FCC Fines for Noncommercial Stations Having Underwriting Announcements That Were Too Commercial - Even Where the Station Received No Money
Last week, the FCC issued several fines to noncommercial broadcasters who had underwriting announcements that sounded too commercial. In these decisions, the Commission found that the stations had broadcast promotional announcements for commercial businesses - and those announcements did not conform to the FCC's rules requiring that announcements acknowledging contributions to noncommercial stations cannot contain qualitative claims about the sponsor, nor can they contain "calls to action" suggesting that listeners patronize the sponsor. These cases also raised an interesting issue in that the promotional announcements that exceeded FCC limits were not in programming produced by the station, but instead in programs produced by outside parties who received the compensation that led to the announcement. The FCC found that there was liability for the spots that were too promotional even though the station itself had received no compensation for the airing of that spot.
The rules for underwriting announcements on noncommercial stations (including Low Power FM stations) limit these announcements to ones that identify sponsors, but do not overtly promote their businesses. Underwriting announcements can identify the sponsor, say what the business of the sponsor is, and give a location (seemingly including a website address). But the announcements cannot do anything that would specifically encourage patronage of the sponsor's business. They cannot contain a "call to action" (e.g. they cannot say "visit Joe's hardware on Main Street" or "Call Mary's Insurance Company today"). They cannot contain any qualitative statements about the sponsors products or services (e.g. they cannot say "delicious food", "the best service", or "a friendly and knowledgeable staff" ). The underwriting announcements cannot contain price information about products sold by a sponsor. In one of the cases decided this week, the Commission also stated that the announcements cannot be too long, as that in and of itself makes the spot seem overly promotional and was more than was necessary to identify the sponsor and the business that the sponsor was in. The spot that was criticized was approximately 60 seconds in length.
But perhaps the most interesting aspect of these cases was the fact that, in two decisions, the consideration (or payments) for the spots in question did not go to the stations, but instead to program producers. In one of these cases, they came in a musical program produced by a third party. In another case, they came in the language of a play-by-play of a sports event, furnished to the station by the team - the team receiving any compensation. In both cases, the Commission rejected the claim that the stations were not responsible for third party advertising that appeared on the noncommercial stations, finding that the statutory prohibition of Section 399B of the Communications Act banning advertising on noncommercial educational stations did not require that the station receive compensation for a spot to be improper advertising, only required that compensation had been received. Moreover, as in both cases, the station had received the program that they broadcast for free, the program itself could be seen as the consideration that the station received for allowing these announcements to be aired. In either event, the fact that the "advertising" was run on the station was enough to give rise to the fine, even if the station had not received compensation directly from the sponsors.
These cases remind public broadcasting and other noncommercial stations, both radio, television and LPFM, to remain alert to the creep of any advertising into their programming. Sponsorship announcements must be limited to the identification of the sponsor and cannot be promotional. Failure to adhere to these requirements can lead to fines - in these cases ranging between $2,500 to $5000 dollars. So be careful!