Posted on February 11, 2011 by David Oxenford

FCC Underwriting Rules for Noncommercial Radio and TV - A Seminar on the Issues

Fines for noncommercial broadcasters who air acknowledgments of their donors and contributors that sound too much like commercials have been a problem area for many noncommercial educational radio and television stations, and have resulted in significant fines from the FCC.  The FCC allows "enhanced underwriting announcements" that identify a sponsor, what their business is, and where they are located, but such information must be provided in an objective, non-promotional manner.  Earlier this week, I conducted a seminar for noncommercial broadcast stations who are members of the Maine Association of Broadcasters and the Connecticut Broadcasters Association.  During the seminar, we discussed the FCC rules that govern fundraising done on such stations.  The PowerPoint slides from that presentation are available here, and provide an outline of the FCC rules on underwriting, promotions, fundraising and related issues, with samples of announcements that have led to FCC fines for noncommercial stations.

We have written many times about FCC issues related to fundraising and other matters relevant to  noncommercial stations.  We have written articles about cases where the FCC fined stations for enhanced underwriting announcements that were too enhanced, and violated FCC standards by containing prohibited calls to action, inducements to buy, price information or qualitative claims (see, for instance, articles here and here).  Another article discussed fines issued by the FCC for improper underwriting announcements where the announcements were of excessive length, and where the announcement ran in programming that was not originated by the station and from which the station received no consideration.  Another article discussed the FCC prohibition on noncommercial stations interrupting their regular programming to raise funds for charitable groups other than the licensee.  You can scroll though other articles we have written on other legal issues for noncommercial broadcasters by clicking here.  Watch our blog for other issues that relate to noncommercial broadcasters to stay up-to-date on the latest developments about which you should be aware. 

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Posted on June 17, 2010 by David Oxenford

Noncommercial FM Station Fined $12,500 for Sponsorship Acknowledgments That Were Too Commercial

Stations that are licensed as "noncommercial educational" stations are prohibited by the FCC from running commercials - seemingly a pretty straightforward prohibition.  Yet drawing the line between a prohibited commercial and a permissible sponsorship acknowledgment is sometimes difficult in these days of "enhanced underwriting."   In a recent case, the FCC fined a noncommercial radio station $12,500 for repeatedly airing 4 announcements from sponsors that the Commission found to have crossed the line by being overly promotional.  These announcements, which appear to have been recordings of unscripted sponsor acknowledgments, demonstrate how carefully noncommercial stations must police their sponsorship announcements to avoid risking an FCC sanction.

The announcements in these cases are worth reviewing. Some have subtle promotional messages, while the areas of concern are more clear in others.  But in reaching its decision, the Commission goes through a close analysis of the wording of each announcement to see if the announcement contains "comparative or qualitative descriptions, price information, calls to action, or inducements to buy, sell, rent or lease", all prohibited language in a noncommercial sponsorship identification.  So, when one of the announcement referred to "beautiful Harley Davidson light trucks" sold by a local auto dealer who sponsored the station, the FCC found that this was a qualitative claim that went over the line.  Similarly, statements that "we have it here" or "where we are proud to be Mexicans" (these announcements having been run on a Spanish-language station in California) were found to be attempts to qualitatively distinguish this dealer from others, or to be inducements to buy - a prohibited call to action.  And a specific statement that "no downpayment" would be required on a purchase constituted the kind of price information that should not be contained in a sponsorship acknowledgment.  Another announcement for a local tire store had similar problems in the content of the ads, using phrases such as stating that the company "knows about tires" and that the company's product "reduces [the] loss [of tire] pressure" and "has less risk of suffering damages . . . last longer and [is] not too expensive cause you to save more . . . [and] save more in gas per mileage."

As evidenced by this decision, noncommercial broadcasters need to concentrate on the facts when delivering a sponsorship acknowledgment.  A station can identify the sponsor and provide a non-promotional description of what business they are in, and provide contact or location information.  But they need to keep these product identification statements short and generic, and avoid all that stuff that sometimes makes commercials on commercial stations interesting - the music, the hype, the reason why one business is better or different from its competitors, and the real push to make the listener want to patronize the sponsor.  We've written about some other cases where underwriting acknowledgments have gone too far and prompted FCC fines, here and here.  There is a fine line between the permissible and the prohibited, but it is one that noncommercial stations must carefully walk to avoid FCC penalties. 
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Posted on January 25, 2009 by David Oxenford

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!
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Posted on May 11, 2008 by David Oxenford

FCC Fines Noncommercial Station for Enhanced Underwriting Announcments that Were too Commercial

In a decision released late on Friday, the FCC upheld a $9,000 fine on a noncommercial television operator who broadcast underwriting announcements which, in the opinion of the Commission, were too much like commercials and thus were impermissible on a noncommercial station.  Under the Commission's policies governing the noncommercial nature of noncommercial stations, it is permissible to air an underwriting announcement acknowledging a commercial entity that makes a financial contribution to the station.  And it is permissible to state the nature of the business, where it is located, and to air the slogan of the company.  What is not permissible is when the underwriting announcement contains "calls to action," qualitative or comparative claims, price information, or other inducements to do business with this particular company.  In this case, the Commission felt that the announcements crossed some or all of these lines.

In the initial Notice of Apparent Liability in this case, released in late 2004, the text of the announcements at issue are set out.  In last week's order, phrases such as "planning a special occasion?" as the intro line to an announcement about an Ice cream store were deemed to be calls to action, and the description of the ice cream cakes that the store made as "tastefully decorated" were deemed to be qualitative.  Similarly, statements about a real estate company that "we're all about family" and "we love selling real estate" were deemed to be comparative in nature, trying to distinguish this particular agent from other competitors.  In only one of ten ads, one for a school supply store, did the Commission overturn its previous determination, finding that an announcement for "creative learning materials" was arguably descriptive and not qualitative.

So what is a licensee supposed to take away from this decision?  Basically, keep the ads very straightforward.  "This program is sponsored by XXXXX business, located at YYYYYY, which sells [plain factual description], "[insert business' slogan here]."  Essentially, the slogan is the only selling point - the remainder of the ad has to be without color to avoid problems.  The Commission will give the licensee the benefit of a doubt in a close case - but it is much easier to argue that it is a close case when the spot sounds like a fairly simple announcement of who is sponsoring a program, instead of like a commercial announcement.  Too much hype and you're asking for trouble.  So keep it simple and avoid problems.
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