Should FCC adjust Fines?

[b-turner]

I read a document proposing the FCC adjust their fines to adapt to revenue of the fined entity. Before you say that is already covered by requesting a reduction because of financial hardship, I'm more or less talking about the top end.

Station A is owned by a non-profit and is in the non-commercial educational band. Station A is airing commercials and has been for two years before being caught by the FCC. During that time the station may have gained a couple of million in revenue by airing commercials. The FCC fines them, let's say, $25,000. The stations admits its guilt, promises to eliminate the issue and moves on. Let's just say the profit margin is a mere 15%. On 2 million, that's $300,000. You pay a fine of $25,000 and say another $5,000 to the attorney that writes the response and is consulted with. That leaves $270,000 in profit.

Station B is a 300 watt non-commercial FM that included 8 items the merchant offers in the Underwriting Announcement and is told by the FCC that is too much, that it crosses the line. The fine is $25,000. Station B has an annual income of about $18,000. It is pretty much a labor of love for the non-profit. They can't afford the fees a communications attorney would charge and they don't have the $25,000. They take the only step they can. There's a local attorney they look to who advises them. They file the paperwork themselves along with the latest IRS Form 990. The FCC takes pity and reduces the fine to $5,000. That $5,000 is five times the annual amount left over to put in the emergency fund. Board members decide if they'll dig in to their personal accounts or just stop this labor of love.

My point is the FCC has an upper limit on fines. The reductions seem to be arbitrary and they need to be. Should guidelines be introduced to allow fines to adjust to cash flow or gross income for the offending party? In other words, you get caught breaking the rules. You submit your latest tax return and the FCC fines according to cash flow or gross income instead of having a top end amount.

Are FCC fines seen as more of a 'cost of doing business' among top billers but a business destroyer among the barely skating by stations? Would such a change be legal? Granted, if I'm working a minimum wage job, driving a junker with a headlight out, tires that are too worn and an out of date inspection sticker because I'm saving up for new tires and a headlight and get stopped by the cops, I get a few tickets that might cost me a few week's pay. The guy with the flashy car in the same condition gets the same tickets but has pocket change to cover it. Sure the guy in the junker car can lose a day's pay to go to court in hopes of a fine reduction or payment plan, but my point is the tickets hurt the guy that drives the junker even more. The guy in the flashy car thinks he has bad luck, shells out for the tickets and moves on, barely a bump in the road. The equal fines assure everyone is equal but the dollar amount, depending on the person, is not equal. And that's might point. The bite of the fine ranges from a slight nip to a deep gash that leaves a mark and needs stitches or maybe it is so bad you bleed out. Can the FCC design itself to deliver a more equal bite?

I agree the FCC has a very challenging job, one I would not want. They get criticism on all sides. It is as if they can do nothing right. The fact is the folks they regulate are mostly names on paper, totally unknown to them. I'm not saying this is a bad thing but understanding the place where a station is and the character of the licensee can help in understanding intent and how something happened that spurred the fine. A licensee I knew visited the FCC on vacation. He wanted to meet some of the faceless signatures he saw on his documents. He said it was exceptional for both the FCC and him. One FCC employee said he never met a broadcaster face to face and it was pretty cool to see the broadcaster was just a regular guy like he was. In other words, the meeting gave greater depth and understanding for both parties. The fellow was not trying to find favor with the FCC and refused to say what station had his name on the license but the FCC guy figured it out.

So, should fines be adjusted to a maximum percentage of cash flow or gross income versus a certain dollar amount? Would such a policy save the FCC time in dealing with fines or open up a can of worms? Would this be more fair?

 

[TheBigA]

You make a great case. However, any time you talk about changing anything at the FCC, it's a process. And not an easy or quick one. They have to put it out there for comments, and then discuss it among themselves. From what I can see, studying FCC procedures over the past 15-20 years, the Commissioners are not friends. They don't hang out together, they represent different political parties, and so they often don't agree. Putting anything in front of the Commission will lead to contention. It's not unlike bringing something in front of the Supreme Court, except that's their job. The FCC is supposed to regulate, not legislate. They do it with fines. For 30 years, thanks to Congress, those fines have funded FCC operations. So they're looking to play "gotcha" whenever they can. So I don't know how sympathetic the FCC is with stations who break the rules. So I ask, how do you go about getting the FCC to consider your very well-worded proposal?

 

[b-turner]

I really am not proposing it. I simply had a mass of working brain cells actually doing their job as I pondered this. There is a petition for rulemaking that proposes this and that is what I read, spurning my thoughts. I really did know of a non-comm broadcaster running their commercial feed on their non-comm for a couple of years before a slap on the wrist. I also know of a small non-comm getting nabbed on the eight items listed in an Underwriting spot, pondering if seven items was okay or not. My thought is the remedy is not wondering if 7 is okay but would be two spots with 4 different items in each spot because I know I have heard many underwriting spots with 4 things mentioned

I agree, the FCC is a political entity. Depending on which party is in control can determine if what is okay today might not be tomorrow. I compare that to the police force that doesn't stop a driver for going 5 miles over but the next police department will for 3 miles an hour over the speed limit. While over the speed limit is illegal and thus, a clear line in the sand, FCC rules are subject to interpretation so the line in the sand can change at any time. That's why I have always advocated staying far from that line in the sand to be on the safe side.

To cite an example or two, in talking with one non-comm, I suggested they drop the production music from their underwriting because the FCC could, if they chose, claim the spot sounded too much like a commercial although there is no specific rule that says you can't use music under your Underwriting. I had another conversation about an underwriting spot that describe the traits one looks for when hiring an attorney. While the spot did not say the underwriter had these qualities, the spot said when selecting an attorney you should ask these questions, call it a thinly veiled 'public service' type of spot. That made me think the FCC could say the attributes described were stated in order to sway the listener to call the lawyer paying for the underwriting spot. Illegal, not really but depending on the FCC Agent, it might be interpreted as illegal even though it does not specifically break a rule. It's sort of like an automobile maker having a smiling human behind the wheel in an Underwriting spot on PBS. The FCC has already said that is a no no. My point is the rules are vague enough already and the ones least prepared for a fine also are out in the cold as far as legal council goes that could nip any problem areas in the bud prior to any fine. Granted, many stations try to come right up to the line instead of moving away to a safe distance. Me, I'm within yelling range of that line but far enough away to not attract scrutiny.

In other words, there is so much gray area, I really am not sure how to pierce the organization for a clear path to consider such a proposal. I am certainly not qualified. One would need an attorney's mind to identify every train of thought and create a logical argument for every potential scenario and even then, one would have to wonder if it could ever happen.

 

[TheBigA]

The best example is the indecency rules, which have now been thrown out by the courts, and sent back to the FCC for re-writing. I don't know how many years it's been, but the FCC hasn't acted on the court's decision, and the rules remain vague and "capricious," as one court described. In the meantime they fined a TV station a boatload of money for accidently airing someone's private parts. So it appears that the FCC continues to operate as though previous court decisions haven't taken place.

 

[b-turner]

I remember that. You bet the FCC indecency rules are horrible. While there is supposed to be some basis on community standards, that is a well meaning but very elusive standard. If a certain person who is not a typical listener happens to mistakenly tune in and hears something, they might get the wheels rolling on a hefty fine. Worst of all, it is less about content and what this otherwise unknown listener might 'think'. We can't control other people's interpretation of our words and that is the problem. All they have to do is get some agreement at the Commission level and you might see a fine or spend as much as the fine to fight it. That's another issue: if you think the FCC is wrong, you'll easily spent as much if not more than the fine to fight it.

On the case you cited, I had to question the station's thinking that this should actually be a news story. Gee, you are a firefighter and did porn at some point. So what? Does that mean you can't be a good firefighter? I thought it might have been a ploy to increase viewership that went south. Still, fined a boatload, I wonder what happened to the spot rate afterwards.