[Federal Register: November 1, 2006 (Volume 71, Number 211)]
[Rules and Regulations]
[Page 64154-64165]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01no06-18]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Parts 73 and 76
[MM Docket No. 00-167; FCC 06-143]
Broadcast Services; Children's Television; Cable Operators
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: This document resolves a number of issues regarding the
obligation of television broadcasters to protect and serve children in
their audience. The document addresses matters related to two areas:
the obligation of television broadcast licensees to provide educational
and informational programming for children and the requirement that
television broadcast licensees protect children from excessive and
inappropriate commercial messages. The item makes certain modifications
to the rules and policies adopted in the Commission's 2004 order in
this proceeding. These modifications respond to petitions for
reconsideration filed in response to the 2004 rules as well as a joint
proposal recommending modifications to those rules filed by a group of
cable and broadcast industry representatives and children's television
advocates, among others.
DATES: The stay is lifted on Sec. 73.670 paragraphs (b), (c) and Note
1; Sec. 73.671 paragraphs (e) and (f) and Sec. 76.225 paragraphs (b),
(c) and Note 1 effective January 2, 2007. The amendments in this final
rule are effective January 2, 2007.
FOR FURTHER INFORMATION CONTACT: Kim Matthews, Media Bureau, (202) 418-
2120.
SUPPLEMENTARY INFORMATION: This is a summary of the Federal
Communications Commission's Second Order on Reconsideration and Second
Report and Order in MM Docket No. 00-167, FCC 06-143, adopted September
26, 2006, and released September 29, 2006. The complete text of this
document is available for inspection and copying during normal business
hours in the FCC Reference Center, 445 12th Street, SW., Washington, DC
20554. The complete text may be purchased from the Commission's copy
contractor, Qualex International, 445 12th Street, SW., Room CY-B402,
Washington, DC 20554. The full text may also be downloaded at:
http://www.fcc.gov. To request materials in accessible formats for people with
disabilities (braille, large print, electronic file, audio format),
send an e-mail to fcc504@fcc.gov or call the Consumer & Governmental
Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY).
Summary of the Second Order on Reconsideration and Second Report
1. In this Second Order on Reconsideration and Second Report and
Order (``Second Order'') we resolve issues regarding the obligation of
television broadcasters to protect and serve children in their
audience. We address matters related to two areas: the obligation of
television broadcast licensees to provide educational and informational
programming for children and the requirement that television broadcast
licensees and cable operators protect children from excessive and
inappropriate commercial messages. Some of the rules and policies
adopted herein apply only to digital broadcasters, while others apply
to both analog and digital broadcasters as well as cable operators. Our
goals in resolving these issues are to provide television broadcasters
with guidance regarding their obligation to serve children as we
transition from an analog to a digital television environment, update
our rules protecting children from overcommercialization in children's
programming, and improve our children's programming rules and policies.
2. Specifically, this Second Order makes certain modifications to
the rules and policies adopted in our September 9, 2004 Report and
Order and Further Notice of Proposed Rule Making (70 FR 25 and 63,
January 3, 2005) (``2004 Order'') in this proceeding. The modifications
we make today respond to petitions for reconsideration filed in
response to the rules as well as a Joint Proposal of Industry and
Advocates on Reconsideration of Children's Television Rules (``Joint
Proposal'') filed by a group of cable and broadcast industry
representatives and children's television advocates, among others.
3. Our decision today does not alter the new children's core
programming ``multicasting'' rule adopted in the 2004 Order, but does
clarify the way in which repeats of core programs will be counted under
the new rule. We do not make substantial changes to the four-prong Web
site rule adopted in the 2004 Order, but do amend the host selling
restrictions adopted in the 2004 Order to apply those restrictions less
broadly and to exempt certain third party Web sites from the host
selling restriction. We also revise the definition of ``commercial
time'' adopted in the 2004 Order to limit the kinds of promotions of
children's programs that must be counted under the advertising rules
adopted in the 2004 Order. In addition, with regard to scheduling of
core children's programming, we vacate the percentage cap on the number
of permissible core program preemptions adopted in the 2004 Order and
return to our prior practice of addressing the number of preemptions
and rescheduling of core programming on a case-by-case basis. These
modifications will serve the public interest by
[[Page 64155]]
ensuring an adequate supply of children's educational and informational
programming as we transition to digital television technology, and
protecting children from excessive and inappropriate commercial
messages in broadcast and cable programming, without unduly impairing
the scheduling flexibility of broadcasters and cable operators.
Discussion
4. We commend the parties to the Joint Proposal for their hard work
in negotiating a compromise among a group of entities with often widely
divergent views on the appropriate rules and policies in the area of
children's television. Negotiation among interested parties can often
be productive in achieving a workable compromise proposal consistent
with the public interest on issues before the Commission, and we
encourage such efforts. This private agreement has now been subject to
public scrutiny and we will, of course, consider all comments in
determining what rules and policies are most consistent with the
statute and best serve the public interest. Based on the full record
before us, we conclude that the Joint Proposal appropriately balances
the concerns and needs of children and parents with those of industry,
advertisers, and others, and will result in swift implementation of the
rules.
5. We note that the Joint Proposal recommends only relatively minor
clarifications to two of the rules adopted in the 2004 Order--the
digital broadcasting processing guideline and the Web site address
rule. While some of the comments filed in response to the Joint
Proposal indicate that some parties remain concerned about aspects of
the digital broadcasting processing guideline, by and large the
comments support the Joint Proposal. In this item, we retain both the
digital programming processing guideline and the Web site address rule
with only minor modifications. These and the other modifications we
make to the 2004 rules are consistent with the recommendations of the
Joint Proposal and with our overall goals of ensuring the provision of
sufficient children's educational programming and protecting children
from excessive advertising as we transition to the digital era.
Digital Core Children's Programming Processing Guideline
6. Under the core programming processing guideline adopted in 1996,
analog broadcasters that air at least three hours per week of core
children's educational programming are entitled to staff-level approval
of the CTA portion of their license renewal application. With the
advent of digital broadcasting and the multicasting ability that
technology offers, the Commission determined in the 2004 Order that it
would adopt a new method of quantifying the core programming guideline
for digital broadcasters that choose to multicast. The Commission made
clear that all digital broadcasters continue to be subject to the
existing three hours per week core programming processing guideline on
their main program stream. In addition, for DTV broadcasters that
choose to multicast, the guideline increases in proportion to the
additional hours of free programming offered on multicast channels--up
to an additional three hours per week for each 24-hour free multicast
program stream. Under the revised guideline adopted in the 2004 Order,
digital broadcasters can choose to air some or all of the additional
core programming on either the main stream or a multicast stream, as
long as the multicast stream receives MVPD carriage comparable to the
stream that generated the additional core programming obligation.
7. In order to ensure that digital broadcasters do not simply
replay the same core programming in order to meet this revised
processing guideline, the Commission required in the 2004 Order that
``at least 50 percent of core programming not be repeated during the
same week in order to qualify as core.'' The Commission exempted from
this requirement any program stream that merely time shifts the entire
programming line-up of another program stream. In addition, the
Commission stated that during the digital transition we would not count
as repeated programming core programs that are aired on both the analog
station and a digital program stream.
8. A number of broadcast interests argued on reconsideration that
requiring additional programming obligations for multicast streams
would stifle the deployment of specialized channels. Broadcasters also
claimed that there is no record evidence of a failure by commercial TV
stations to meet children's educational programming needs. To counter
the disincentive to air multicast channels, some petitioners supported
an exemption for digital program streams that carry non-entertainment
programming. Petitioners also argued that the Commission should waive
the ``comparable carriage'' element of the guideline, at least until
MVPDs are required to carry all free over-the-air channels. In
response, children's television advocates argued that history shows
that market forces do not ensure that broadcasters serve the
educational needs of children and that the record in this proceeding
demonstrates that the educational needs of children are not currently
being met.
9. The Joint Proposal generally accepts the new multicasting rule
but recommends a clarification of the restriction on the number of
repeated core programs that can count toward the new programming
guideline. Specifically, the Joint Proposal would clarify that at least
50 percent of the core programming counted toward meeting the
additional programming guideline cannot consist of program episodes
that had already aired within the previous seven days on either the
station's main program stream or on another of the station's free
digital program streams. This is not a change in the rule, but rather a
clearer statement of what the rule was intended to cover. The Joint
Proposal would also amend FCC Form 398 to collect information necessary
to enforce this limit.
10. We will retain the revised core programming processing
guideline as adopted in the 2004 Order. As we stated then, we believe
that the revised guideline translates the existing three-hour guideline
to the digital environment in a manner that is both fair to
broadcasters and meets the needs of the child audience. The previous
core programming guideline represented the Commission's judgment as to
what constituted a ``reasonable, achievable guideline'' that would not
unduly burden broadcasters. Now that digital broadcasters have the
capability to significantly increase their overall hours of
programming, increasing the amount of core programming will not result
in an unreasonable burden. For example, if a station chooses to
broadcast a second stream of free video programming twenty-four hours a
day, seven days a week, it can satisfy the new guideline by providing
merely three additional hours per week of core programming--or less
than two percent of the channel's 168 hours of additional weekly
programming. In addition, we believe that a guideline that increases
the amount of core programming in a manner roughly proportional to the
increase in free video programming offered by broadcasters is
consistent with the objective of the CTA ``to increase the amount of
educational and informational broadcast television available to
children.''
11. We also conclude that the revised quantitative processing
guideline we reaffirm today is consistent with the First Amendment. It
is well established
[[Page 64156]]
that the broadcast media do not enjoy the same level of First Amendment
protection as do other media. Under this more lenient scrutiny, it is
also well established that the government may regulate broadcast speech
in order to advance its compelling interest in promoting and protecting
the well-being of children. As we discussed in the 2004 Order, our new
guideline imposes reasonable parameters on a broadcaster's use of the
public airwaves and is narrowly tailored to advance the government's
substantial, and indeed compelling, interest in the protection and
education of America's children. In enacting the CTA, Congress
explicitly found that ``as part of their obligation to serve the public
interest, television station operators and licensees should provide
programming that serves the special needs of children.'' As noted
above, the multicasting rule substantially advances that interest by
furthering ``the objective of the CTA `to increase the amount of
educational and informational broadcast television available to
children.' '' Moreover, consistent with the First Amendment, the rule
is narrowly tailored to achieve its objective. It increases the
guideline only for broadcasters that choose to use their digital
capacity to air additional free video programming. Broadcasters
continue to retain wide discretion in choosing the ways in which they
will meet their CTA obligations. Under the rule, the core programming
guideline increases in a manner roughly proportional to the additional
amount of free video programming multicasters choose to provide. That
guideline, by ``giving broadcasters clear but nonmandatory guidance on
how to guarantee compliance'' with the CTA, provides ``a constitutional
means of giving effect to the CTA's programming requirement.'' We
reject the State Broadcasters Associations' argument that our revised
guideline is constitutionally unacceptable because it ``dictates the
removal of one form of content over another.'' The CTA itself reflects
a preference for children's educational and informational programming,
and no party has challenged the constitutionality of the CTA's
provisions for promoting such programming.
12. A number of broadcast companies and industry associations, none
of which are parties to the Joint Proposal, argue that the Commission
either should not impose additional core programming requirements on
digital multicast channels, or at least should exempt multicast
channels that offer educational, informational, and/or public interest
programming. These commenters argue that many local broadcasters are
planning multicast channels that focus on a single genre of
programming, such as weather or news, and that the multicast guideline
as adopted would discourage the provision of such specialized channels.
These commenters also argue that children are unlikely to watch
programming aired on channels primarily devoted to news and other
specialized adult programming.
13. We decline to revise our processing guideline as suggested by
these commenters. As we stated in the 2004 Order, we do not want to
discourage broadcasters from providing channels with a specialized
focus. However, we agree with the Children's Media Policy Coalition
that the guideline provides broadcasters the flexibility to move core
programming to either their main programming stream or other multicast
streams, so long as the stream the programming is moved to receives
comparable MVPD carriage to the stream triggering the additional
obligation. Thus, the guideline preserves the principle that, in order
to obtain staff level approval of their CTA compliance, broadcasters
must provide three hours of children's core programming for every 168
hours per week of free video programming that they air, while at the
same time giving broadcasters flexibility to choose the multicast
stream that will air that programming. In addition, broadcasters could
meet the guideline by airing children's programming on specialized
channels, such as a children's news program on a twenty-four hour news
channel or a children's educational weather program on a twenty-four
hour weather channel. Furthermore, we note that our rules provide
flexibility for licensees that have aired somewhat less core
programming than indicated by the guideline but that nonetheless
demonstrate an adequate commitment to educating and informing children.
14. Some broadcast commenters also point out that there is no
requirement for cable carriage of multicast channels, thereby limiting
the flexibility of broadcasters to consolidate their core programming
on a multicast stream under the comparable MVPD carriage requirement.
While we recognize that the comparable MVPD carriage requirement may
limit the flexibility of some broadcasters to consolidate core
programming on a single multicast channel, we believe that the
comparable carriage requirement is necessary to ensure that, as
additional free programming is made available to viewers in the
station's service area, the level of children's programming increases
as well.
15. As noted, the Joint Proposal suggests a clarification of the
number of permissible core program repeats under the processing
guideline. Specifically, the Joint Proposal recommends that the
Commission clarify that at least 50 percent of the core programming
counted toward meeting the additional programming guideline cannot
consist of program episodes that had already aired within the previous
seven days on either the station's main program stream or on another of
the station's free digital program streams. We will adopt this
clarification; it makes the rule easier to understand and apply and is
consistent with the intent of the 2004 Order. All of the commenters
that addressed this aspect of the Joint Proposal supported this
clarification. We will also adopt the Joint Proposal recommendation,
supported by other commenters, that FCC Form 398 be amended to collect
the information necessary to enforce the limit on repeats under the
revised guideline. As suggested by commenters, we will permit licensees
to certify on Form 398 that they have complied with the repeat
restriction and will not require broadcasters to identify each program
episode on Form 398. We will require licensees, however, to retain
records sufficient to document the accuracy of their certification,
including records of actual program episodes aired, and to make such
documentation available to the public upon request. The children's
programming liaison, whose name and phone number must be included on
FCC Form 398, should be able to provide documentation to substantiate
the certification if requested.
Preemption
16. To qualify as ``core programming'' for purposes of the
children's programming processing guideline, the Commission requires
that a children's program be ``regularly scheduled''; that is, a core
children's program must ``be scheduled to air at least once a week''
and ``must air on a regular basis.'' In adopting its 1996 children's
programming rules, the Commission stated that television series
typically air in the same time slot for thirteen consecutive weeks,
although some episodes may be preempted for programs such as breaking
news or live sports events. The Commission stated in the 1996 Order
that it would leave to the staff to determine, with guidance from the
full Commission as necessary, what constitutes regularly scheduled
programming and what level of preemption is allowable.
[[Page 64157]]
17. In the 2004 Order, the Commission stated that core programs
moved to the same time slot on another digital program stream would not
be considered preempted, as long as the alternate stream has comparable
MVPD carriage and the station provides notice of the move on both the
original and the alternate program stream. In addition, the 2004 Order
limited the number of core programming preemptions for analog and
digital broadcasters to no more than ten percent of core programs in
each calendar quarter. Any preemption beyond the ten percent limit
would cause that program not to count as core under the processing
guideline, even if the program were rescheduled. The 2004 Order
exempted preemptions for breaking news from the preemption limit and
rescheduling requirement.
18. On reconsideration, a number of petitioners argued that the
preemption cap is unworkable in light of broadcasters' commitments to
air live sports programming on Saturdays, particularly on the West
coast. In lieu of the new rules, some petitioners urged the Commission
to continue its prior practice of case-by-case staff approval of
network preemption practices. Other petitioners supported exempting
from the preemption cap live sports programming or children's programs
rescheduled in accordance with the Media Bureau's current preemption
policies. In their original opposition to these petitions, children's
advocates agreed that a modest modification of the new preemption rule
would be appropriate to accommodate major sporting events such as the
Olympics and World Cup.
19. The Joint Proposal recommends that the Commission not adopt any
percentage or other numerical limit on preemptions and instead return
to the Commission practice of ensuring, on a case-by-case basis, that
broadcasters do not engage in excessive preemptions of core
programming. All of the commenters that addressed the issue of
preemptions supported the Joint Proposal recommendation to eliminate
the cap on the number of preemptions and return to a case-by-case
approach.
20. We are persuaded that the burden created by the ten percent cap
on preemptions outweighs the benefits the Commission sought to achieve,
and therefore hereby repeal the ten percent cap on preemptions adopted
in the 2004 Order. We will instead institute a procedure similar to
that used by the Media Bureau and the Commission following adoption of
the 1996 children's television Order whereby networks sought informal
approval of their preemption plans each year. Under the policy formerly
developed by the Commission staff, a program counted as preempted only
if it was not aired in a substitute time slot (otherwise known as a
``second home'') with an on-air notification of the schedule change
occurring at the time of preemption during the previously scheduled
episode. The on-air notification must announce the alternate date and
time when the preempted show will air. As part of this policy, we will
require all networks requesting preemption flexibility to file a
request with the Media Bureau by August 1 of each year stating the
number of preemptions the network expects, when the program will be
rescheduled, whether the rescheduled time is the program's second home,
and the network's plan to notify viewers of the schedule change. We
will presume that non-network stations are complying with the three
hour core programming requirement, and do not need broad preemption
relief. We intend to monitor the number, rescheduling, and promotion of
preemptions of all stations under this policy by our quarterly review
of their Children's Programming Reports to ensure that the interests of
the child audience are being served. We find this approach to be a
reasonable compromise for programmers that routinely face conflicts
between their children's television blocks and sports programming as
the result of time differences. We note that the concept of a ``second
home'' is familiar to viewers, and are persuaded that those core
programs that must be preempted are consistently rescheduled and
promoted. Indeed, the Media Bureau has previously found that children's
educational and informational programming efforts have not been
``unduly affected by the limited preemption flexibility granted'' under
the existing standard.
Limit on Display of Internet Web Site Addresses
21. The CTA requires that commercial television broadcasters and
cable operators limit the amount of commercial matter in children's
programs to no more than 101/2 minutes per hour on weekends and 12
minutes per hour on weekdays. The Commission noted in the 2004 Order
that some broadcasters are displaying Internet Web site addresses
during children's program material (for example, in a crawl at the
bottom of the screen) and expressed concern that the display of such
addresses for Web sites established for commercial purposes in
children's programs was inconsistent with the CTA's mandate to protect
children from excessive and inappropriate commercial messages.
Accordingly, the 2004 Order required that, with respect to programs
directed to children ages 12 and under, the display of Internet Web
site addresses during program material is permitted only if: (1) The
Web site offers a substantial amount of bona fide program-related or
other noncommercial content; (2) the Web site is not primarily intended
for commercial purposes, including either e-commerce or advertising;
(3) the Web site's home page and other menu pages are clearly labeled
to distinguish the noncommercial from the commercial sections; and (4)
the page of the Web site to which viewers are directed by the Web site
address is not used for e-commerce, advertising, or other commercial
purposes (e.g., contains no links labeled ``store'' and no links to
another page with commercial material). This restriction applies to
analog and digital broadcasters as well as cable operators.
22. On reconsideration, a number of petitioners claimed that the
rule exceeds the Commission's authority because the CTA does not
authorize regulation of Web site addresses, which petitioners assert
are not commercials. We disagree. As the children's television
advocates asserted, the Commission has the authority to enact these
restrictions because they do not regulate Internet content, but rather
the advertising of commercial Web sites in children's programming, a
subject clearly within the scope of the Commission's jurisdiction.
Several petitioners also challenged the rule on notice grounds. In
response, child advocates argued that the Commission gave adequate
notice of the potential restriction, because it sought comment on
whether to prohibit all direct links to commercial Web sites and the
term Web site links can refer to either passive displays or interactive
links. We agree that adoption of the Web site display rules was within
the scope of the NPRM. Furthermore, the Second FNPRM sought comment
``on the rules and policies adopted in the [2004] Order in light of the
recommendations reflected in the Joint Proposal'' and asked for ``any
alternative modifications'' to the 2004 rules, in addition to the
modifications proposed in the Joint Proposal. Thus, the notice issue is
moot.
23. The Joint Proposal does not propose material changes to the Web
site rule adopted in the 2004 Order but requests two clarifications:
(1) That the rule applies only when Internet addresses are displayed
during program material or during promotional material
[[Page 64158]]
not counted as commercial time; and (2) that if an Internet address for
a Web site that does not meet the four-prong test is displayed during a
promotion, in addition to counting against the commercial time limits,
the promotion will be clearly separated from programming material. The
comments filed in response to the Second FNPRM generally support the
Joint Proposal approach.
24. We will retain the rule on Web site addresses and, in addition,
adopt the clarifications proposed in the Joint Proposal. As the
Commission stated in the 2004 Order, the Web site address rule fairly
balances the interest of broadcasters in exploring the potential uses
of the Internet with our mandate to protect children from over-
commercialization. The display of the address of a Web site that sells
a product is the equivalent of a commercial encouraging children to go
to the store and buy the product. Thus, including the display during
program material converts that program material into commercial matter
just as a host telling children to race to their local toy store would.
We note that broadcasters are free to display the addresses of Web
sites that do not comply with the test during the allowable commercial
time, as long as it is adequately separated from the program material;
thus, the burden is minimal and outweighed by the benefits discussed
above. The minor clarifications recommended by the Joint Proposal make
this point clear.
25. We also disagree with petitioners, and conclude that the Web
site rule we modify today is consistent with the First Amendment.
Because this rule regulates commercial speech, it is subject to less
First Amendment protection than noncommercial speech. The rule is
therefore permissible under the First Amendment if it ``directly
advances'' a ``substantial'' governmental interest in a manner that
``is not more extensive than necessary to serve that interest.'' The
Web site rule satisfies these criteria. By limiting the display of
commercial Web site addresses during children's programming, the Web
site rule advances the government's substantial interest in protecting
children from overcommercialization. Numerous Web sites sell products
with special appeal to children. Televised references to commercial Web
sites are no different from other forms of advertising. A television
commercial encouraging children to go to a toy store Web site, for
example, is substantially similar to an advertisement telling children
to go to their local toy store. As such, a limit on televised
advertising of commercial Web sites during children's programming is
necessary ``to protect children, who are particularly vulnerable to
commercial messages.'' The rule is narrowly tailored. It only limits
when certain types of Web site addresses may be televised; it places no
limits on displays of Web sites that are not commercial in nature. In
addition, these restrictions apply only during non-commercial portions
of children's programs, which represent a tiny fraction of a
broadcaster's programming. The rule does nothing to prevent
broadcasters and cable programmers from publicizing their Web sites as
often as they wish during their many hours of other programming or
during properly buffered commercial portions of children's programming,
regardless of whatever content those Web sites may contain. Further,
despite petitioner's passing assertions, the Web site rule as modified
is not constitutionally suspect on vagueness grounds. We find that the
four-part test is sufficiently clear to give broadcasters reasonable
notice of what conduct is proscribed.
26. A number of commenters, including the Ad Council, request that
public service announcements (``PSAs'') be exempt from the four-prong
Web site rule. The Ad Council states that the rule has created
confusion within the broadcast industry and has had a chilling effect
on broadcasters' willingness to run PSAs. We agree that further
clarification of this issue could help avoid confusion. We agree with
the Children's Media Policy Coalition that we should clarify that
certain PSAs, which are not commercial matter under our rules, are
exempt from the Web site display rules. The Commission has historically
encouraged licensees to air PSAs as part of their obligation to fulfill
the public interest. Indeed, in the children's television context, as
discussed above, licensees that have not aired at least three hours of
core programming may count educational and informational PSAs toward
the three hour processing guideline. Thus, the Commission has already
adopted a policy of encouraging the airing of PSAs during programming
directed to children. For these purposes, we will define PSAs exempt
from the Web site display rules as suggested by the Coalition: PSAs
aired on behalf of independent non-profit or government organizations,
or media companies in partnership with non-profits or government
entities, that display Web sites not under the control of the licensee
or cable company. We believe it is unlikely that PSAs meeting this
definition will display addresses for commercially-oriented Web sites,
and we are persuaded by commenters that if we do not carve out an
exception for PSAs licensees and cable operators will be discouraged
from airing them because they do not want to incur the obligation of
ensuring that any Web site addresses displayed comply with the four
prong test. Given the non-profit nature of PSAs, we do not expect abuse
of this exemption. But we will revisit this issue if the need arises.
27. For similar reasons, we also clarify that station
identifications and emergency announcements are not subject to the
rules governing the display of Web site addresses as long as the
display is consistent with the purpose of the announcement. The four
prong Web site address rule applies to Web site addresses displayed
during program material and, as clarified above, to promotional
material not counted as commercial time. Station identifications and
emergency announcements are neither program material nor promotions for
purposes of the Web site rule. Rather, both are announcements required
under the Commission's rules and must comport with certain requirements
regarding their composition and timing. To the extent a licensee
includes a Web site address to provide more information about an
emergency or about how to contact the station, we find it unnecessarily
restrictive to require that such a Web site comply with the four prong
test.
28. We decline to exempt closing credits from application of the
Web site address rules as requested by some commenters. Closing credits
are part of the television program material and should, therefore, be
subject to the Web site restrictions.
29. We decline at this point to further define terms in the Web
site rule. NAB argues that certain terms in the rule are vague and do
not provide sufficient guidance to broadcasters on whether a Web site
would comply with the Web site rule. We believe that the rule, as
clarified herein, is sufficiently clear to guide broadcasters'
compliance. Isolated concerns about the clarity of the Web site rule
can be addressed by the Commission staff on a case-by-case basis.
30. We also decline to allow broadcasters to avoid liability by
relying on representations from program providers that web addresses
meet the four-prong test. We do not expect compliance to be burdensome,
but we will revisit this issue if we receive evidence that this is
imposing an undue burden on broadcasters.
[[Page 64159]]
Host Selling
31. The Commission's long standing host selling policy prohibits
the use of program characters or show hosts to sell products in
commercials during or adjacent to shows in which the character or host
appears. Because of the unique vulnerability of children to host
selling, the 2004 Order prohibits the display of Web site addresses in
children's programs when the site uses characters from the program to
sell products or services. In the 2004 Order, the Commission stated
that the restriction on Web sites that use host selling applies to Web
site addresses displayed both during program material and during
commercial material.
32. Several parties argued on reconsideration that the host selling
restriction is unnecessarily restrictive. These petitioners contended
that familiar television characters are often used in Web sites in ways
that are not commercial in nature, such as to adorn a webpage or guide
children from one page to the next. Petitioners also argued that any
Web site promotion of any product or service incorporating a program-
related character appears to violate the rule even though the 2004
Order permits the sale of program-related merchandise on appropriately
cabined commercial sections of a Web site. In response, children's
advocates argued that there are clear examples of problems with host
selling on Web sites, and that the Commission can address any concerns
about the clarity of its rules on a case-by-case basis.
33. The Joint Proposal proposes that the host selling rule in the
2004 Order be vacated and replaced with the following rule:
Entities subject to commercial time limits under the Children's
Television Act (``CTA'') will not display a Web site address during
or adjacent to a program if, at that time, on pages that are
primarily devoted to free noncommercial content regarding that
specific program or a character appearing in that program: (1)
Products are sold that feature a character appearing in that
program; or (2) a character appearing in that program is used to
actively sell products.
To clarify, this rule does not apply to: (1) Third-party sites
linked from the companies' web pages; (2) on-air third-party
advertisements with Web site references to third-party Web sites; or
(3) pages that are primarily devoted to multiple characters from
multiple programs.
Commenters that addressed the host selling issue generally support
the Joint Proposal recommendation.
34. We continue to believe that it is important to restrict the
practice of host selling in children's programming. As we have stated
before, the trust that children place in program characters allows
advertisers to take unfair advantage of the relationship between the
hosts and young children. This can occur whether the host selling
occurs on the air or on a Web site to which the television program
refers children.
35. We agree, however, with those who argue that our original
formulation of the host selling rule was overly restrictive, and that
we should revise it as recommended by the Joint Proposal. We believe
the revised rule achieves a better balance than the existing rule
between the goals of protecting children and permitting broadcasters
and cable operators to make appropriate use of Web site displays. The
2004 Order expressly states that commercial portions of Web sites that
comply with the Web site display rules may sell or advertise products
associated with the related television program. As several parties
noted, the host selling rule as originally written appeared to prohibit
the sale of any merchandise incorporating a program-related character
anywhere on a Web site, even if that portion of the site was clearly
identified as commercial in nature and the site otherwise complied with
the four-prong Web site rule. The revised host selling rule we adopt
today permits the sale of merchandise featuring a program-related
character in parts of the Web site that are sufficiently separated from
the program itself to mitigate the impact of host selling.
36. Univision supports the Joint Proposal revision but states that
the revised rule is vague with respect to the proposed exemption for
certain third party sites as it fails to provide a definition of the
term ``third party.'' We decline to adopt a definition of ``third
party'' at this time as we believe that the purpose of the third party
exemption from the host selling restriction is sufficiently clear to
provide guidance to broadcasters and cable operators about the kinds of
ads and Web sites to which the exemption applies. As stated by the
Coalition, the intent behind the third party exemption to the rule is
to alleviate the need for companies to police third party Web sites
over which the company has no control. In addition, the third party Web
site would not be included in the relevant children's programming;
rather the third party Web site would be displayed in a commercial
(subject to the commercial limits) or would merely be linked to from
the company's Web site. Advertisements with or without Web site
addresses must be separated from programming material by use of
bumpers, as currently required under the Commission's existing
commercial limits rules and policies. As such, there will be multiple
layers of separation between the program and the third party Web site,
which will sufficiently attenuate the commercial content from the
relevant programming.
37. Television licensees currently certify their compliance with
the children's advertising commercial limits on their license renewal
forms and are required to maintain in their public inspection file
records sufficient to substantiate the certification. As the Commission
stated in the 2004 Order, licensees will be required also to certify
that they have complied with the requirements concerning the display of
Web site addresses in such programming. In addition, licensees will be
required to maintain in their public inspection file, until final
action has been taken on the station's next license renewal
application, records sufficient to substantiate the station's
certification of compliance with the restrictions on Web site addresses
in programs directed to children ages 12 and under. Cable operators
airing children's programming must maintain records sufficient to
verify compliance with the Web site address and host selling rules and
make such records available to the public. Such records must be
maintained by cable operators for a period sufficient to cover the
limitations period specified in 47 U.S.C. 503(b)(6)(B).
Definition of Commercial Matter
38. The limitation on the duration of advertising in children's
programming of 10 \1/2\ minutes per hour on weekends and 12 minutes per
hour on weekdays applies to ``commercial matter.'' Prior to the 2004
Order, the term ``commercial matter'' was defined to exclude certain
types of program interruptions, including promotions of upcoming
programs that do not mention sponsors. The Commission noted in the 2004
Order that a significant amount of time is devoted to these types of
announcements in children's programming, thereby reducing the amount of
actual program material far more than the commercial limits alone might
suggest. To address this problem, the 2004 Order revised the definition
of ``commercial matter'' to include promotions of television programs
or video programming services other than children's educational and
informational programming. The revised definition applies to analog and
digital broadcasters and to cable operators.
39. On reconsideration, petitioners generally argued that the
revised definition of commercial matter would lead to lost ad sales in
children's programming and reduced revenues
[[Page 64160]]
from such programming as well as diminished opportunities to promote
programming. Petitioners claimed that reducing the number of program
promotions would reduce the number of children watching the programs.
Petitioners also argued that there is no evidence that counting
internal promotions as commercials would increase the amount of content
in children's shows or reduce program interruptions as programs are
produced in a specific length. Children's advocates claimed that new
children's programs can be made longer and that the amount of program
material in existing shows can be increased by supplementing existing
programs with short-form programming, that is, programming lasting less
than thirty minutes.
40. As noted above, the 2004 Order included all program promotions
other than children's educational and informational programming in the
definition of commercial matter. The Joint Proposal would change the
revised definition of ``commercial matter'' to exclude (1) promotions
for any children's or other age-appropriate programming appearing on
the same channel, and (2) promotions for children's educational and
informational programming appearing on any channel. Commenters express
general support for the Joint Proposal recommendation.
41. We will revise our definition of ``commercial matter'' as
recommended by the Joint Proposal. We believe that the revised
definition of commercial matter is consistent with the public interest,
provides additional flexibility for broadcasters and cable operators,
and furthers our goal of making high quality children's programming
available to the public. We also note that the CTA explicitly
authorizes the Commission to review and evaluate the advertising
duration limits; the Commission is therefore authorized to change the
definition of ``commercial matter'' consistent with the intent of the
CTA and the public interest. Thus, we disagree with parties that argue
the revised definition is inconsistent with the CTA.
42. While the revised rule may not limit program promotions in
children's programming to the same extent as the rule adopted in the
2004 Order, the revision will still reduce the number of interruptions
that were permissible under the original rule and encourage the
promotion of programming appropriate for children, including
educational and informational programming. As we stated in the 2004
Order, we believe that reducing the number of program promotions will
help protect children from overcommercialization of programming
consistent with overall intent of the CTA. In addition, exempting
program promotions for programming appropriate for children may
encourage broadcasters to promote children's programming with
educational and informational value, thereby increasing public
awareness of the availability of this programming.
Conclusion
43. The rules and policies adopted herein will serve the public
interest by both protecting children from excessive and inappropriate
advertising on television and ensuring an adequate supply of children's
educational programming as we transition from an analog to a digital
television environment. Our actions today further the public interest
and the mandate of the CTA and provide a reasonable balance between the
concerns of industry and protecting the well-being of the nation's
children.
Administrative Matters
44. Final Regulatory Flexibility Analysis As required by the
Regulatory Flexibility Act, the Commission has prepared a Final
Regulatory Flexibility Analysis (``FRFA'') relating to this Report and
Order.
45. Final Paperwork Reduction Act Analysis. This Second Order
contains information collection requirements which were proposed in the
Second FNPRM, 21 FCC Rcd 3642 (2006), 71 FR 15145 (March 27, 2006), and
are subject to the Paperwork Reduction Act of 1995 (``PRA''). The
Second FNPRM proposed to revise FCC Form 398 and modify/add new
information collection requirements. These proposals were submitted to
the Office of Management and Budget (OMB) for review under Section
3507(d) of the PRA. The revised FCC Form 398 and modified/new
information collection requirements were approved by OMB on June 23,
2006, OMB Control No. 3060-0754. This Second Order adopts the
information collection requirements and FCC Form 398 as proposed.
46. Our requirements regarding the requests that may be filed with
the Media Bureau by networks seeking preemption flexibility will become
effective after approval by the Office of Management and Budget
(``OMB''). The Commission will publish a separate Federal Register
Notice seeking public comment on this new information collection
requirement at a later date. Upon OMB approval, we will issue a Public
Notice announcing the effective date of this rule.
47. In addition, the general public and other Federal agencies were
invited to comment on the information collection requirements in the
Second FNPRM. We further note that pursuant to the Small Business
Paperwork Relief Act of 2002, the Commission previously sought specific
comment on how the Commission might ``further reduce the information
collection burden for small business concerns with fewer than 25
employees.'' We received no comments concerning these information
collection requirements. For additional information concerning the
information collection requirements contained in this Report and Order,
contact Cathy Williams at 202-418-2918, or via the Internet to
Cathy.Williams@fcc.gov.
48. Congressional Review Act. The Commission will send a copy of
this Second Order in a report to be sent to Congress and the Government
Accountability Office pursuant to the Congressional Review Act, see 5
U.S.C. Sec. 801(a)(1)(A).
49. Additional Information. For additional information on this
proceeding, please contact Kim Matthews, Policy Division, Media Bureau
at (202) 418-2154, or Holly Saurer, Policy Division, Media Bureau at
(202) 418-7283.
Ordering Clauses
50. It is ordered that, pursuant to the authority contained in
Sections 1, 2, 4(i), 303, 303a, 303b, and 307of the Communications Act
of 1934, 47 U.S.C 151, 152, 154(i), 303, 303a, 303b, and 307, this
Second Order on Reconsideration and Second Report and Order is adopted.
51. It is further ordered that pursuant to the authority contained
in Sections 1, 2, 4(i), 303, 303a, 303b, and 307 of the Communications
Act of 1934, 47 U.S.C 151, 152, 154(i), 303, 303a, 303b, and 307, the
Commission's rules are hereby amended as set forth in the rule changes.
It is our intention in adopting these rule changes that, if any
provision of the rules is held invalid by any court of competent
jurisdiction, the remaining provisions shall remain in effect to the
fullest extent permitted by law.
52. It is further ordered that the rules as revised in the rule
changes shall be effective 60 days after publication of the Second
Order in the Federal Register. With respect to renewal applications, we
will evaluate compliance with these requirements in applications filed
after that date. Licensee performance during any portion of the renewal
term that predates the effective date of the rules in the Second Order
will be evaluated
[[Page 64161]]
under current rules, and licensee performance that post-dates the
effective date of the revised rules will be judged under the new
provisions.
53. It is further ordered that the Media Bureau make available to
the public an electronic version of FCC Form 398, Children's Television
Programming Report, that reflects the changes adopted in this Second
Order. A revised version of this form has already been approved by OMB.
Licensees will be required to use the revised electronic version of FCC
Form 398 to report their children's core programming, including their
digital core programming, for the first quarter of 2007. Thus,
licensees must use the revised electronic version of FCC Form 398 for
their quarterly filing due no later than April 10, 2007.
54. It is further ordered that the Petitions for Reconsideration
and Oppositions to Petition for Reconsideration filed in response to
the 2004 Report and Order and Further Notice of Proposed Rule Making in
this docket are granted in part and denied in part, as discussed above,
and otherwise dismissed as moot.
55. It is further ordered that the Commission's Consumer and
Governmental Affairs Bureau, Reference Information Center, shall send a
copy of this Second Order on Reconsideration and Second Report and
Order, including the Final Regulatory Flexibility Analysis, to the
Chief Counsel for Advocacy of the Small Business Administration.
56. It is further ordered that the Commission shall send a copy of
this Second Order on Reconsideration and Second Report and Order in a
report to be sent to Congress and the General Accounting Office
pursuant to the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A).
Final Regulatory Flexibility Act Analysis
As required by the Regulatory Flexibility Act of 1980, as amended
(``RFA'') an Initial Regulatory Flexibility Analysis (``IRFA'') was
incorporated in the Second Further Notice of Proposed Rule Making
(``Second FNPRM'') in this proceeding. The Commission sought written
public comment on the proposals in the Second FNPRM, including comment
on the IRFA. The Commission received one comment on the IRFA, as
discussed below. This Final Regulatory Flexibility Analysis (``FRFA'')
conforms to the RFA.
Need for, and Objectives of, the Second Order
The purpose of this proceeding is to determine how the existing
children's educational television programming obligations and
limitations on advertising in children's programs should be interpreted
and adapted to apply to digital television broadcasting in light of the
new capabilities made possible by that technology. The Second Report
and Order and Second Order on Reconsideration (``Second Order'') makes
certain modifications to the rules and policies adopted in our
September 9, 2004 Report and Order and Further Notice of Proposed Rule
Making (``2004 Order'') in this proceeding. The modifications we make
today respond in part to a Joint Proposal of Industry and Advocates on
Reconsideration of Children's Television Rules (``Joint Proposal'')
filed by a group of cable and broadcast industry representatives and
children's television advocates, among others. The Commission sought
comment on the Joint Proposal in the Second FNPRM.
In the 2004 Order, the Commission updated the children's television
rules and policies to ensure that they continue to serve the interests
of children and parents as the country transitions from analog to
digital television. Among other things, the Commission revised the
three-hour core programming processing guideline as it applies to DTV
broadcasters that choose to multicast. Specifically, the 2004 Order
increased the core programming benchmark for digital broadcasters in a
manner roughly proportional to the increase in free video programming
offered by the broadcaster on multicast channels. The 2004 Order also
permitted the display of Internet Web site addresses during children's
programming only if the Web site meets a four-prong test limiting
commercial matter on the site, and prohibited broadcasters from
displaying Web site addresses during both children's programs and
commercials appearing in those programs if the Web site uses host
selling. The 2004 Order also imposed a percentage cap on the number of
preemptions of core children's programs and revised the definition of
``commercial matter'' for purposes of the commercial limits to include
promotions of other television programs unless they are children's
educational or informational programs.
Our decision today does not alter the new children's core
programming ``multicasting'' rule adopted in the 2004 Order, but does
clarify the way in which repeats of core programs will be counted under
the new rule. We do not make substantial changes to the four-prong Web
site rule adopted in the 2004 Order, but do amend the host selling
restrictions adopted in the 2004 Order to apply those restrictions less
broadly and to exempt certain third party Web sites from the host
selling restriction. We also revise the definition of ``commercial
time'' adopted in the 2004 Order to limit the kinds of promotions of
children's programs that must be counted under the advertising rules
adopted in the 2004 Order. In addition, with regard to scheduling of
core children's programming, we vacate the percentage cap on the number
of permissible core program preemptions adopted in the 2004 Order and
return to our prior practice of addressing the number of preemptions
and rescheduling of core programming on a case-by-case basis. These
modifications will serve the public interest by ensuring an adequate
supply of children's educational and informational programming as we
transition to digital television technology, and protecting children
from excessive and inappropriate commercial messages in broadcast and
cable programming, without unduly impairing the scheduling flexibility
of broadcasters and cable operators.
Summary of Significant Issues Raised by Public Comments in Response to
the IRFA
The U.S. Small Business Administration (``SBA'') filed the only
comment in this proceeding responding to the IRFA. The SBA notes that
several alternatives were suggested to the FCC by various members of
industry which could, according to the SBA, offer significant cost
savings to smaller broadcasters while potentially serving the FCC's
goals. First, the SBA notes that the Local Broadcasters Alliance
(``LBA'') recommends that the FCC limit the applicability of the new
core programming requirements to multicast streams that do not already
offer educational, informational, and/or public affairs programming.
According to the SBA, providing an exemption for small broadcasters who
are already providing public affairs content, and who do not yet have
the technical capabilities to insert children's programming on their
multicast channels, could serve the FCC's goals and provide a
reasonable amount of flexibility for small business. Second, the SBA
notes that the National Association of Broadcasters (``NAB'') and
others recommend that the FCC allow broadcasters to rely on
certifications from programming providers that Web site addresses
displayed during core programming meet the FCC requirements, instead of
requiring stations to continuously monitor and edit programming
[[Page 64162]]
containing Web site addresses. According to the SBA, adopting this
alternative could offer significant cost savings to small broadcasters.
Third, the SBA notes that the multicasting rule would require that at
least 50 percent of the core programming counted toward meeting the
additional core programming requirements not consist of program
episodes that have already aired within the previous seven days. The
SBA notes that the NAB recommends that the FCC amend Form 398 to allow
broadcasters to certify compliance with the limitation. According to
the SBA, adopting this alternative could provide significant compliance
cost savings to both small and large broadcasters.
With respect to LBA's argument that the Commission limit the
applicability of the new core programming requirements to multicast
streams that do not already offer educational or public affairs
programming, as noted in paragraph 20 of the Second Order a number of
commenters joined the LBA in arguing that the Commission either should
not impose additional core programming requirements on digital
multicast channels, or at least should exempt multicast channels that
offer educational, informational, and/or public interest programming.
As discussed in paragraphs 18-21 of the Second Order, we decline to
revise the guideline as suggested by these commenters. The Commission
believes that the revised processing guideline translates the existing
three-hour guideline to the digital environment in a manner that is
both fair to broadcasters and meets the needs of the child audience.
Now that digital broadcasters have the capability to significantly
increase their overall hours of programming, increasing the amount of
core programming will not result in an unreasonable burden. For
example, if a station chooses to broadcast a second stream of free
video programming twenty-four hours a day, seven days a week, it can
satisfy the new guideline by providing merely three additional hours
per week of core programming--or less than two percent of the channel's
168 hours of additional weekly programming. That additional programming
can be aired on the main program stream or on a multicast stream, at
the discretion of the broadcaster. In addition, we believe that a
guideline that increases the amount of core programming in a manner
roughly proportional to the increase in free video programming offered
by broadcasters is consistent with the objective of the CTA ``to
increase the amount of educational and informational broadcast
television available to children.''
The digital programming processing guideline provides broadcasters
flexibility to move core programming to either their main programming
stream or other multicast streams, so long as the stream the
programming is moved to receives comparable MVPD carriage to the stream
triggering the additional obligation. Thus, the guideline preserves the
principle that, in order to obtain staff level approval of their CTA
compliance, broadcasters must provide three hours of children's core
programming for every 168 hours per week of free video programming that
they air, while at the same time giving broadcasters flexibility to
choose the multicast stream that will air that programming. In
addition, broadcasters could meet the guideline by airing children's
programming on specialized channels, such as a children's news program
on a twenty-four hour news channel or a children's educational weather
program on a twenty-four hour weather channel. Furthermore, we note
that our rules provide flexibility for licensees that have aired
somewhat less core programming than indicated by the guideline but that
nonetheless demonstrate an adequate commitment to educating and
informing children. With respect to the recommendation of NAB and
others regarding reliance on certifications from program providers, as
discussed in paragraph 38 of the item we decline to allow broadcasters
to avoid liability by relying on representations from program providers
that web addresses meet the four-prong test. We do not expect
compliance to be burdensome, but we will revisit this issue if we
receive evidence that this is imposing an undue burden on broadcasters.
Finally, as discussed in paragraph 23 the item adopts NAB's
recommendation, which was echoed by other commenters, that FCC Form 398
allow broadcasters to certify compliance with the revised limitation on
the repeat of core digital programming adopted under the multicasting
guideline rather than requiring broadcasters to identify each program
episode on Form 398. We will require licensees, however, to retain
records sufficient to document the accuracy of their certification,
including records of actual program episodes aired, and to make such
documentation available to the public upon request.
Description and Estimate of the Number of Small Entities To Which the
Proposed Rules Will Apply
The RFA directs agencies to provide a description of and, where
feasible, an estimate of the number of small entities that will be
affected by the rules. The RFA generally defines the term ``small
entity'' as having the same meaning as the terms ``small business,''
``small organization,'' and ``small governmental jurisdiction'' under
section 3 of the Small Business Act. In addition, the term ``small
business'' has the same meaning as the term ``small business concern''
under the Small Business Act. A small business concern is one which:
(1) Is independently owned and operated; (2) is not dominant in its
field of operation; and (3) satisfies any additional criteria
established by the SBA.
Television Broadcasting. The proposed rules and policies apply to
television broadcast licensees, and potential licensees of television
service. The SBA defines a television broadcast station as a small
business if such station has no more than $13 million in annual
receipts. Business concerns included in this industry are those
``primarily engaged in broadcasting images together with sound.''
According to Commission staff review of the BIA Publications, Inc.
Master Access Television Analyzer Database (BIA) on October 18, 2005,
about 873 of the 1,307 commercial television stations (or about 67
percent) have revenues of $12 million or less and thus qualify as small
entities under the SBA definition. We note, however, that in assessing
whether a business concern qualifies as small under the above
definition, business (control) affiliations must be included. Our
estimate, therefore, likely overstates the number of small entities
that might be affected by our action, because the revenue figure on
which it is based does not include or aggregate revenues from
affiliated companies.
In addition, an element of the definition of ``small business'' is
that the entity not be dominant in its field of operation. We are
unable at this time to define or quantify the criteria that would
establish whether a specific television station is dominant in its
field of operation. Accordingly, the estimate of small businesses to
which rules may apply do not exclude any television station from the
definition of a small business on this basis and are therefore over-
inclusive to that extent. Also as noted, an additional element of the
definition of ``small business'' is that the entity must be
independently owned and operated. We note that it is difficult
[[Page 64163]]
at times to assess these criteria in the context of media entities and
our estimates of small businesses to which they apply may be over-
inclusive to this extent.
Cable and Other Program Distribution. The Census Bureau defines
this category as follows: ``This industry comprises establishments
primarily engaged as third-party distribution systems for broadcast
programming. The establishments of this industry deliver visual, aural,
or textual programming received from cable networks, local television
stations, or radio networks to consumers via cable or direct-to-home
satellite systems on a subscription or fee basis. These establishments
do not generally originate programming material.'' The SBA has
developed a small business size standard for Cable and Other Program
Distribution, which is: all such firms having $13.5 million or less in
annual receipts. According to Census Bureau data for 2002, there were a
total of 1,191 firms in this category that operated for the entire
year. Of this total, 1,087 firms had annual receipts of under $10
million, and 43 firms had receipts of $10 million or more but less than
$25 million. Thus, under this size standard, the majority of firms can
be considered small.
1. Cable Companies and Systems. The Commission has also developed
its own small business size standards, for the purpose of cable rate
regulation. Under the Commission's rules, a ``small cable company'' is
one serving 400,000 or fewer subscribers, nationwide. Industry data
indicate that, of 1,076 cable operators nationwide, all but eleven are
small under this size standard. In addition, under the Commission's
rules, a ``small system'' is a cable system serving 15,000 or fewer
subscribers. Industry data indicate that, of 7,208 systems nationwide,
6,139 systems have under 10,000 subscribers, and an additional 379
systems have 10,000-19,999 subscribers. Thus, under this second size
standard, most cable systems are small.
2. Cable System Operators. The Communications Act of 1934, as
amended, also contains a size standard for small cable system
operators, which is ``a cable operator that, directly or through an
affiliate, serves in the aggregate fewer than 1 percent of all
subscribers in the United States and is not affiliated with any entity
or entities whose gross annual revenues in the aggregate exceed
$250,000,000.'' The Commission has determined that an operator serving
fewer than 677,000 subscribers shall be deemed a small operator, if its
annual revenues, when combined with the total annual revenues of all
its affiliates, do not exceed $250 million in the aggregate. Industry
data indicate that, of 1,076 cable operators nationwide, all but ten
are small under this size standard. We note that the Commission neither
requests nor collects information on whether cable system operators are
affiliated with entities whose gross annual revenues exceed $250
million, and therefore we are unable to estimate more accurately the
number of cable system operators that would qualify as small under this
size standard.
Description of Projected Reporting, Recordkeeping and Other Compliance
Requirements
The Second Order retains the revised core programming processing
guideline for digital stations adopted in the 2004 Order but clarifies
the number of permissible core program repeats under the guideline.
Specifically, we clarify that at least 50 percent of the core
programming counted toward meeting the additional programming guideline
cannot consist of program episodes that had already aired within the
previous seven days on either the station's main program stream or on
another of the station's free digital program streams. We also amend
FCC Form 398 to collect the information necessary to enforce the limit
on repeats under the revised guideline. We permit licensees to certify
on Form 398 that they have complied with the repeat restriction and do
not require broadcasters to identify each program episode on Form 398.
Licensees must retain records sufficient to document the accuracy of
their certification, including records of actual program episodes
aired, and make such documentation available to the public upon
request. The children's programming liaison identified in the FCC Form
398 must be able to provide documentation to substantiate the
certification if requested.
The Second Order repeals the ten percent cap on preemptions of core
children's programming adopted in the 2004 Order and instead institutes
a procedure similar to that used by the Media Bureau and the Commission
following adoption of the 1996 children's television Order whereby
networks sought informal approval of their preemption plans each year.
Under the policy formerly developed by the Commission staff, a program
counted as preempted only if it was not aired in a substitute time slot
(otherwise known as a ``second home'') with an on-air notification of
the schedule change occurring at the time of preemption during the
previously scheduled episode. The on-air notification must announce the
alternate date and time when the preempted show will air. As part of
this policy, we will require all networks requesting preemption
flexibility to file a request with the Media Bureau by August 1 of each
year stating the number of preemptions the network expects, when the
program will be rescheduled, whether the rescheduled time is the
program's second home, and the network's plan to notify viewers of the
schedule change. We will presume that non-network stations are
complying with the three hour core programming requirement, and do not
need broad preemption relief.
The Second Order retains the rule on Web site addresses adopted in
the 2004 Order with two clarifications: (1) The rule applies only when
Internet addresses are displayed during program material or during
promotional material not counted as commercial time; and (2) if an
Internet address for a Web site that does not meet the four-prong test
is displayed during a promotion, in addition to counting against the
commercial time limits, the promotion will be clearly separated from
programming material. We exempt from the Web site display rules certain
PSAs, which are not commercial matter under our rules. Specifically, we
define PSAs exempt from the Web site display rules as: PSAs aired on
behalf of independent non-profit or government organizations, or media
companies in partnership with non-profits or government entities, that
display Web sites not under the control of the licensee or cable
company. We also clarify that station identifications and emergency
announcements are not subject to the rules governing the display of Web
site addresses as long as the display is consistent with the purpose of
the announcement. Closing credits are not exempt from application of
the Web site address rules.
The Commission's host selling policy prohibits the use of program
characters or show hosts to sell products in commercials during or
adjacent to shows in which the character or host appears. The Second
Order adopts the following host selling rule with respect to Web site
addresses:
Entities subject to commercial time limits under the Children's
Television Act (``CTA'') will not display a Web site address during
or adjacent to a program if, at that time, on pages that are
primarily devoted to free noncommercial content regarding that
specific program or a character appearing in that program: (1)
Products are sold that feature a character appearing in that
program; or (2) a character appearing in that program is used to
actively sell products.
To clarify, this rule does not apply to: (1) Third-party sites
linked from the companies'
[[Page 64164]]
web pages; (2) on-air third-party advertisements with Web site
references to third-party Web sites; or (3) pages that are primarily
devoted to multiple characters from multiple programs.
The limitation on the duration of advertising in children's
programming of 10\1/2\ minutes per hour on weekends and 12 minutes per
hour on weekdays applies to ``commercial matter.'' Prior to the 2004
Order, the term ``commercial matter'' was defined to exclude certain
types of program interruptions, including promotions of upcoming
programs that do not mention sponsors. The 2004 Order revised the
definition of ``commercial matter'' to include promotions of television
programs or video programming services other than children's
educational and informational programming. The revised definition
applies to analog and digital broadcasters and to cable operators.
The Second Order revises the definition of ``commercial matter'' to
exclude (1) promotions for any children's or other age-appropriate
programming appearing on the same channel, and (2) promotions for
children's educational and informational programming appearing on any
channel.
Steps Taken To Minimize Significant Impact on Small Entities, and
Significant Alternatives Considered
The RFA requires an agency to describe any significant,
specifically small business, alternatives that it has considered in
reaching its proposed approach, which may include the following four
alternatives (among others): ``(1) The establishment of differing
compliance or reporting requirements or timetables that take into
account the resources available to small entities; (2) the
clarification, consolidation, or simplification of compliance and
reporting requirements under the rule for such small entities; (3) the
use of performance rather than design standards; and (4) an exemption
from coverage of the rule, or any part thereof, for such small
entities.''
Several steps were taken to minimize the impact on small entities.
As noted above, the Second Order adopts the alternative recommended by
NAB and others that broadcasters be permitted to certify on FCC Form
398 their compliance with the limit on the number of repeats of digital
core programming under the revised processing guideline. See paragraph
23, supra. Thus, broadcasters will not be obligated to identify each
program episode on Form 398, but will be required to retain
documentation sufficient to substantiate the certification on Form 398.
This step will make compliance with the rules easier for all
broadcasters, including smaller broadcasters. The Commission
considered, but rejected, the approach of requiring broadcasters to
identify each program episode on the Form 398. That approach, if
adopted, would have imposed a greater burden on broadcasters.
The Second Order also lifts the cap on the number of preemptions of
core programs adopted in the 2004 Order and instead returns to the
prior practice of permitting networks that need scheduling flexibility
to accommodate sports and other programming to request such flexibility
from the Media Bureau. This change should help all broadcasters,
including small broadcasters, by providing more scheduling flexibility.
The Commission considered, but rejected, keeping the cap on the number
of preemptions as adopted in the 2004 Order, which would have been more
burdensome to broadcasters.
In addition, the Second Order also revises the definition of ``host
selling'' adopted in the 2004 Order with respect to Web site address
displays in children's programming. The revised definition is less
restrictive than that adopted in 2004 and permits the sale of
merchandise featuring a program-related character in parts of the Web
site that are sufficiently separated from the program itself to protect
children from the unique impact of host selling. This change should
provide more flexibility to all broadcasters and cable operators,
including smaller entities, and should be less burdensome to all
affected entities.
Another change made in the Second Order that will ease the burden
on all entities in complying with the rules is the change in the
definition of ``commercial matter.'' The revised definition provides
additional flexibility for broadcasters and cable operators and permits
them to air program promotions that would not have been permitted under
the rule adopted in 2004.
Report to Congress
The Commission will send a copy of the Second Order, including this
FRFA, in a report to be sent to Congress and the Government
Accountability Office pursuant to the Congressional Review Act, see 5
U.S.C. 801(a)(1)(A). In addition, the Commission will send a copy of
the Second Order, including this FRFA, to the Chief Counsel for
Advocacy of the Small Business Administration. See 5 U.S.C. 604(b). A
copy of the Second Order and FRFA (or summaries thereof) will also be
published in the Federal Register. See 5 U.S.C. 604(b).
List of Subjects
47 CFR Part 73
Television.
47 CFR Part 76
Cable television.
Federal Communications Commission.
Marlene H. Dortch,
Secretary.
Rule Changes
0
For the reasons discussed in the preamble, the Federal Communications
Commission amends 47 CFR parts 73 and 76 as follows:
PART 73--RADIO BROADCAST SERVICES
0
1. The authority citation for part 73 continues to read as follows:
Authority: 47 U.S.C. 154, 303, 334, and 336.
0
2. Section 73.670 is amended by revising paragraph (b) introductory
text and paragraph (c), adding paragraph (d), and revising Note 1 to
read as follows (Note 2 remains unchanged):
Sec. 73.670 Commercial limits in children's programs.
* * * * *
(b) The display of Internet Web site addresses during program
material or promotional material not counted as commercial time is
permitted only if the Web site:
* * * * *
(c) If an Internet address for a Web site that does not meet the
test in paragraph (b) of this section is displayed during a promotion
in a children's program, in addition to counting against the commercial
time limits in paragraph (a) of this section the promotion must be
clearly separated from program material.
(d)(1) Entities subject to commercial time limits under the
Children's Television Act shall not display a Web site address during
or adjacent to a program if, at that time, on pages that are primarily
devoted to free noncommercial content regarding that specific program
or a character appearing in that program:
(i) Products are sold that feature a character appearing in that
program; or
(ii) A character appearing in that program is used to actively sell
products.
(2) The requirements of this paragraph do not apply to:
(i) Third-party sites linked from the companies' Web pages;
[[Page 64165]]
(ii) On-air third-party advertisements with Web site references to
third-party Web sites; or
(iii) Pages that are primarily devoted to multiple characters from
multiple programs.
Note 1: Commercial matter means air time sold for purposes of
selling a product or service and promotions of television programs
or video programming services other than children's or other age-
appropriate programming appearing on the same channel or promotions
for children's educational and informational programming on any
channel.
* * * * *
0
3. Section 73.671 is amended by revising paragraph (e)(3) and by
removing paragraph (f) to read as follows:
Sec. 73.671 Educational and informational programming for children.
* * * * *
(e) * * *
(3) For purposes of the guideline described in paragraph (e)(2) of
this section, at least 50 percent of the core programming counted
toward meeting the additional programming guideline cannot consist of
program episodes that had already aired within the previous seven days
on either the station's main program stream or on another of the
station's free digital program streams. This requirement does not apply
to any program stream that merely time shifts the entire programming
line-up of another program stream and, during the digital transition,
to core programs aired on both the analog station and a digital program
stream.
* * * * *
PART 76--MULTICHANNEL VIDEO AND CABLE TELEVISION SERVICE
0
4. The authority citation for part 76 continues to read as follows:
Authority: 47 U.S.C. 151, 152, 153, 154, 301, 302, 303, 303a,
307, 308, 309, 312, 317, 325, 338, 339, 503, 521, 522, 531, 532,
533, 534, 535, 536, 537, 543, 544, 544a, 545, 548, 549, 552, 554,
556, 558, 560, 561, 571, 572, and 573.
0
5. Section 76.225 is amended by revising paragraphs (b) introductory
text, (c), and (d), by adding paragraph (e), and by revising Note 1 to
Sec. 76.225 to read as follows:
Sec. 76.225 Commercial limits in children's programs.
* * * * *
(b) The display of Internet Web site addresses during program
material or promotional material not counted as commercial time is
permitted only if the Web site:
* * * * *
(c) If an Internet address for a Web site that does not meet the
test in paragraph (b) of this section is displayed during a promotion
in a children's program, in addition to counting against the commercial
time limits in paragraph (a) of this section the promotion must be
clearly separated from program material.
(d)(1) Entities subject to commercial time limits under the
Children's Television Act shall not display a Web site address during
or adjacent to a program if, at that time, on pages that are primarily
devoted to free noncommercial content regarding that specific program
or a character appearing in that program:
(i) Products are sold that feature a character appearing in that
program; or
(ii) A character appearing in that program is used to actively sell
products.
(2) The requirements of this paragraph do not apply to:
(i) Third-party sites linked from the companies' Web pages;
(ii) On-air third-party advertisements with Web site references to
third-party Web sites; or
(iii) Pages that are primarily devoted to multiple characters from
multiple programs.
(e) The requirements of this section shall not apply to programs
aired on a broadcast television channel which the cable operator
passively carries, or to access channels over which the cable operator
may not exercise editorial control, pursuant to 47 U.S.C. 531(e) and
532(c)(2).
Note 1 to Sec. 76.225: Commercial matter means air time sold
for purposes of selling a product or service and promotions of
television programs or video programming services other than
children's or other age-appropriate programming appearing on the
same channel or promotions for children's educational and
informational programming on any channel.
* * * * *
[FR Doc. E6-18401 Filed 10-31-06; 8:45 am]
BILLING CODE 6712-01-P