Broadcast Law Blog

Last week, the FCC commenced its long anticipated proceeding to reexamine its sponsorship identification rules. This proceeding has been rumored for over six months, having appeared on an agenda for a Commission open meeting in December, only to be pulled from the agenda days before it was to have been voted on. The Commission has initiated this proceeding, to a great degree, at the urging of Commissioner Adelstein who has been vocal in his concerns that the broadcast and advertising industries, in adopting advertising techniques to respond to technological and marketplace changes, has been exposing the public to commercial messages without their knowledge.  One of the principal practices of concern to the Commission, though not the only one, is embedded advertising (as the Commission refers to product placement and product integration into the dialog and/or plot of a program). While many of the trade press reports have focused on embedded advertising, this proceeding is wide-ranging and important to the broadcast, cable and advertising industries. Comments on the proceeding will be due 60 days after its publication in the Federal Register, with replies 30 days later.   We have prepared an Advisory, summarizing the issues raised by the Commission in this proceeding, which can be found here.

According to trade press reports, this proceeding was initially planned as a Notice of Proposed Rulemaking (NPRM), which would have proposed rules which, after public comment, could have been immediately adopted. After significant lobbying from the advertising community, the Notice was released in two parts. First, there is a Notice of Inquiry (NOI), asking a series of questions about the current state of advertising on broadcast and cable outlets, and asking how the Commission should amend its rules to deal with new advertising techniques. Second, the Commission’s announcement contains an NPRM with respect to certain specific items, including proposing to clarify the type of sponsorship identification necessary in television advertising, the extension of the sponsorship identification rules beyond local origination cablecasting to cable network programming, and clarification of the rules with respect to live-read radio commercials. The specifics of the NOI and the NPRM are set forth in our Advisory. 

Posted By David Oxenford In Advertising Issues , Payola and Sponsorship Identification | Permalink | 0 Comments | Email entry

In several recent speeches and press releases, FCC Commissioner Jonathan Adelstein has challenged the FCC to do more in the regulation of children's programming.  In a recent Press Release, the Commissioner outlined proposals including the following:

• Improve the V-Chip and other program blocking technologies
• Improve ratings information for television programming - including potentially having third parties review programming for its suitability to children as opposed to the television programmers themselves doing the ratings
• In the context of a proceeding on Embedded Advertising that has been rumored for quite some time, look at how such advertising is used in children's programming
• Restrict interactive advertising directed at children.
• Convene a summit to explore these issues

In addition to these proposal, the Commissioner gave a recent speech to the Media Institute in which he expanded on these ideas, and also lengthened this agenda to include further Commission action to define and restrict violent programming.  He also expressed his regrets over the recent decision overturning the FCC's fines for fleeting expletives and urged that action be taken to overturn this decision (see our post here on the FCC's appeal of that decision).  And in yet another recent speech, he emphasized the proceeding on Interactive advertising in children's programming, remarking on how the Commission has a pending proceeding that has been pending and unresolved for several years.  He cited the Commission's tentative conclusion to ban such ads, as broadcasters form a "portal" for children's entrance to the Internet.  While the Commissioner expressed that the FCC had little jurisdiction to do much on the Internet itself (but see our recent post as asking whether the FCC may soon get more power over the Internet), he felt that restrictions on the links to the Internet from television programs would be useful in protecting children. 

Posted By David Oxenford In Advertising Issues , Children's Programming and Advertising , On Line Media , Programming Regulations | Permalink | 0 Comments | Email entry

Last year, Congress considered limits on direct to consumer (DTC) prescription drug advertising (about which we wrote here), but this effort stalled.  A recent letter from two Congressional leaders of the Energy and Commerce Committee suggest that Congress is looking at these issues once again.  This advertising has become important to television networks, and to drug manufacturers anxious to distribute information about their latest products to consumers.  Congress held a hearing in May to consider issues about this advertising.  One concern was whether ads could be misleading when they featured celebrities (a particular concern was when Robert Jarvic, the inventor of the artificial heart who is not an medical doctor, was seen in a drug commercial, which some felt implied that he was giving medical advice). Other concerns include the potential for advertising to build up large demands for new drugs, quickly exposing these drugs to large populations, when a slower roll out would give the companies and the medical community more time to discover any unanticipated side effects.  An article about these concerns is available to Wall Street Journal subscribers, here.  The Congressional letters, which can be accessed here, address both of these issues.

The letter, from Congressmen Dingell and Stupak, both from Michigan, ask several drug companies and the Pharmaceutical Research and Manufacturers of America (the trade association for Pharmaceutical companies), if they were planning to update their guidelines on direct to consumer advertising to address the issue of celebrity advertising.  Also, the letter asked if the companies and the association would back a voluntary two year moratorium on advertising for new drugs, presumably while new guidelines are worked out.  FDA guidelines already require a statement on the major risks of the drug and information on where consumers can learn more about the risks of the drug (suggesting a combination of 4 datapoints in each ad - a toll-free telephone number, a website, a recent print publication - all dealing in more detail with side effects and cautions - and a recommendation to "ask your doctor" about the effects of the drug).  The Congressional Research Service of the FDA has prepared a good  history of regulations in this area and a summary of the issues.  Watch upcoming Congressional actions to see if even more disclosures will be necessary.

Posted By David Oxenford In Advertising Issues | Permalink | 0 Comments | Email entry

In recent months, the broadcast industry has experienced one of the most active periods of regulatory activity in recent memory. Since November, the FCC has adopted enhanced disclosure obligations concerning the public interest programming of television broadcasters and requirements for an on-line public inspection file; rejected most calls for increased deregulation of broadcast ownership (allowing only the cross-ownership of broadcast stations and newspapers in the largest markets); established specific prohibitions against advertising practices that involved “no Spanish, no urban dictates”; placed mandatory disclosure obligations on television broadcasters in connection with promotion of the DTV transition; proposed rules that could favor low power FM stations over improvements in full-power broadcast services and existing FM translator licensees; and proposed sweeping regulation of broadcasters which could potentially require specific amounts of nonentertainment programming by all stations, restrict the flexibility of broadcasters' location of their main studios, require 24-7 live staffing for all stations that operate on that basis, and perhaps even evaluate the music selection process of radio operators. Rumored to be in the offing are proposals to regulate embedded advertising, to adopt enhanced rules on sponsorship identification in connection with video news releases and payola-like practices, and perhaps even expand EEO reporting requirements (as the FCC recently asked for public comment on the employee-classification information for its long-suspended requirements for the filing of FCC Form 395 – the Annual Employment Report in which stations categorize all their employees by their employment duties, race and gender). And Congress has not been idle, with proposals introduced for the adoption of a performance royalty on over-the-air radio for the use of sound recordings, hearings about potential restrictions on prescription drug advertising, and a proposal to roll back the limited ownership reform adopted by the Commission in December.

With all this activity in a six month period under a Republican administration with a Republican majority on the FCC, during a time of great turmoil in the broadcast industry itself, as television prepares for the digital transition and broadcast revenue growth is slow or nonexistent (based on a variety of factors including general economic conditions and competition from the plethora of new media choices), many broadcasters are wondering what’s going on? And some fear even more changes could come about in any new administration that may come to Washington after the November elections, no matter what the result of that election. The one candidate with the most experience in the regulation of broadcasting, Senator McCain who has chaired the Senate Commerce Committee which regulates the broadcast industry, has by no means been a captive of the broadcast industry – leading efforts to enhance the use of LPFM and at one point pushing a spectrum tax proposal for television broadcasters for the use of the digital spectrum.

Posted By David Oxenford In Advertising Issues , Digital Television , EEO Compliance , FM Translators and LPFM , General FCC , Multiple Ownership Rules , Programming Regulations , Public Interest Obligations/Localism | Permalink | 3 Comments | Email entry

In a decision released last week, the FCC imposed a fine of $4000 on a broadcaster licensed to a community in the state of Arkansas for airing an advertisement for the Missouri State Lottery.  In this case, a station licensed to Arkansas ran a remote broadcast from a store in Missouri.  During the course of the remote, the on-air announcer invited listeners to come to the store and made some not-too-subtle remarks implying that, when they did, they could buy Missouri lottery tickets.  As there is a statutory provision prohibiting a station located in one state from running an ad for a lottery in another state if its own state does not have a lottery, the Commission issued this fine.

This ban is based on a statute passed  by Congress, and approved by a Supreme Court decision 15 years ago - finding a compelling state interest in protecting the citizens of states that ban gambling from allowing stations in their states from advertising that prohibited activity.  Of course, in many cases, a station licensed to one state may be heard (and may in fact be physically located) in another state.  Even so, the city of license is what counts - so a station has to observe the laws of that state.  In some cases, that can mean that there are different rules that apply to different stations in the same cluster (and possibly located in the same building, with advertising being sold by the same sales people).

Posted By David Oxenford In Advertising Issues , FCC Fines | Permalink | 1 Comments | Email entry

At its December meeting, at the same time as it adopted rules relaxing the newspaper-broadcast cross-ownership rules, the FCC adopted new rules to expand diversity in the ownership of broadcast stations, encouraging new entrants into such ownership.  The full text of that decision was just released last week, providing a number of specific rule changes adopted to promote diverse ownership, as well as a number of proposals for changes on which it requests further comment.  Comments on the proposed changes will be due 30 days after this order is published in the Federal Register.  As this proceeding involves extensive changes and proposals, we will cover it in two parts.  This post will focus on the rule changes that have already been made - a subsequent post will cover the proposed changes.  The new rules deal not only with ownership rule modifications, but also with issues of discrimination in the sale of broadcast stations and in the sale of advertising on broadcast stations, new rules that leave some important unanswered questions. 

The rules that the Commission adopted were for the benefit of "designated entities."  Essentially, to avoid constitutional issues of preferences based on race or gender, the definition of a designated entity adopted by the Commission is based on the size of the business, and not the characteristics of the owners.  A small business is one designated as such by the Small Business Administration classification system.  Essentially, a radio business is small if it had less than $6.5 million in revenue in the preceding year.  A television company is small if it had less than $13 million in revenues.  These tests take into account not only the revenue of the particular entity, but also entities that are under common control, and those of parent companies.  For FCC purposes, investment by larger companies in the proposed FCC licensee is permissible as long as the designated entity is in voting control of the proposed FCC licensee and meets one of three tests as to equity ownership: (1) the designated entity holds at least 30% of the equity of the proposed licensee, or (2) it holds at least 15% of the equity and no other person or entity holds more than 25%, or (3) in a public company, regardless of the equity ownership, the designated entity must be in voting control of the company.

Posted By David Oxenford In Advertising Issues , EEO Compliance , Multiple Ownership Rules | Permalink | 2 Comments | Email entry

Last week, the FCC approved the long-pending application for the transfer of control of Clear Channel Broadcasting from its public shareholder to several private equity funds. Even though the application had been pending at the FCC for over a year, the Commission’s decision was notable for the paucity of issues that were discussed. The decision approves the transfer, conditioned on certain divestitures by the Company and by the equity funds that will control the new company, including divestitures previously ordered by the Commission in connection with the investment of one of these funds in Univision Broadcasting but not yet completed, and rejects three petitions that, from the Commission’s description, did not involve fundamental issues about the nature of the overall transaction, but were instead devoted to certain limited issues, in two cases involving actions in a single market. The divestiture conditions were approved seemingly as a matter of course, and do not provide any new insights into the law concerning the FCC’s attribution rules (unlike the recent decision approving the transfer of control of Ion Television, about which we wrote here, which contained an extensive detailed discussion of what it takes to make an ownership interest “nonattributable” for purposes of the FCC multiple ownership rules). Given the lack of controversy in the Commission's order, what is perhaps most noteworthy about the decision are the concurring statements of the two Democratic Commissioners, which may provide some indication of the concerns of the Commission should we have a Democratic-controlled Commission following this year’s Presidential election.

Of course, as we’ve described in our posts about the FCC’s Localism Notice of Proposed Rulemaking (here), and the new rules regarding Enhanced Disclosure requirements for television broadcasters (here), the Commission has already begun to act in a far more regulatory manner than any other Commission in the past 20 years. Yet the issues raised by the Democrats in this decision are in areas not yet considered by the Commission. Commissioner Copps expresses his concern about the role of private equity in broadcast ownership, and whether such ownership is in the public interest. In numerous proceedings and in response to the presentation made at the FCC’s January meeting by the Media Bureau, Copps has suggested that private equity should be investigated, both to determine whether the Commission is fully aware of all ownership ties of the companies involved, and also (as emphasized in this case) for the potential economic impact on the operations of the broadcast stations caused by the new debt involved in the acquisition. Here, Commissioner Copps questions whether the announcement of a potential downgrade of the bonds of the Company if these deals occur should have been of more concern to the Commission. Private equity should be aware that, in a future FCC, an investigation of the economics of their operations should be expected.

Posted By David Oxenford In Advertising Issues , Multiple Ownership Rules , Public Interest Obligations/Localism | Permalink | 0 Comments | Email entry

As 2007 wound to an end, advertising issues figured prominently on the agenda of Washington agencies, including both the FCC and the FTC.  While the FCC is looking at specific regulatory requirements governing broadcast advertising, the FTC is investigating the privacy issues raised by advertising conducted by on-line companies.  In November, the FTC held a two day set of workshops and panels where interested parties discussed issues of behavioral advertising - advertising that can be targeted to individuals based on their history of Internet use, and whether or not regulation of these practices was necessary.  The wide-ranging discussion is summarized on our firm's Privacy and Security Blog, here.  After gathering this testimony, we will see if the FTC decides to proceed to propose any regulations dealing with this sort of personalized, on-line advertising.

At the FCC, there are two separate proceedings dealing with advertising issues for broadcasters.  The first came about as part of the FCC's diversity initiatives adopted at its December meeting.  There, the Commission determined that broadcasters will need to certify in their renewal applications that they have not discriminated in their advertising practices.  While this proposal was adopted at the Commission's December 18 meeting, the full text of the decision has yet to be released, so we do not know the specifics of this new requirement.

Posted By David Oxenford In Advertising Issues | Permalink | 0 Comments | Email entry

The FCC has released its agenda for its December 18 meeting - and it promises to be one of the most important,and potentially most contentious, in recent memory.  On the agenda is the Commission's long awaited decision on the Chairman's broadcast multiple ownership plan relaxing broadcast-newspaper cross-ownership rules (see our summary here).  Also, the FCC will consider a Further Notice of Proposed Rulemaking on Localism issues (pending issues summarized here) following the conclusion of its nationwide hearings on the topic, as well as an Order and Further Notice of Proposed Rulemaking on initiatives to encourage broadcast ownership by minorities and other new entrants (summary here).  For cable companies, the Commission has scheduled a proposed order on national ownership limits.  And, in addition to all these issues on ownership matters, the FCC will also consider revising its sponsorship identification rules to determine if new rules need to be adopted to cover "embedded advertising", i.e. product placement in broadcast programs.  All told, these rules could result in fundamental changes in the media landscape.

The broadcast ownership items, dealing with broadcast-newspaper cross-ownership, localism and diversity initiatives, all grow out of the Commission's attempts to change the broadcast ownership rules in 2003.  That attempt was largely rejected by the Third Circuit Court of Appeals, which remanded most of the rules back to the FCC for further consideration, including considerations about their impact on minority ownership.  The localism proceeding was also an outgrowth of that proceeding, started as an attempt by the Commission to deal with consolidation critics who felt that the public had been shut out of the process of determining the rules in 2003, and claiming that big media was neglecting the needs and interests of local audiences.

Posted By David Oxenford In Advertising Issues , Multiple Ownership Rules , Payola and Sponsorship Identification , Public Interest Obligations/Localism | Permalink | 0 Comments | Email entry

The New York Times recently published an article about NBC's owned and operated station in New York City acceptance of advertising for liquor.  While ads for beer and wine have been a staple on broadcast stations (though see our discussion of the limits on that advertising, here), ads for other alcoholic beverages ads have been less frequent.  Many broadcasters have for years believed that such ads were prohibited by the FCC or some other government agency.  In fact, alcohol ads have not been prohibited by law, but instead by voluntary actions of trade associations representing broadcasters and the alcoholic beverage industry .

Until the early 1980s, the National Association of Broadcasters had a voluntary code of conduct for broadcasters, suggesting good standards and practices for broadcasters: limiting some broadcast content while encouraging broadcasters to air other programming perceived to be in the public interest.  Among the conduct that the Code prohibited was the advertising of hard liquor. While the NAB Code was not mandatory for broadcasters, in filing many routine applications for new stations and for the acquisition of existing stations, the FCC in the past had requirements that the potential broadcasters explain how their programming would serve the public interest.  Most applicants would shorthand their compliance plans by simply promising to abide by the NAB code, in effect binding themselves to the code through those representations made to the FCC.  The Code was in place until the early 1980s, when the Department of Justice became concerned that code provisions suggesting maximum commercial loads and similar matters functioned as a restraint of trade in violation of the antitrust laws, and the NAB Code was abandoned.

Posted By David Oxenford In Advertising Issues | Permalink | 1 Comments | Email entry

I had an interesting question this week - asking why beer companies won't advertise on radio stations with younger demographics.  Was it a law or just a marketing decision?  What I found is that it is a little of both.  While there are no laws specifically prohibiting the advertising of beer on radio stations with younger audiences, the Federal Trade Commission and Congress have been very concerned about all alcohol advertising, especially advertising that appears to encourage under-aged drinking. Thus, to avoid regulation, the Beer Institute has adopted voluntary standards that require its members to advertise only on radio stations which have an audience that is at least 70% comprised of those older than the legal drinking age. 

The FTC has periodically issued reports on advertising for alcoholic beverages, the last report having been issued in 2003.  Appendix D to that report contains the Beer Institute guidelines.  As set forth in those guidelines, the industry looks to audience demographics, by daypart, in deciding whether or not its members should buy time on a particular station.  If the Arbitron or similar ratings data shows 30% or more of a station's audience in a given daypart is under 21, then there will be no advertising in that daypart on the station.

Posted By David Oxenford In Advertising Issues | Permalink | 1 Comments | Email entry

The FCC has taken the unusual step of issuing a Notice of Apparent Liability, i.e. an announcement that it has fined a broadcaster, against two TV station owners for failing to provide a sponsorship identification for political material sponsored by another Federal agency--the Department of Education ("DOE").  The proposed fines for these two broadcasters totaled over $70,000.  In connection with the same broadcasts, the Commission also issued a citation against the producer of the programs for failing to include a disclosure of the sponsor of the programs, warning that company that it would be fined if it were to engage in such activity in the future, even though the entity was not an FCC licensee.  These actions demonstrate the concern of the Commission over programs that attempt to influence the public, particularly those dealing with controversial issues of public importance, where those who have paid to do the convincing are not evident to the public.

These cases all stem from programs associated with conservative political commentator Armstrong Williams, who was paid by DOE to promote the controversial No Child Left Behind Act ("NCLBA") supported by the current administration.  He did so on two television programs:  his own show, titled "The Right Side with Armstrong Williams" and on "America's Black Forum," where he appeared as a guest.  These shows were aired by various television stations without any sponsorship identification to indicate that Williams was paid by DOE to promote NCLBA on the air.

In one case, the television broadcaster received $100 per broadcast for airing Right Side, but failed to reveal that it had received any consideration.  The broadcaster claimed that the consideration received was "nominal," which is generally an exception to the sponsorship ID requirement.  However, the FCC noted that the exception for "nominal" consideration applies only to "service or property" and not to "money," holding that receipt of any money, even if only a small sum, triggers the requirement for sponsorship identification.

Posted By David Silverman In Advertising Issues , Payola and Sponsorship Identification , Political Broadcasting | Permalink | 0 Comments | Email entry

At last Thursday's Public Hearing on multiple ownership in Chicago, about which we wrote here, a statement was read by a spokesman for Presidential candidate Barack Obama.  According to press reports, the statement expressed the candidate's positions favoring shorter license renewal terms for broadcasters so that they would be subject to more public scrutiny, as well as criticizing the FCC for allowing broadcast consolidation.  These thoughts essentially echo the comments of FCC Commissioner Copps, especially on the subject of license renewal terms, whose views we wrote about here.  While many press reports have asked if this statement by Senator Obama foreshadows the broadcast ownership debate becoming part of the presidential campaign issues, we worry that it may signal a far broader attack on broadcasters during the upcoming political year.  The statement by Senator Obama is but one of a host of indications that broadcasters may face a rash of legislative issues that are now on the political drawing boards.

Broadcasters make easy targets for politicians as everyone is an expert on radio and television - after all, virtually everyone watches TV or listens to the radio and thus fancies themselves knowledgeable of what is good and bad for the public.  But those in Congress (and on the FCC) have the ability to do something about it.  And, with an election year upon us, they have the added incentive to act, given that any action is bound to generate at least some publicity and, for some, this may be their last opportunity to enact legislation that they feel important.  We've already written about the renewed emphasis, just last week, on passing legislation to overturn the Second Circuit's decision throwing out the FCC's fines on "fleeting expletives" and making the unanticipated use of one of those "dirty words" subject again to FCC indecency fines.  Clearly, no Congressman wants to be seen as being in favor of indecency (look at the rise in the indecency fines to $325,000 per occurrence which was voted through Congress just before the last election), and First Amendment issues are much more nuanced and difficult to explain to the voter, so watch this legislation.

Posted By David Oxenford In Advertising Issues , Children's Programming and Advertising , Indecency , Multiple Ownership Rules , Programming Regulations , Public Interest Obligations/Localism | Permalink | 0 Comments | Email entry

The FCC today issued a Public Notice soliciting comments on the impact of Internet ad sales on the lowest unit rate prescribed by the FCC's Political Advertising Rules.  The Commission's inquiry picks up on an issue we raised in a blog entry last year and responds to a recent Request for Declaratory Ruling filed by a group of state broadcasters associations seeking guidance on the effect that ad sales made via the Internet could have on the rates charged to political candidates.  With the advent of Internet sites, such as Google’s dMarc service, that take remnant advertising inventory from broadcasters and market that inventory on-line, it is possible that a station could sell left-over spot time at prices less than a local advertiser would pay for similar time on the same radio station.  The informal guidance given previously by the FCC's staff has been that if a commercial advertiser can buy a particular spot on a particular station using an on-line service, and that spot carries with it the same rights that a spot purchased directly from the station has (e.g. it runs in the same time period, has the same protections against pre-emption, it carries similar make-good rights), then the spot must be considered in the station’s lowest unit rate analysis for spots of the same class.

With a formal request for clarification now before it, the FCC seeks input to assist it in resolving the issue of whether such ad time sold via these Internet sales must be taken into consideration when determining the station's lowest unit rate for purposes of the political advertising rules.  Among other things, the Commission seeks information regarding the design and operation of these Internet ad sales services.  A copy of the Commission's Public Notice can be found here.  The proceeding has been assigned Docket  MB No. 07-137.  Comments are due by August 6, 2007, and Reply Comments are due by August 21, 2007, and can be filed with the Commission either electronically via ECFS, or on paper. 

Posted By Brendan Holland In Advertising Issues , Political Broadcasting | Permalink | 0 Comments | Email entry

Three of the FCC Commissioners have responded to the Congressional inquiry about the Commission’s rules regarding junk food advertising about which we wrote here.  This inquiry was initiated by Congressman Ed Markey, Chairman of the House of Representatives Subcommittee on Telecommunications and the Internet. The Congressman's letter had urged the FCC to move quickly to implement rules limiting the advertising of unhealthy food aired during broadcasting directed to children.  The Commissioners' responses uniformly indicate the potential for regulation, depending in part on the outcome of the activities of the industry Task Force formed at the initiation of, and with the participation by, the FCC and Congress. See our reports on the formation of the Task Force, here.  The Commissioners all note that should the Task Force fail to conclude that the industry has achieved satisfactory results through self-regulation, FCC proceedings might be required to insure that children are not unduly exposed to junk food advertisements. 

Two commissioners, Chairman Martin and Commissioner Tate, responded jointly, and indicated that the FCC could explore regulation of unhealthy food, perhaps looking at guidelines adopted in other countries as a model for US regulation.  These Commissioners' statement even address the issue of regulating children's programming on cable television networks, where they claim that there is much exposure to ads for junk food.  These statements make clear that this is not just an issue for the broadcast industry.

Posted By David Oxenford In Advertising Issues , Children's Programming and Advertising | Permalink | 0 Comments | Email entry

In a letter to FCC Chairman Martin and Commissioners Copps and Tate, Congressman Edward Markey, head of the House of Representatives Subcommittee on Telecommunications and the Internet, has asked that the FCC take strong steps to restrict the advertising of unhealthy food in children's television programs.  While applauding voluntary efforts promised by some broadcasters to include in their children's programing more Public Service Announcements (PSAs) for healthy eating, Congressman Markey urged the FCC to do more by cutting in half to 6 minutes per hour the amount of permissible advertising in children's programming , and by finding that a station had not met its obligations to broadcast educational and informational programming directed to children if the station aired ads for unhealthy foods during a program which would otherwise qualify as a toward meeting the station's obligations.

The letter from Congressman Markey, while citing efforts in other countries to enforce similar regulations, does not address basic issues with each of his proposals.  First, if sponsorship of children's programming is cut in half, won't that also cut the incentive of broadcasters to air such programs?  Cutting sponsorship to the bone would seem to guarantee that broadcasters will do the absolute minimum amount of children's programming required, so that they can air programs where there are no advertising restrictions.

These requirements would also seem to make broadcasters into the food police.  Broadcasters will have to educate themselves as to the nutritional qualities of various food products to make sure that nothing impermissible gets on the air.  And where will lines be drawn?  Could a station safely advertise a fast food store if the ads featured only the salads sold by the store - even where that store might also sell not so healthy alternatives?  If definitions are drawn by numerical limits on contents such as sugar, salt and fat (as suggested by the letter), will these limits necessarily lead to advertising the most healthy foods?  Will broadcasters be forced to substitute for parents in making decisions about what their children will eat?

Posted By David Oxenford In Advertising Issues , Children's Programming and Advertising , Programming Regulations | Permalink | 0 Comments | Email entry

The Sacramento radio contest gone wrong, which led to the death of a contestant, will apparently not lead to any criminal liability for the station or its employees, according to press reports including one in the San Francisco Chronicle, here.  However, as the standards for a criminal prosecution are higher than those for a finding of civil liability, this may not be the last that we hear about this contest.  A complaint is also pending before the FCC about the matter.

We wrote about some of the problems that can arise with contests, here.  Stations should be careful planning and executing any contest.  A company planning a contest should research state law, to be sure that everything is being done is in compliance with all local requirements, and any necessary registrations are filed or local permits obtained.  The rules of the contest must be spelled out, anticipating every eventuality to the extent possible, carefully followed, and publicized (including the requirement for FCC licensees that the principal rules be broadcast on air - see our post here).  And, of course, try to anticipate the participants' possible actions while trying to participate, and avoid situations where the contest could create any dangerous situations.  In this day and age, there is much to consider in planning a simple contest in a manner that avoids potential liability.

Posted By David Oxenford In Advertising Issues , FCC Fines | Permalink | 0 Comments | Email entry

The Commission recently issued an Order fining a Kansas broadcaster $4000 in connection with a station contest - "Guess What is in the Santa Sack."  The licensee was faulted for not giving away the prize to someone who correctly guessed what was in the sack, and for also for not broadcasting the rules of the content on the air.  Obviously, a broadcaster must comply with its contest rules and give away a prize as promised.  In fact, as the winner had to complain to the FCC in order to get her prize, broadcasters should know that, when a listener complains, they should investigate immediately, give away the prize if warranted, and avoid the FCC fine that might result if the listener does not get satisfaction and has to ask for the FCC's involvement.  This case also reminds broadcasters that the material terms of any contest must be announced on the air on a periodic basis.

According to the FCC rules, "material terms" include those factors which define the operation of the contest and which how a listener can participate in the contest. Although the material terms may vary  depending upon the exact nature of the contest, they will generally include: how to enter or participate; eligibility restrictions; entry deadline dates; whether prizes can be won; when prizes can be won; the extent, nature and value of prizes; the basis for valuation of prizes; time and means of selection of winners; and/or tie-breaking procedures.   The broadcaster can make a good faith judgment as to how often the terms need to be broadcast .  They do not need to be broadcast every time the contest is mentioned, but should be aired often enough so that listeners can become familiar with the rules.  The complete rules should also be readily available to listeners.  We suggest that they be on the station's website, and hard copies should also be available at the main studio and at the business locations of any principal sponsors where contest entries can be made.  As we've written before, this is the year of the contest gone wrong, so broadcasters must be vigilant to avoid legal problems. 

Posted By David Oxenford In Advertising Issues , FCC Fines | Permalink | 0 Comments | Email entry

Two interesting stories in major national newspapers highlight the attention that the content of broadcast programming is receiving from regulators - both at the FCC and in Congress.  One story, in the Washington Post, reveals a draft FCC report suggesting that the FCC could regulate violent programming in the same way that it regulates indecent programming, if Congress gives the FCC statutory authority to do so.  In another story, appearing in the Wall Street Journal, critics suggest restrictions on when ads for Viagra and other similar medications could be run on television.  That story also mentions pending legislation to restrict all consumer-directed advertising dealing with prescription drugs. 

Obviously, these proposals for regulation would strike hard at broadcasters - particularly television broadcasters.  Pharmaceutical advertising has become big business for TV companies.  Sure, we've probably all felt uncomfortable at times when a Viagra ad runs in a program we are watching with family members.  But should the government pass laws restricting the the advertising of legal products?  Should we shield viewers from information about these products?  In other contexts, the Supreme Court has struck down restrictions on liquor and legal gambling ads.  How would restrictions on legal drugs fair?

And we all know how well the FCC has done in setting out the limits on indecent programming.  Where would lines be drawn on violent programming?  How does one even define violent programming?  For instance, many of the most popular programs on television are medical programs (e.g. Grey's Anatomy, ER, House).   All feature very detailed and sometimes disturbing visuals of medical procedures - though rarely are there detailed depictions of what most people would characterize as "violent" actions - shootings, stabbings, etc.  Would these medical shows fall under any restrictions?  And how would rules deal with broadcasts such as "Saving Private Ryan," which has already received a dispensation from the FCC for its indecent content which, in other programs, would have resulted in FCC fines.  Would its violent content also receive such a pass?

Posted By David Oxenford In Advertising Issues , Programming Regulations | Permalink | 0 Comments | Email entry

I've just returned from this year's Radio Advertising Bureau convention in Dallas.  In reflecting on the convention, and in discussing it with many who were in attendance, the consensus was that this was not your Father's RAB convention.  I was surprised by how little discussion there was of traditional radio at the conference.  The sessions weren't the typical ones about how to make the most money from selling your cluster of radio stations in combination, or how to compete against the newspaper or the Yellow Pages, or how to get the most out of your sales staff.  Instead, virtually every session talked about leveraging your digital assets.  There were discussions of using your website, streaming, podcasts, text messaging, and  audio on cell phones to increase the financial performance of broadcast stations.  There were discussions of HD Radio and some of the opportunities that service might offer if and when it starts getting consumer acceptance.  All in all, it seemed as if radio (or at least those planning the convention sessions) had received the message that the industry needs to take advantage of its ability to drive traffic to new technologies, and drive that traffic to new media sources that stations themselves create. 

In the past, there seemed to be a fear about discussing these new technologies.  It was almost as if the technologies weren't discussed, they'd go away.  But at the RAB, and at many of the conventions of the state broadcast associations that I have attended over the last year, broadcasters seemed to have decided that they need to embrace the new media.  While the old fear had been that these new media sources would cannibalize the current broadcast audience, everyone seems to now recognize that the audience is going to use these technologies no matter what - so the broadcaster might as well be the one cannibalizing its own audience.

While legal and regulatory issues do not tend to be the primary topic of discussion at the RAB Conference, as in almost any broadcast discussion, they do come up.  Here too, the discussion was digital.  For instance, in the speech by NAB President David Rehr outlining the priorities of the NAB for the year, only the effort to authorize FM translators for AM stations (which we wrote about here), was not a "digital" topic.  The other issues discussed by Mr. Rehr included pushing the FCC for final rules for digital radio, monitoring the actions of satellite radio companies XM and Sirius, and finally, the issues that arise out of the Perform Act.  The Perform Act is a copyright bill introduced in the Senate last month that would affect digital royalties for music used on the Internet, place restrictions on services promoting the promotion and sale by digital music providers of devices that disaggregate songs contained in a digital stream, and require copy protection technologies to be employed by digital music providers.  Hardly the exciting stuff that makes for an applause line in a convention speech.  While we will write more about the Perform Act in a separate posting, the major concern for broadcasters is that the sponsor, California Senator Diane Feinstein, suggested in her remarks that the performance royalty on sound recordings which now applies to satellite radio and webcasting (which we have written about many times including here), should also apply to broadcast radio.  And that is a big enough issue - one that could hit broadcasters directly in the pocketbook - that it demands the industry's attention in every forum. 

Posted By David Oxenford In Advertising Issues , Digital Radio , Intellectual Property , Internet Radio , Internet Video , On Line Media | Permalink | 1 Comments | Email entry

When was there ever a year where there was more controversy about contests and promotions?  This week, the stories were everywhere about how Boston was shut down by the promotion for a program on the Cartoon Network.  While all the facts are not in on that case, had this been conducted by a broadcaster, the FCC might well be investigating to determine if the promotion violates the Commission's hoax policies, which prohibit the airing of hoaxes that endanger the public by tying up emergency responders.

The FCC already seems to be investigating the contest gone wrong in Sacramento.  According to trade press reports, FCC Chairman Martin asked the Enforcement Branch of the FCC to review the contest that resulted in the death of a participant.  While the FCC may investigate any matter, what is it that they are looking for in connection with the Sacramento contest?  Certainly, the contest  was a tragic event.  And there is the possibility of civil liability from the lawsuit that was filed last week.  But not every action by a broadcaster can or should be the subject of FCC action.  The FCC has never become involved in libel or slander cases, leaving them to the jurisdiction of the civil courts.  Nor has the FCC become involved in cases of personal or property damage from accidents or injuries caused by broadcast vehicles or other equipment.  Again - those matters are left to the Courts.

Posted By David Oxenford In Advertising Issues , FCC Fines , General FCC | Permalink | 0 Comments | Email entry

In a Public Notice issued today, the FCC announced the membership of a Task Force to study how the Media affects childhood obesity.  We reported on the formation of the task force in October, but its membership is just being announced, and its first meeting will be taking place on Valentines Day (probably without red hearts filled with chocolates for the members).  The task force is comprised of representatives of various public interest groups, food and media industry representatives, two FCC Commissioners and Senators Brownback and Harkin.  The Public Notice states that the Task Force will focus on voluntary means by which the media can help fight childhood obesity.  At the end of their study, the Task Force will issue a report on its findings.

This issue is one which the broadcaster should follow closely.  Senator Brownback has made this issue his own and, with his announcement this week that he is exploring a run for President, we can be sure that more will be heard about this issue.  We reported in August on his initial attempts to have the industry adopt guidelines to limit the advertising to children of unhealthy foods.  Also, Commissioner Tate has enthusiastically promoted this task force, issuing a statement today applauding the start of its important business of addressing this societal problem.  With these officials invested in this issue, broadcasters will no doubt face pressures to restrict their advertising of unhealthy food.  Watch for the results and recommendations of this Task Force in the next year.

Posted By David Oxenford In Advertising Issues , Children's Programming and Advertising | Permalink | 0 Comments | Email entry

About this time every year, predictions are offered as to what will happen in the coming year.  Since everyone else does it, we've offered our own predictions as to what Washington has in store for the broadcast industry in 2007.  Find a copy of our predictions in the memo on our firm website, here.  The advisory offers our thoughts on many of the regulatory issues affecting broadcasters that may well come out of Washington this year.  Our observations are offered on the status of considerations including multiple ownership, the digital television transition, payola, indecency, Internet radio and even the political broadcasting rules. 

Let us know if you think our crystal ball is a little cloudy.

Posted By David Oxenford In Advertising Issues , Digital Television , General FCC , Internet Radio , Multiple Ownership Rules , Payola and Sponsorship Identification | Permalink | 0 Comments | Email entry

Recently, we wrote about reports that the FCC would be creating an Obesity Task Force.  On September 27, Senator Brownback, FCC Chairman Martin, and FCC Commissioner Tate announced the formation of that task force.  The task force will examine the impact of the media and advertising on children's health.  The press release stated:

“Given the saturation of media in our children’s lives, we need to understand how media impacts their health and behavior,” said Brownback. “I’m pleased that representatives from the public and private sector are coming together to address the rising rate of childhood obesity and its relationship to media and advertising. I hope this task force helps government, parents, and the business community define how to address childhood obesity.”

The full press release can be found here.  This will be a process that broadcasters should carefully monitor

Posted By David Oxenford In Advertising Issues | Permalink | 0 Comments | Email entry

At the Open Meeting on September 26, the Commissioners unanimously adopted a Second Order on Reconsideration and Second Report and Order resolving several issues regarding the children's television programming obligations for television broadcasters.  Specifically, the Order modifies the children's rules to clarify the FCC's rules regarding host-selling, the definition of commercial matter and the display of website addresses during children's programming, .  The Order also eliminates the cap on the number of preemptions that are permitted for a qualifying core program, and clarifies the limits on the repeat of core programs on multi-cast DTV channels.  The Order is a result of a Joint Proposal of Industry and Advocates that sought reconsideration and clarification of the Commission's 2004 Children's Television Order.  A copy of the Joint Proposal is available on the FCC's website here.  The Commission's News Release provides some details regarding the forthcoming Order, and we will post the full details of the modified rules once the text of the Order is released. 

Posted By Brendan Holland In Advertising Issues , Children's Programming and Advertising | Permalink | 0 Comments | Email entry

On August 18, we reported on meetings held between Senator Brownback of Kansas and representatives of the advertising community dealing with the subject of the advertising of "unhealthy foods."  It looks like those meetings have led to action as, according to a Hollywood Reporter story today, the FCC will be forming an obesity task force to look at such advertising.

FCC task forces often do nothing more than study an issue, but sometimes they develop  recommendations that lead to regulatory actions.  No matter where this task force ends up, broadcasters need to stay involved in the process to make sure that it does not lead to ill-defined rules that are difficult or impossible to comply with.  Can you imagine having to weigh the fat content or caloric impact of all foods that are being advertised on your station?  Might you have to channel McDonald's chicken McNuggets ads to some late-night safe harbor, while the ads for salads would be permissible at any time of day?  The permutations that are possible are both innumerable and a little frightening.  This is a proceeding that bears careful monitoring by the broadcaster.

Posted By David Oxenford In Advertising Issues | Permalink | 0 Comments | Email entry

Another executive of an on-line betting site was arrested late last week when changing planes in the United States.  According to a New York Times story, the executive of SportingBet was detained based on a warrant issued by Louisiana state authorities. 

As we wrote on July 18 and August 12, the arrest of an officer of BetOnSports.com caused the website to cease its operations in the United States.  This new arrest, based on the actions of state authorities, rather than Federal officials, may signal a new offensive against such sites.  In the past, we have found that many state authorities have been the first to approach broadcasters with threats of legal actions over advertisements for gambling websites.  This action may indicate that authorities will also be going after the sites themselves.

We warned in an August advisory that broadcasters needed to exercise great care in accepting advertising in any way related to on-line gaming.  Even the "dot net" sites, which don't take money for bets, but are for "educational purposes" or for fun using free points instead of money for betting, need to be approached with suspicion.  Check out the advisory for cautions on how to approach this increasingly hot topic.

Posted By David Oxenford In Advertising Issues | Permalink | 0 Comments | Email entry

In the early 1990s, calls were heard in the halls of Congress, among public interest groups and in the press about the harmful effects of advertising on children. Within a few years, we saw legislation and FCC actions limiting the amount of advertising aimed at children, and effectively prohibiting the hosts of children’s programs from promoting goods or services during their programs. We may now be seeing a similar wave building with respect to the advertising “unhealthy” foods - particularly as that advertising affects children.

A recent Broadcasting and Cable article referred to discussions held between advertising organizations and Senator Brownback of Kansas, seeking to encourage industry self-regulation on the advertising and promotion to children of unhealthy foods.   After the discussion, the Senator reportedly agreed to refrain from pursuing any Congressional action at this time, while industry efforts to develop voluntary guidelines proceeded. However, the concern was clearly expressed that, should industry actions not be forthcoming, legislative action may follow.

These efforts to regulate the advertising of unhealthy foods have been arising not only at the Federal level, but also in state legislatures around the country.   Several state broadcast associations have faced proposals in their legislatures to enact restrictions on the advertising of unhealthy foods. So far, most of these efforts have not resulted in actual regulation, at least in part because of the difficulty of defining what foods would be covered by any rules that may be adopted. 

Posted By David Oxenford In Advertising Issues | Permalink | 0 Comments | Email entry

On July 18, we wrote about the arrest of the CEO of BetOnSports, the Internet gambling site, and the indictment of individuals involved with the Company, including representatives of its advertising agencies.  Yesterday, the New York Times reported that BetOnSports has stopped taking bets from people in the United States in compliance with the US Court Order banning all such activities.  The Times story is here.

Even though BetOnSports has ceased US operations, there are other Internet gambling sites that continue to operate, continue to solicit US citizens to place wagers, and continue to seek to entice broadcasters to run their advertising.  We warned our clients of the risks posed by taking such advertising in our bulletin on the subject.  As we stated in the bulletin, not only is the Federal government active in enforcing restrictions against such sites, but state governments have enforced their own bans.  Given the capitulation of the one of the biggest and best financed of the Internet gambling sites to the US Court order, broadcasters should not be promoting the sites directly, and must very carefully consider the risks of taking any advertising which even indirectly solicits US citizens to patronize these on-line gaming sites.

Posted By David Oxenford In Advertising Issues | Permalink | 0 Comments | Email entry

Yesterday, according to press reports, Federal agents arrested the CEO of BetOnSports.com, an on-line sports gambling site.  The reports state that others involved with this website were indicted, and those involved in companies which were in charge of promotion of this site were also arrested.  Indications are that this may just be the beginning of a Federal crackdown on Internet gambling.

Broadcasters are well aware of Internet gaming sites, as many of these sites have tried to entice radio and television stations to run advertising to promote the sites.  Most stations have wisely stayed away from any promotion of actual gaming sites.  However, the promotion of the so-called "dot-net" sites, i.e. sites with URLs identical to the gaming site, but ending in ".net" instead of ".com."  The dot-net sites have claimed to broadcasters that they are legal because they do not accept bets, instead featuring instructions on how to play various games and allowing people to play the game with free credits assigned by the site.

We have always warned broadcasters to be wary of such advertising.  If the broadcaster decides to accept the "dot net" ads, it should do so only after being very careful to be absolutely sure that these sites do not promote gambling - that they are free of links to the associated gambling site and other promotion for those sites.  With the government arresting people for promoting gambling sites, extra caution about this advertising is warranted. 

Posted By David Oxenford In Advertising Issues | Permalink | 0 Comments | Email entry