FCC Door

The fact that the Federal Communications Commission had proposed increases to the annual regulatory fees paid by radio stations at a time when a global pandemic was closing businesses and siphoning away advertising was certain to draw criticism from the National Association of Broadcasters. But the NAB is taking it a step further, saying the plan “is patently unfair and likely unlawful.” Not only does the FCC fail to take into account the impact of the COVID-19 pandemic on broadcasters’ ability to pay yet another increase in fees, NAB said, but it also argued the FCC has continued to offer “opaque explanations” for how it decides which licensees will pay more. It also accused the agency of ignoring the “considerable resources” other industries, especially the tech sector, demand to the detriment of radio and TV companies. NAB said that amounts to broadcasters subsidizing well-funded, less–regulated companies.

The FCC aims to collect $339 million from radio and other industries it regulates to pay for the agency’s operations. That’s the same as a year ago. Yet the 2020 fee proposal (MD Docket No. 20-105) would boost the annual fee paid by radio by 4% to 5%. That’s roughly half the increase adopted last year. Various other fees would also go up. With little explanation for why the agency wants more from broadcasters despite a flat budget, the NAB said it’s nearly impossible for companies and other stakeholders to offer meaningful feedback on the proposal. “It is an annual rite of passage for the Commission to simply hand down the fees without adequate explanation, and expect licensees to wordlessly pay up,” it said in a filing on Thursday.

But it is the coronavirus pandemic and business shutdowns that loom the largest over this year’s regulatory fee proposal. The NAB says stations are facing “unprecedented economic losses” at a time when they are also providing critical emergency news and information to the public.

“We urge the Commission to use its authority to help alleviate broadcasters’ financial burdens by – at the very least – suspending regulatory fee increases or allowing broadcasters to pay their regulatory fees in installments over a period of six to nine months,” the NAB proposed. It told the government that radio companies have been particularly hard hit because the industry is highly dependent on local businesses for their advertising revenues, businesses that are now shuttered or restricted and cannot afford to advertise. That’s led to layoffs, furloughs and even some silent stations. “At a time when broadcasters are making difficult cuts,” it said, “the Commission should do everything in its power to minimize this burden.

The NAB’s arguments pick up where two other state broadcast associations left off. The New Jersey Broadcasters Association and Colorado Broadcasters Association have both proposed the FCC scrap its plans to collect regulatory fees from radio and TV this year.

“While the increase may have been rational in a pre-pandemic era, it only serves to further hinder the ability of these cash-strapped broadcast operations,” CBA President Justin Sasso wrote in a letter to FCC last month.

NJBA President Paul Rotella told the FCC last week that many broadcasters in his state have sustained declines of 60% to 70% in ad revenues during the past two months, with some losses even bigger. “It makes no sense to raise regulatory fees on the same stations that are going to the government for stimulus relief dollars,” said Rotella. He said at the very least the FCC should reconsider its fee approach in the states that have been hardest hit by the COVID-19 outbreak.

The challenge for broadcasters is federal statute. FCC Chair Ajit Pai told Inside Radio in April that there are limits to what the agency can do on its own since, under federal law, the FCC must assess an annual fee on license holders. That means it would likely take congressional intervention in order for it to suspend fee collections. “We still are legally required to collect fees to pay our bills,” he said.