The New York State legislature is in full swing and we are watching a number of issues that may affect broadcasters. Several of the key issues are contained in the Governor’s budget package. Inclusion in the budget package is important because it signals that the Governor is very interested in the issue. Budget issues tend to get resolved by the end of March. Legislative issues that are not resolved in the budget process are then addressed during the regular session which runs through mid-June. Importantly, Governor Cuomo’s budget often includes issues that are not specifically related to financial matters. Rather they are included to signal that the Governor considers the issue as a high priority.
No Advertising Taxes in the Budget – The Governor’s budget does not include any taxes on advertising. This is good news. Other states, such as Maryland, are trying to impose a tax on digital services. At this point the Governor is looking at increasing taxes that are already on the books, e.g., personal income taxes. NY has a significant budget deficit. Nonetheless, with the election of President Biden, NY state officials believe there will be more federal money returning to New York. While there is still concern about the deficit, the immediate crisis to raise revenue by taxing advertising has subsided.
There are additional legislative proposals regarding the imposition of digital advertising taxes. Nonetheless, we do not believe these proposals will move forward as part of the budget process. They will be left for another day.
On-Line Sports Wagering in the Budget – Advertising from on-line sports wagering promises to provide a huge boost to local broadcast stations. Unfortunately, the Governor’s initial budget proposal called for the State of New York to allow only one vendor to operate an on-line sports wagering service. Rather than simply collecting taxes from multiple on-line sports wagering platforms, the Governor’s proposal claimed it could obtain more than $500 million by operating a single system. For example, New Hampshire adopted a single vendor approach when it allowed on-line sports wagering.
NYSBA’s position is straightforward. We believe competition from multiple on-line sports wagering platforms will generate more income for the state of New York. Several recently released economic studies support this position. Moreover, competition from multiple on-line sports wagering platforms will increase advertising opportunities for all local stations. When a state only has one wagering platform, there is less of a need to advertise.
At this point, it looks like we are heading for a compromise that envisions multiple on-line sports wagering platforms. The key for the Governor is to obtain $500 million in revenue. While many believe this number to be inflated, there is a belief that this can be obtained by awarding multiple licenses and opening two new licensed casinos down state. We believe it is likely that the four state licensed casinos will have at least one on line sports platform associated with each casino. There may be more. We anticipate that the Native American owned casinos will also be providing on-line sports wagering platforms. We are keeping a close watch on this issue as it moves forward.
Adult Use Marijuana in the Budget – The Governor’s Budget contains provisions that would legalize adult use marijuana in New York. This issue has been debated extensively in New York. While there are a number of issues involving the legalization of adult use cannabis, we have been focusing on the proposed advertising regulations.
Importantly, changes in New York adult use the cannabis law will not by itself allow you to accept cannabis advertising. Marijuana remains illegal under federal criminal law and broadcasters operate under a federal license. So even if marijuana becomes legal in New York, you cannot accept marijuana advertisements without placing your broadcast license at significant risk. Remember these are federal criminal laws, so you may have more at stake than just your broadcast license.
President Biden stated his administration favors legalizing adult use cannabis. Last December, the U.S. House of Representatives passed H.R. 3884, the Marijuana Opportunity Reinvestment and Expungement (MORE) Act of 2020. This legislation effectively legalizes adult use cannabis by removing marijuana from the list of federally controlled substances. With the Senate now under Democratic control, it is quite possible that we may see a relaxation of the federal cannabis laws. If federal law changes, that could open the door for broadcasters to advertise for adult use cannabis.
This brings us back to NY State. We do not want to see cannabis advertising regulations adopted in NY State that effectively preclude cannabis advertising. Unfortunately the Governor’s proposed cannabis bill contains language that could prevent cannabis advertising. For example it would give the cannabis regulators the power to prohibit advertisements that are “designed to appeal in any way to children or other minors.” Such a standard could lead to a complete prohibition of cannabis advertising. There are several provisions that are similarly troubling. From a First Amendment perspective, you cannot enact legislation that effectively bans the advertising of a legal product.
NYSBA believes that we should approach cannabis advertising in the same way broadcasters have approached alcohol advertising. This approach has been successful in protecting children. In other words – like alcohol advertisements – cannabis advertising would be placed where at least 71.6 percent of the audience is reasonably expected to be 21 years of age or older.
We are working with the Governor Cuomo’s office and members of the New York Legislature on this issue.
To see a copy of our First Amendment analysis of the Governor’s proposal click HERE.
Data Accountability and Transparency Act in the Budget – Several other states, such as California, have enacted digital privacy laws. The proposed New York law would establish a Consumer Data Privacy Bill of Rights and create liability for companies that are using consumer data without permission. It would apply to any entity in New York that: 1) controls or processes personal information on 100,000 or more New York residents or, 2) derives more than 50% of its gross revenues from the sale, control or processing of personal information.
The legislation requires these entities to enact specific notification procedures on websites and social media sites to inform consumers – at the point of collection – about the type of information being collected and the purpose for collecting the information. Entities would only be allowed to collect personal information relevant to the purposes for which it is intended and cannot collect more data or use it for another purpose without notifying consumers.
We are examining this legislation carefully. It certainly will affect the way data is collected on digital platforms. It may apply to broadcasters, especially in larger markets across New York. Implementing the technical safeguards required in the legislation will be costly. We are also examining whether it would affect ratings services such a Nielsen.
One positive development is that the legislation does not create a private right of action. Thus, unlike other states such as California, we could avoid a plethora of potential class action lawsuits. However, the legislation allows New York State to impose fines of up to $7,500 per violation/per day. This could result in massive liability for companies collecting data on millions of individuals.
Importantly, some in the New York State Senate want an even stricter and more encompassing bill. Accordingly if this bill is dropped from the Governor’s budget, we could face an even tougher challenge later on. We are speaking with the Governor’s office and are monitoring this issue closely.
Broadcasting Medical Procedures not in Budget– This issue is not in the Governor’s Budget. For the past several legislative sessions we have opposed a bill that would create civil liability for broadcasting images of patients being treated without their express written consent at a medical facility. Our concern has always been that such liability would prevent radio and television stations from covering important news events.
This session is no different. New York Assemblyman Ed Braunstein (D. Queens) has introduced A.520, which would create liability for broadcasting patients being treated at a “medical facility” without prior written consent of the patients. While earlier versions of the bill included treatment by an ambulance service, the bill has been changed to require express permission when treatment is being provided inside an ambulance with the doors closed. Nonetheless, we remain concerned because the bill does not contain an exemption for news casts. For example, the bill would effectively preclude COVID-19 news reports from inside medical facilities. It would have prevented Geraldo Rivera’s 1972 report on the Willowbrook State School that led to a complete overhaul of the in mental health system in New York.
Fortunately, the NY State Senate drafted a separate version of the bill S.484A that contains an exemption for newscasts. The Senate bill recognizes the important First Amendment considerations associated with reporting the news. In order for a bill to pass the New York Legislature, both the Assembly and the Senate versions must be exactly the same. We are supporting S.484A.
To see our Memo in Opposition to A.520 – click HERE.
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