Two Proposed FCC Fines Suggest Tougher Enforcement – $32,000 for EEO Paperwork Issues and $20,000 for Alleged Contest Rule Violations

In the last week, the FCC issued proposed fines to two big radio companies for alleged violations of FCC requirements. One proposed fine was for apparent violations of the FCC’s EEO rules, and the other dealt with the obligations of broadcasters to disclose and follow rules for on-air contests.  In both cases, the proposed fines focused on paperwork issues, not necessarily substantive issues.  These decisions seem to signal to the broadcast industry generally that they need to dot every “I” and cross every “T” to avoid penalties like those proposed in these cases.

The EEO Notice of Apparent Liability, issued unanimously by all four FCC Commissioners, proposed a $32,000 fine on Cumulus Media because of one Annual EEO Public File Report that was uploaded to the online public file of co-owned stations in a Georgia market about 9 months after the due date for uploading the report (and the link to that report on each stations’ website was also missing for that period).  In addition, the FCC said that another fine for failing to self-assess the station’s EEO program was warranted. Broadcasters are required to regularly assess the effectiveness of their EEO program.  But what was that failure to assess?  The evidence relied on in issuing this fine was that the public file report had not been uploaded for over 9 months so, if the licensee had been regularly assessing its program, it would have noted that the required report had not made it to the online public file.  The decision did not cite any failure by the licensee to recruit widely when it had open positions, nor any failure of the group to conduct the required EEO non-vacancy specific outreach (described in our posts here and here).  The alleged violations cited in the decision were simply tied to the failure to upload the required documents.  While the base fines for these violations totaled less than $10,000, the proposed fine was increased because Cumulus previously had been found to have had FCC rule violations for EEO and sponsorship identification matters.

The contest Notice of Apparent Liability, issued by the FCC’s Enforcement Bureau, was directed to an iHeart station premised on two facts.  First, the Bureau found that the contest was not conducted in accordance with its rules.  The Bureau noted that contest rules must be clear and unequivocal and, where there is any ambiguity, it must be interpreted against the station.  In this case, the written rules stated that anyone who had won a contest in the prior 30 days could not win the contest at issue.  When the person filing the compliant that led to the proposed fine claimed the prize, the station disqualified him, incorrectly applying a general station rule that said that prohibited winners in the prior 90 days from winning another prize (rather than the 30 days specified in the rules for this particular contest).  iHeart argued that this misunderstanding was immaterial, as the complaining party was still ineligible because the contest rules stated that no one who had won another station contest in the 30 days prior to the start of the contest could win again.  In this case, the individual won another station contest about two months after the start of the contest.  The Bureau said that, as the rule only prohibited winners who had won in the 30 days before the start of the contest, and this contestant won the other contest after the start of the contest, he was not prohibited from participating based on the wording of the rules.  In other words, to prohibit this individual from winning, the rules would have to have specifically stated that they prohibited anyone from winning who had won a station contest anytime between the date 30 days before the start of the contest and the date on which the contest reached its conclusion.  While the station may have meant to imply that restriction, because it was not clearly and unambiguously stated, the violation was found.  See our articles here, here, here and here for more information on FCC requirements for detailing the material terms of any contest (note that some of these articles were from when all material rules of a contest had to be disclosed on-air – now they can be disclosed online as long as the station regularly promotes the website where they can be found).

In addition, there was a second violation that the Bureau found to independently justify the proposed fine.  Specifically, the station had removed the contest rules from its website immediately after the contest ended.  FCC rules require that the contest rules must be maintained on the website at least 30 days after the end of the contest (see our post here on the FCC requirements on publicizing contest rules).  Together, these violations, plus past findings of rule violations by iHeart, were found by the Bureau to warrant the $20,000 fine proposed in this case.

Cumulus and iHeart have 30 days in which to pay the proposed fine or file a petition opposing the proposed fine.

Taken together, these two decisions seem to signal a robust enforcement policy by the new FCC administration, holding companies, particularly big companies like those involved in these cases, to a high standard of regulatory compliance.  In addition, they demonstrate that the FCC will hold the violations of any station in a station group against the group as a whole in the event of a future violation – thus increasing the penalty for any future violations.  So, a violation in one market will subject the licensee to enhanced fines for a violation in another market – even if the prior violation is unrelated to the matter before the FCC.  Broadcasters need to carefully review their compliance not only with the EEO and contest rules considered in these cases, but also their compliance in other areas, as the FCC seems ready to take strong actions when it finds violations of its rules in areas that it believes materially impair the rights of the public.  Be diligent in your rule compliance!

David Oxenford is MAB’s Washington Legal Counsel and provides members with answers to their legal questions with the MAB Legal Hotline. Access information here. (Members only access). There are no additional costs for the call; the advice is free as part of your MAB membership.