July 21, 2008

FCC Fine for CBS’ Super Bowl “Indecency” Vacated [2:35 pm]

A violation of the APA forms the grounds for a vacate and remand in CBS v FCC:

The FCC possesses authority to regulate indecent broadcast content, but it had long practiced restraint in exercising this authority. During a span of nearly three decades, the Commission frequently declined to find broadcast programming indecent, its restraint punctuated only by a few occasions where programming contained indecent material so pervasive as to amount to “shock treatment” for the audience. Throughout this period, the Commission consistently explained that isolated or fleeting material did not fall within the scope of actionable indecency.

At the time the Halftime Show was broadcasted by CBS, the FCC’s policy on fleeting material was still in effect. The FCC contends its restrained policy applied only to fleeting utterances – specifically, fleeting expletives – and did not extend to fleeting images. But a review of the Commission’s enforcement history reveals that its policy on fleeting material was never so limited. The FCC’s present distinction between words and images for purposes of determining indecency represents a departure from its prior policy.

Like any agency, the FCC may change its policies without judicial second-guessing. But it cannot change a well established course of action without supplying notice of and a reasoned explanation for its policy departure. Because the FCC failed to satisfy this requirement, we find its new policy arbitrary and capricious under the Administrative Procedure Act as applied to CBS.

[...] In finding CBS liable for a forfeiture penalty, the FCC arbitrarily and capriciously departed from its prior policy excepting fleeting broadcast material from the scope of actionable indecency. Moreover, the FCC cannot impose liability on CBS for the acts of Janet Jackson and Justin Timberlake, independent contractors hired for the limited purposes of the Halftime Show, under a proper application of vicarious liability and in light of the First Amendment requirement that the content of speech or expression not be penalized absent a showing of scienter. And the FCC’s interpretation and application of 47 U.S.C. § 503(b)(1) are not sufficiently clear to permit review of the agency’s determination of CBS’s direct liability for a forfeiture penalty based on broadcast indecency.

Further action by the Commission would be declaratory in nature, as the agency may not retroactively penalize CBS. [...]

Indecency Penalty Against CBS Is Rejected

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I’m Sure This Will Solve Everything [8:28 am]

Musicians’ unions stay out of digital debate (pdf)

With digital distribution of entertainment as the focal point, the TV/film and music industries are embroiled in several disputes between those who create the content and those who distribute it. But while those disputes in Hollywood are well-documented — with powerful unions like the Writers Guild of America and the Screen Actors Guild staging high-profile negotiations and, in some cases, strikes — the perception in the music industry is that artists are largely left to themselves to fight for whatever they can get on their own.

[...] To date, the bulk of artist-label disputes have centered on details contained in individual contracts, leaving artists with few options to engage their union for support.

[...] Take the revenue split for digital downloads. The standard practice is that labels pay artists the same cut they get under their contract for CD sales — around 15% after recoupable costs. However, many artists, managers and their lawyers argue digital sales should be treated as a third-party license, in which case they would get 50% of digital revenue.

“Every artist contract is an individual situation, and the labels use that to their advantage,” says Perry Resnick, a business manager with RZO, which represents David Bowie. “Labels haven’t budged on this issue at all . . . I can’t think of any way to address it other than through the courts.”

That’s exactly what’s happening. Sony BMG is facing a class action lawsuit initiated by the Allman Brothers Band and Cheap Trick over this issue for digital downloads and ringtones, and Universal Music Group faces a non-class status suit by some artists regarding a similar issue.

According to AFTRA national executive director Kim Roberts Hedgpeth, the unions have stayed out of that particular fight because they wanted to let the legal process take its course. However, she expects unions will take a much larger role in the near future.

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