HWG Regulatory Advisory: FCC Issues Forfeiture Against Two Programmers for Emergency Alert System Violations

January 28, 2015

Michael Nilsson, Brita Strandberg, and Patrick O’Donnell

On January 20, 2015, the Federal Communications Commission fined Viacom and ESPN a total of $1.5 million for misusing the Emergency Alert System (EAS) to promote the movie Olympus Has Fallen.  In doing so, the FCC erased any possible doubts about the seriousness with which it takes public safety and emergency alerts.  It also demonstrated, once again, the flexibility it has in calculating fines—especially its ability to manipulate the number of violations found in order to increase fine amounts.

  1. Background

Nearly anyone that has ever watched television has encountered the EAS, that now-familiar set of audible tones and subsequent alerts meant to convey emergency information to the public.  Earlier this year, the Commission received complaints that Viacom, ESPN, and NBC Universal had reproduced actual EAS tones in a trailer for Olympus Has Fallen.  The companies, in turn, had included the trailer in programming they supplied to cable and satellite systems.  It issued a “notice of apparent liability” to the three programming companies, accusing each of having violated various Commission rules related to EAS and proposing substantial fines for each.  NBC Universal chose to pay the proposed fines.  Viacom and ESPN chose to fight.  In the end, the FCC imposed exactly the same fines as it had originally proposed.

  1. The FCC’s Order

The FCC affirmed its notice of apparent liability, fining Viacom $1,120,000 and ESPN $280,000.  In doing so, it rejected a variety of legal arguments raised by Viacom and ESPN, including the following.

  • Notice.  Viacom and ESPN argued they did not have sufficient notice that misuse of emergency tones constitutes “false distress signals” in violation of the Communications Act.  Setting aside whether EAS alerts should be considered distress signals, the FCC found that this question has been “well settled” for more than 20 years.
  • Application to “intermediaries.”  Viacom argued that it did not “cause” the transmission of false EAS tones, because it neither created the commercial in question (Horizon Media did) nor delivered it to subscribers (satellite and cable operators did).  The FCC, however, found that Viacom both included the commercial in the programming it provided to satellite and cable operators and reviewed it before doing so.  Even if mere “conduits” can sometimes enjoy reduced liability, the FCC reasoned, Viacom was more than a passive conduit.
  • Requirement of “deceptiveness.”  Viacom and ESPN argued that the commercial was not “deceptive,” and that there was no public outcry or reasonable public fear of confusion.  The FCC found that there was no requirement of “deceptiveness” in the relevant statutory and regulatory provisions, and that, even if there was, the transmissions in question were inherently deceptive.
  • Willfulness.  Viacom argued that it did not “willfully” violate the rules.  The FCC disagreed, because it construes the term to require only the “conscious and deliberate commission or omission of [any] act,” regardless of intent.
  • Selective prosecution.  Viacom argued that the FCC should have also commenced enforcement activity against Horizon Media and the satellite and cable companies that carried the commercial, while ESPN argued that the FCC should not have relied upon a “complaint” filed by one of its own employees.  The FCC decided, however, that it was free to prosecute selectively, and that no public complaint was required to do so.
  • Forfeiture calculation.  Viacom and ESPN both complained about the manner in which the FCC calculated its fines.  Generally speaking, the FCC issues fines by multiplying a base amount set forth in its rules by the number of violations having occurred.  It then adjusts this number based on a variety of factors, within statutory limits for any “single act or failure to act.”  In practice, however, the FCC has great flexibility both in determining how many “acts” have occurred and in the adjustments it chooses to make.
    • Viacom complained that the FCC treated each insertion of   the commercial, in each feed (East and West), provided to each satellite or cable distributor, as a separate “violation”—for a total of 108 violations. It argued that it had only committed a single “continuing” violation. The FCC disagreed, finding its methodology consistent with that used in earlier cases.
    • ESPN, for its part, complained that the FCC over-fined it compared to Viacom. Under the FCC’s calculations, ESPN argued, ESPN had committed “only” 13 violations—but the FCC imposed a much higher “per-occurrence” fine. The FCC, however, concluded that “other factors” justified the fine, including the number of viewers that watch ESPN as compared to Viacom.

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For more information regarding Harris, Wiltshire & Grannis’s media practice, please contact Michael Nilsson at (202) 730-1334 or mnilsson@hwglaw.com.  For more information about HWG’s enforcement practice, please contact Brita Strandberg at (202) 730-1346 or bstrandberg@hwglaw.com, or Patrick O’Donnell at podonnell@hwglaw.com or (202) 730-1312.

This client advisory is not intended to convey legal advice.  It is circulated to HWG clients and contacts as a convenience and is not intended to reflect or create an attorney-client relationship as to its subject matter.

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