FCC 375

Radio stations will be required to pay more in annual fees this year after the Federal Communications Commission on Friday rejected much of the industry’s case for why the calculation method for a proposed double-digit hike was flawed. The Commission did, however, accept one piece of the industry’s argument, and that has led to a fee recalculation. That means station fees will rise by about eight percent from last year, compared to the earlier plan that would have increased them by 13%.

The FCC’s methodology to determine fees based on how many direct full-time FCC employees work on issues in the various bureaus inside the agency lead to fundamentally unfair results, the radio industry argued. Stations are footing the bill for other industries, especially big tech companies, broadcasters contend.

But in the 63-page order, the Commission says broadcasters “fail to recognize the fundamental task” they face in determining how its $381.95 million budget is paid for. That includes the reality that not all the full-time employees may work on projects and regulation of the industry that is footing the bill.

The National Association of Broadcasters estimates that during the last five years broadcasters have paid more than $25 million in regulatory fees to support work inside the FCC that doesn’t benefit the industry. In this year’s budget it urged the FCC to remove the costs tied to 84 full-time workers in the Media Bureau that are strictly focused on promoting broadband.

The FCC refused, however, explaining the personnel are working toward the “strategic goals” of the agency and the Biden administration overall, and that is “not a sound rationale” for reassigning those costs.

All 50 state broadcast associations jointly proposed the FCC create a new fee category that would cover the costs of full-timers who are focused on a set of issues regulated by various bureaus but benefit a discrete group of industries that would cover the cost of that work.

But the Commission rejected that too, saying it would be unmanageable given the resources it would take to calculate.

The Commission did, however, make a small but impactful decision for stations. It reproportioned 38 full-time employees who work on Universal Service Fund issues away from the costs broadcasters are responsible for covering. The change resulted in a reduction in the size of how much stations will pay in annual fees.

The largest FM stations in the biggest markets are required to pay a regulatory fee of $22,390, rather than $23,585 in its initial proposal. And the largest AMs in the biggest markets will be charged $17,945, rather than $18,885.

Beyond that, the Commission said it cannot arbitrarily lower how much radio and TV pays, saying when it cut the size of last year’s increase to 9%, other industries absorbed the cost.

“We recognize that many entities, including broadcasters, sustained economic losses during the COVID-19 pandemic,” it says, but adds that is not enough to justify changes.

NAB President Curtis LeGeyt took what amounts to a mixed decision in stride, saying in a statement on Friday that he is “very appreciative” of the “hard work and thoughtfulness” shown by the FCC to “reduce the exorbitant increase broadcasters faced in the FCC's draft regulatory fees order.”

The FCC also rejected calls to raise the so-called “de minimis rule” threshold above its current $1,000. That’s the amount under which a company need not pay a regulatory fee if what it owes falls below the figure.

But the FCC is keeping several pandemic relief measures in place, making it easier for companies to apply for waivers, reductions or deferrals on financial grounds.

Stations must pay annual fees by Oct. 1 or face the possibility that any pending application will not be processed. The FCC also has the authority to charge a 25% mandatory late filing fee.

FCC Looking At Long-Term Changes

While the 2022 proceeding did not bring the wholesale changes sought by broadcasters, the Commission opened an inquiry into how the work of some full-time workers is attributed to regulatory fees in the future. The focus is on “indirect” full-timers whose work is not focused on a specific bureau or industry.

LeGeyt said he hopes the inquiry will service as “as a springboard to a thorough modernization” of the FCC's regulatory fee methodology to ensure all industries pay their fair share. “It is no longer good enough to tinker around the edges,” he said.