the principal community contour of any AM, FM, or TV broadcast station licensed to the station's community of license; or (3) [w]ithin twenty-five miles from the reference coordinates of the center of its community of license." According to the Commission, however, the costs associated with the Main Studio Rule often dissuade broadcasters in small and rural communities from launching or continuing to operate a station.

The Order argues that eliminating the Main Studio Rule, and related requirements, will put broadcasters on a more equal footing with competing Internet and satellite radio services.

It also asserts that the Main Studio Rule is no longer necessary because technological advances have rendered this portion of the rule somewhat obsolete. Specifically, the viewing and listening audience can (and do) keep in contact with their local stations primarily through email, websites, and social media. In this sense, the Order suggests that the FCC's prior actions mandating the posting of public file materials online was a direct precursor to this change. According to the Order, "[b]ecause " technological innovations have eliminated the need for a local main studio, the costs of complying with the main studio rule substantially outweigh any benefits."

In addition to allowing broadcasters to eliminate their main studio, the Order notes that stations "that are co-owned or jointly operated may find it to be more efficient for them to co-locate their studios." This may significantly reduce expenses for broadcasters that still wish to keep some physical presence in their community of license.

While the Commission is eliminating the the Main Station Rule, the Order acknowledges that Section 307(b) of the Communications Act still requires the efficient distribution of broadcast stations. It notes that broadcast stations will still be licensed to a specific community of license, and still be obligated to place a certain signal contour over that community. Stations will still be subject to quarterly issues/programs list requirements.

2. Main Studio Staffing Requirements Eliminated

In connection with the Main Studio Rule, the FCC separately had adopted associated requirements regarding staffing for the studio. Specifically, the Commission has held that a main studio must have a "meaningful management and staff presence" to fulfill the main studio's function, which at a minimum required that presence "on a full-time basis during normal business hours" and was interpreted to be at least two employees present on a full-time basis: one management-level employee and one staff member. The Order noted that this often constitutes a significant burden on small and rural stations; thus all staffing requirements have been eliminated.

While some commenters raised concerns that this could lead to unfortunate loss of jobs for station staff, the Order counters that "preventing stations from going dark and enabling broadcasters to launch stations that they otherwise may not launch may promote employment." In any case, this is now purely a business decision for broadcasters.

The Order does caution, however, that "the deletion of the main studio rule does not in any way limit or reduce broadcast licensees' obligation and responsibility to retain and maintain control over essential station matters, such as personnel, programming, and finances." The Order goes on to note that the Commission expects that "broadcast licensees will continue to be able to demonstrate such control notwithstanding the elimination of the Main Studio Rule and the staffing requirements associated with the Main Studio Rule."

3. Programming Origination Capability Requirement Eliminated

While the Commission (in 1987) repealed a rule requiring each broadcast station to originate more than 50 percent of its non-network programs from its main studio or other points within its community of license, it retained at that time a requirement that stations have program origination "capability" (production and transmission facilities) at their main studio. Yesterday's Order eliminates this requirement. It noted that "[t]echnology makes it easier than ever before to originate locally relevant programming from locations outside of the station's community of license" and that there "is no evidence in the record that the current program origination capability requirement has enhanced local programming or otherwise served the public interest."

4. Continuing Requirement for Local or Toll-Free Telephone Number

While the Commission axed numerous requirements in this Order, it did retain Section 73.1125(e) of the rules. This subsection requires "[e]ach AM, FM, TV and Class A TV broadcast station [to] maintain a local telephone number in its community of license or a toll-free number." The Order retains the requirement to post this telephone number in the station's online public file, but the FCC declined to require stations to publicize the number in additional ways. The Order notes that implicit in the requirement to maintain a local number is the requirement that calls to that number be answered during normal business hours. The Order includes the helpful suggestion that stations use voicemail as a method to allow listeners to leave messages outside of normal business hours.

5. Transitional Access to Local Public Inspection Files

As the Order noted, there soon will be only limited instances in which any portion of a station's public inspection file will be permitted to be maintained at the station's main studio rather than online. Essentially, TV station public files are already online, and by March 1, 2018 all radio station public files will be online. The only potential exception will be preexisting portions of the political file that the station may retain locally until the expiration of the two-year retention period for such materials.

However, in the interim, the Order requires every broadcast station applicant, permittee, or licensee to maintain any portion of its public file that is not part of the online public file at an accessible place within its community of license. This includes: a station office or studio (if it is located within the community of license), a local library, or another station's office or studio. The file must be available for public inspection at any time during regular business hours, as is currently the case with regard to access to a public file maintained at a station's main studio. Of course, as the Order notes, "any station that wishes to avoid this requirement has the option to instead fully transition to the Commission's online public file system."

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It comes as no surprise that the Order was controversial and the two Democratic Party commissioners dissented. Commissioner Clyburn stated that, "[t]oday is a solemn one, in the history of television and radio broadcasting. By eliminating the main studio rule in its entirety for all broadcast stations - regardless of size or location - the FCC signals that it no longer believes those awarded a license to use the public airwaves should have a local presence in their community." She also suggested, along with fellow Commissioner Rosenworcel, that the Commission could have reduced the burden on broadcasters through use of a waiver procedure, based on consideration of market size and economic hardship. Of course, drafting and filing waivers itself can be a significant burden on small broadcasters.

Similarly, Commissioner Rosenworcel acknowledged that "many stations face real economic challenges," but expressed regret that the Order "strip[s] our rules of the very localism that makes broadcasting unique."

The elimination of the Main Studio Rule, and the related staffing and program origination capacity requirements, go into effect 30 days after the Order is published in the Federal Register. On the other hand, the requirement to maintain any portion of its public file that is not part of the online public file at an accessible place within its community of license will have to be approved by the Office of Management and Budget prior to publication in the Federal Register. Keep an eye on Commlawblog for an alert when these actions occur. Or call us to discuss more of the details.