Broadcast Law Blog

In the FCC’s recent Report and Order on Diversity, released earlier this year, the Commission announced new requirements for all broadcast station’s advertising sales contracts. The new FCC rule requires that all advertising contracts contain clauses ensuring that there is no discrimination based on race or gender in the sale of advertising time. This new requirement, which took effect in July, not only requires broadcasters to have these non-discrimination clauses in their advertising sales contracts, but will also require that broadcasters certify as to the existence of such clauses in their next license renewal application. Thus, to be sure that you can make such certifications, you must revise your advertising contracts to include a nondiscrimination provision, such as the one set out below, if you have not done so already. 

These new measures are intended to increase participation in the broadcast industry by businesses owned by women and minorities. The Commission was concerned that some advertising contracts include either explicit or implicit “no urban/no Spanish” dictates. Such contractual limitations, the Commission explained, may violate U.S. anti-discrimination laws by either presuming that certain minority groups cannot be persuaded to buy the advertiser’s product or service, or worse, intentionally minimizing the number African Americans or Hispanics patronizing advertisers’ businesses. 

The Commission decided not to mandate specific language for use in advertising contracts.  Nevertheless, the Commission plans to amend the license renewal application, Form 303-S, to require that broadcasters certify “that their contracts do not discriminate on the basis of race or gender and that such contracts contain nondiscrimination clauses.”   The current Form 303-S (dated July 2008) does not include such a certification, but the new rule only took effect July 15.  Updated renewal forms containing the required certification should be adopted in the near future, well before the start of the next license renewal cycle. Such a certification is likely to require that the broadcaster certify as to the existence of such clauses from this point forward.  Thus, broadcasters who have not already added a nondiscrimination clause to their advertising contracts should begin to do so now. 

The FCC refused to specify exactly what the certifications should say. We suggest language along the following lines:

This station does not discriminate in the sale of advertising time, and will accept no advertising which is placed with an intent to discriminate on the basis of race, gender or ethnicity.  Advertiser hereby certifies that it is not buying broadcasting air time under this advertising sales contract for a discriminatory purpose, including but not limited to decisions not to place advertising on particular stations on the basis of race, gender, national origin, or ancestry.

The Commission has not made clear exactly how this requirement is to be implemented with respect to certain legitimate uses of advertising based on demographics. For instance, an advertiser who wants to place ads for a women’s clothing store, a medical practice that specializes in women’s health issues, or for other products specifically designed for woman will no doubt target their ads at stations with a high proportion of women in its audience. Similarly, if an advertiser wants to advertise a concert by a Spanish-language recording artist, they will more likely seek a station that reaches a population with a large Hispanic population. Presumably, this type of targeted advertising based on legitimate distinctions based on the inherent nature of a particular product is not prohibited, even though one could say that it is an advertising decision based on gender or ethnicity.  Instead, what the FCC seems to be targeting is advertising where a general market advertiser – e.g. a car dealer or a grocery store – provides instructions that it does not want its advertising running on stations targeted toward minority audiences. 

Stations should be careful not to accept general market ads that specifically exclude Spanish, urban or other stations based on race, ethnicity or gender. Stations should also instruct their staff not to either implicitly or explicitly encourage or accept advertising based on such criteria.  As is the case with any other FCC certification, just making the certification is not enough - the station must act in accord with the language of the certification it has made.  If a station were found to have accepted ads based on racial or gender criteria, yet it nevertheless made the certification, it could conceivably have not only discrimination issues before the FCC, but also misrepresentation issues to deal with.  Thus, staff education will be an important part of compliance with this rule.

Stations should immediately take necessary steps to comply with the Commission’s new anti-discrimination requirements for advertising. The new rule has not received much attention since its release, but broadcasters should comply with it now to avoid potential problems upon renewing their license.

This is the biggest pile of crap I have every seen. Obviously no-one in Washington has a clue on how this business works. Typical agency contract is an e-mail from the agency with a schedule & rate--and instructions on how to access an FTP site where we can download the spots. First year contract law would leave me to conclude this is a valid contract...BUT...How the hell are WE going to put this BS non-discrimination language in a contract the AGENCY writes?

And we should turn down business in this economic climate?

The FCC was very terse in their ruling on this issue - providing little guidance to broadcasters on how to meet this requirement given that there are very often sales done without contracts. Perhaps putting the required disclaimer as a tag to your email confirmation of sales orders or on your sales materials will suffice. There are industry working groups looking at these issues. We hope that they or the Commission will come up with more specificity in the near future as to how these issues can be handled.

Obviously the FCC doesn't understand that it's the BUYER that dictates what is bought, not the SELLER. The seller has absolutely NO control in what is offered to them. Therefore, they can't effect any help to enforce a silly rule the FCC has made. The only entities that are truly affected are the advertising agencies and they are not controlled by the FCC. Such a waste of time and money by our public servants...

Um, you can probably put that Non-Discrimination language in the initial Agency of Record letter all agencies are required to submit prior to ANY schedule ordered or placed.

Yeah, and regarding the fact that it's the BUYER that dictates what is bought? Yeah, the stations could actually include that sample paragraph in fine print in the contract confirmation the agency/client will recieve. It's not rocket science and if it's a requirement, then it is what it is.

Wow! Sales made without contracts? You better hope you NEVER get audited! That's stone-aged business!