What’s wrong with this picture? The Federal Communications Commission wants to jack up the annual fees radio pays to the agency just as broadcasters are facing an outsized revenue loss from the COVID pandemic. What’s more, the Commission hasn’t explained how the increase will benefit broadcasters, as required by Congress. And the fees are going up even though the FCC budget is reaming flat. That’s the thrust of the case the National Association of Broadcasters is making to the FCC in reply comments filed with the FCC on Monday about the Commission's rulemaking on regulatory fees for fiscal year 2020.
The powerful lobbying and advocacy group begins its eight-page missive by pointing out that, for a second year in a row, the Commission “utterly fails to explain its rationale” for how the methodology it used to calculate the fees is grounded in Congress’s directive to determine the fees by the benefits that those paying them would receive. “This abject failure” is compounded by the fact that the Commission wants to hike the fees while its budget remains flat and when broadcasters are facing “unprecedented harm” as a result of lost ad revenue from COVID-19-induced advertising pullbacks.
“The Commission should not proceed with its proposed regulatory fee increase when such fee increases could jeopardize the ability of struggling broadcasters to stay on the air and when the Commission apparently violates the law by not properly explaining the basis for the increases nor tying them to any discernible increase in the work performed on behalf of broadcasters as a result of the Commission’s efforts,” the NAB filing says.
The trade group is pushing the agency to reform its fee collection and waiver processes so that the fees don’t “hobble” broadcasters’ ability to recover from the economic effects of the pandemic.
In a carefully worded follow-up to its original comments that pegged the proposed fees as “patently unfair and likely unlawful,” the NAB says the higher fees “fly in the face” of the statutory mandates that require it to consider “factors that are reasonably related to the benefits provided by the payor of the fee by the Commission’s activities.” In addition to giving broadcasters no benefit, the increases “bear no rational relationship” to any cost increases, the NAB argues. It calls “inexplicable” the Commission’s decision to increases radio’s fees by 4% to 5% when the number of full-time employees in the Media Bureau is going up by less than 1%. With the total amount of regulatory fees the FCC will collect staying the same and the percent of fees allocated to other bureaus going down, the NAB accuses the FCC of counting on radio to make up the difference.
Chairman Ajit Pai has said that although he sympathizes with broadcasters that are suffering from the advertising cutbacks tied to the COVID-19 pandemic, his hands are tied – federal law requires the FCC to assess an annual regulatory fee on radio and television stations.
But in recent weeks the FCC has received comments from dozens of state broadcast associations urging it rethink proposed fee hikes. “This year is unusual, and this time around, an untold number of Commission regulatees may well crack under the weight of those regulatory fees,” said a joint filing from 49 associations. The group also raised a growing complaint among broadcasters, who say that the industry’s footing a larger share of the overall FCC budget while deep-pocketed tech companies that face less regulatory hurdles are eating up more of the agency’s time. They calculate the FCC wants broadcasters to pay 17% of the proposed $339 million fiscal 2020 budget while using just 0.07% of allocated spectrum, all the while offering a subscription-free service to the public.
Two weeks ago, Reps. Ann McLane Kuster (D-NH) and Chris Stewart (R-UT) sent a letter to Pai asking that he “halt” any increases to broadcasters’ annual fee. “This action does not require an act of Congress and would have a meaningful impact on radio and television broadcasters that have been economically harmed by the COVID-19 pandemic,” the lawmakers theorized. They referenced estimates showing the total advertising market could decline by 44% this year, which would cut a projected $14 billion in revenue from broadcast television and radio for 2020.