In a Public Notice issued yesterday, the FCC asked for comments from the public on whether broadcast stations should be able to enforce “Last In, First Out” (“LIFO”) pricing against political candidates in election races. During the 45 days before a primary election or the 60 days before a general election, for advertising buys by a political candidate’s authorized campaign committee, a station cannot charge more than the lowest price charged to the station’s best commercial advertiser for that same class of advertising time. What the Commission asks in its Public Notice is whether the practice of stations of deciding that particular classes of advertising time are effectively sold out discriminates against candidates – as candidates routinely buy their advertising time late in an election cycle. These issues come up often, particularly late in any political window as demands on the advertising inventory of stations can become very tight as an election approaches.
So what does this petition ask? First, let’s take a step back and look at how lowest unit charges work in broadcast (and cable) political advertising. An easy example would be where a candidate wants to buy a fixed position advertisement on a radio station during its morning drive program. For that ad, a candidate can be charged no more than the lowest price that the station charged to any commercial advertiser for a similar fixed-position spot that runs in that same time period. Different classes of time have different lowest unit rates. That means that, in that same morning drive program, there might be a lowest rate for these fixed position adverting spots that are guaranteed to run at the time that they are scheduled, but a lower price for spots that can be preempted by higher priced spots. If there are different make-good rights associated with a class of preemptible time (e.g. one type of spot must be “made-good” by the station within a week if it is preempted, while another might just need to be made-good within the next month), both of those classes could have different lowest rates. See more about lowest unit rate here and here. Continue Reading