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The FCC released a Notice of Apparent Liability proposing a $22,000 fine for a contest to win a car conducted by a cluster of five stations.  The contest (the award of a car to the entrant who produced the best commercial for the car, as voted on by website users) was conducted principally through the stations' websites.  But the stations did promote the fact that the contest was being conducted on the air.  A disappointed contestant accused the licensee of rigging the contest by awarding the prize to a friend of a station employee for a video that was entered after the official end of the contest.  The FCC totally rejected the basis of the complaint (finding no basis for the conclusion that favoritism had been shown - especially as voting for the winner was done by website visitors, not station employees).  Nevertheless, the FCC proposed the $22,000 fine for the failure to broadcast all of the material rules of the contest on the air.  This proposed fine reinforces two principles that we have written about in previous cases:

1. You must provide all of the material rules of the contest in on-air announcements a sufficient number of times so that a listener could be expected to hear such announcements (see our article here about what are considered the "material terms" of a contest), and
2. The rules for a contest that is primarily conducted through a station website must still be broadcast on the air if the fact that the contest is occurring on the website is promoted over the air (see our article on a previous case reaching the same conclusion).

Here, the licensee posted the rules of the contest online, which one might think would be sufficient, as all contestants entered online, and the winner was selected through online voting.  But the FCC felt that some of the information given on the air (and in the contest rules) about entry dates was somewhat ambiguous, and decided that, once a contest by a broadcaster is mentioned on the air, all the rules must be given on the air.  As the contest was conducted by multiple stations, the fine reflects a multiple of the FCC's standard $4000 fine for a contest rule violation. This decision seems to penalize a broadcaster for being a broadcaster, as a similar contest, had it been run by the car company instead of the station, could have been promoted and conducted in exactly the same way, and the FCC would not have penalized the station.  But according to the FCC's interpretation of Section 73.1216 of its rule regarding station contests, a station conducting a contest on its website, but promoted on the air, needs to be careful to publicize all of the material rules on the air avoid this FCC trap for the unwary. 

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In recent years, the FCC has been to aggressively enforcing a policy requiring broadcasters to announce all material rules of a contest on the air enough times for a reasonable listener to hear the announcements.  This past week, there was yet another case where this policy was enforced, resulting in a $4000 fine to a broadcaster.  While the FCC continues to enforce this policy, at least one broadcaster has reportedly decided that a fine for not having broadcast of the material rules of a contest is not justified, and is apparently ready to take the FCC on in Court in a case where the FCC tries to enforce a fine issued several years ago.

The newest fine involved a station in Cleveland, which ran a contest called "Who Said That" where a clip of the voice of a sports figure was played on the air.  The first person to be able to identify the speaker won a prize.  Apparently, if no prize was awarded, a new prize was added each week until the voice was identified, when the winner would get all of the accumulated prizes.  In this case, the station ran an announcement about the rules regularly until the station aired a clip that was not identified for some time.   As the clip remained unidentified over the course of many weeks, and then many months, the station apparently became less rigorous about announcing the rules.  But, more importantly to the FCC, the station did not announce on the air all of the prizes that had accumulated, nor did it announce that some of the prizes had become unavailable and had been replaced over time by prizes of what the station considered to be of an equivalent value.  As the station had not announced the "extent, nature and value of the prizes," the FCC found the station to be in violation - even though the right to substitute prizes of equal value was contained in the written rules published by the station.

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The nuts and bolts of legal issues for broadcasters were highlighted in two sessions in which I participated at last week's joint convention of the Oregon and Washington State Broadcasters Associations, held in Stephenson, Washington, on the Columbia River that divides the two states.  Initially, I conducted a seminar for broadcasters providing a refresher on their EEO recruiting obligations set out under FCC rules.  With some public interest groups calling for stricter enforcement of a broadcaster's EEO obligations, and with the license renewals for Oregon and Washington State radio broadcasters coming up in 2013 (with TV the next year), broadcasters cannot slack off on these important obligations to widely disseminate information about job openings and to educate their communities about broadcast employment issues as required by the FCC rules.  Slides from my PowerPoint presentation on a broadcaster's EEO obligations are available here.  Broadcasters looking for more information on EEO obligations can review the Davis Wright Tremaine Guide to the EEO rules, here, and our most recent reminder about the obligations for the annual EEO public inspection file report, here.

At a second session, we discussed the variety of legal issues facing broadcasters in the current environment.  Many of the same issues discussed in this session were also discussed in my Top Ten List of Legal Issues to Keep Broadcasters Awake at Night, details of which can be found here.  Some specific questions were raised during the Oregon-Washington session include questions about the FCC rules covering contests that stations conduct, and the rules that apply to such contests.  See our blog post on some of those issues here and here.  The obligations for the public file of broadcasters are also set out in our advisory, here.  Another issue that broadcasters should remember is the new obligation for their advertising contracts to include terms that state that advertising is not sold for any discriminatory purpose, to avoid no-urban, no Spanish dictates (see our post here for details).  As we wrote recently in connection with fines issued to a couple of stations for multiple day-to-day violations of the FCC rules, the attention to these details now will avoid major financial headaches for broadcasters later, and potentially long-term issues at license renewal time as well. 

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In another sign of just how closely the FCC monitors contests conducted by broadcast stations, the FCC this week issued a Notice of Apparent Liability (a notice of a fine of $4000) to Nassau Broadcasting for being imprecise in the wording of the contest rules for a contest to be held at one of its stations.  In the rules of the contest, the station stated that entries would be accepted "through June 13, 2008."  In fact, the contest was conducted on the evening of June 12, and the station cut off entries to the contest on June 12.  When a listener went to enter the contest on June 13, and was told that she could not enter as the prize had already been awarded, the listener filed a complaint at the FCC.  The FCC, reading the language "through June 13" to mean that listeners could enter the contest up to and including that day, fined the licensee $4000 for misleading its listeners as to the proper rules for the contest it conducted.  This is another indication of just how seriously the FCC's Enforcement Bureau is taking the enforcement of Section 73.1216 of the Commission's rules, which requires licensees "to fully and accurately disclose the material terms" of any contests that it conducts, and to "conduct the contest substantially as announced or advertised."  Broadcasters need to be very precise in their wording of contest rules, and make sure that they carefully observe the details of the rules that they adopt.

In this case, it seems likely that the licensee was simply imprecise in its wording - stating that entries would be taken "through June 13" when it meant "before June 13."  This would have seemed evident from the fact that the rules said that the winner would be announced on the morning show on June 13.  Clearly, if the winner was going to be announced on the morning of June 13, it wouldn't do much good entering after that time.  But the ambiguity in the rules is construed by the FCC against the party who prepared the rules - as is evident from the finding in this case that these rules did not fully and accurately describe the rules of the contest (and actually holding the contest on the night of the 12th instead of the morning of the 13th probably didn't help much).  So what should a broadcaster do to make sure that this kind of ambiguity does not hit them in one of their contests?

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A jury in Sacramento returned a $16.57 million verdict against Entercom Broadcasting's local subsidiary in the case involving the death of a contestant in a radio station-sponsored contest.  The contest - drinking water and waiting to see which contestant would win the Nintendo Wii by being the last to have to use the bathroom - led to the death of contestant Jennifer Strange by water intoxication.  The station had argued that water intoxication was not a readily known risk of the contest that could have reasonably been anticipated.  The plaintiff's case, to refute this argument, included testimony of warnings from on-air station callers of the risks, and health complaints from contestants themselves, which were apparently ignored or minimized by the station employees who were involved in supervising the contest.  This Blog does not purport to address negligence and personal liability questions, which we will leave to others.  Instead, we'll talk about the lesson to broadcasters and the FCC impact of this case.

First, the decision itself serves as a warning to broadcasters of the need to make employees aware of the ramifications of what goes on at a station.  In a Radio Ink Column today, Publisher Eric Rhoads suggests that broadcasters must be careful in what they do, but also submits that owners and managers cannot take the fun out of radio.  And while I wholeheartedly agree with the last sentiment, the fact that radio can be a fun business is all the more reason that owners and managers need to be careful about what goes on at a station.  While we hate to be the lawyers who ruin all the fun, management does need to make employees aware of the nature of the broadcast medium, and the fact that real people are impacted by whatever is done on the station - whether it be a "joke" on the air which some people find offensive, a dangerous contest, or simply putting off compliance with some FCC rule.  We are in a litigious time, and we have an FCC and a Congress with lots of pending matters that could determine the future of the industry.  While it may seem amazing, a single contest gone wrong or wardrobe malfunction can set the tone for the regulation of an entire industry.  So, while broadcast managers need to avoid being the heavies and playing it so safe that they take the fun out of broadcasting, they do need to impress on employees that they must be aware of the ramifications that their actions can have.  Broadcasting is still a powerful medium, and because of that fact, actions taken by broadcasters can have an impact that is magnified far beyond what might be the case in other media or other industries.  And because it is such a regulated industry, that impact can have huge consequences.

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