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In odd years like 2013, most broadcasting stations don’t think about the FCC’s political broadcasting rules. But they should – both for special elections to fill open seats in Congress, and for state and local political offices. This week, the news has been full of stories about next week’s special election for Congress in South Carolina, pitting former South Carolina governor Mark Sanford against Elizabeth Colbert Busch, the sister of TV host Stephen Colbert. Obviously, for a Federal election like that for the Congressional seat they are competing to fill, broadcast stations serving the district they are seeking to serve need to offer candidates the full panoply of candidate rights – including reasonable access, lowest unit rates, and equal opportunities. But in other parts of the country, as well, there are all sorts of political races taking place in this off year and, as we have written before, most of the political rules apply to these state and local electoral races as well as to the few Federal elections that are taking place to fill open Congressional seats.

Candidates for state and local elections are entitled to virtually all of the political broadcasting rights of Federal candidates – with one exception, the right of reasonable access which is reserved solely for Federal candidates. That means that only Federal candidates have the right to demand access to all classes and dayparts of advertising time that a broadcast station has to sell. As we wrote in our summary of reasonable access, here, that does not mean that candidates can demand as much time as they want, only that stations must sell them a reasonable amount of advertising during the various classes of advertising time sold on the station. For state and local candidates, on the other hand, stations don’t need to sell the candidates any advertising time at all. But, if they do, the other political rules apply. 

So that means that if a broadcast station decides to sell advertising time to one candidate in a state or local political race, they must sell it to all candidates for the same race – and be prepared to make available equal amounts of time in equivalent time periods. And, if the time is sold during the 45 days before a primary, or the 60 days before the general election, the time must be sold to the candidate at lowest unit rates. See our summaries of the rules relating to equal time here, and to lowest unit charges here. Similarly, if a station air personality decides to run for state and local office (anything from the school board or local planning commission to governor or state legislature), the station needs to consider whether to take that personality off the air, or risk having to provide equal time to all competing applicants – for free, in amounts equivalent to the amount of time that the employee-candidate appeared on the air, even if the employee never mentions his or her candidacy at all. See our article about this choice here.

Two weeks ago, I spoke on FCC legal issues to the Oklahoma Association of Broadcasters at their annual convention, and was asked a question about this issue and the one type of public office to which the rules do not apply – election to offices in Native American tribes. The Commission has stated that these elections are exempt from the FCC’s political advertising rules, but for all other state and local elections, the rules must be applied. So don’t forget about the political advertising rules – even though this is an odd numbered year!

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Now that the Democratic and Republican conventions are over and the candidates begin the final sprint to the November 6 elections, the political broadcasting season goes into overdrive. Effective last Friday, lowest unit rates are in effect. In this year which will probably break all records for political spending, is your station ready to comply with all of the political rules? We thought that we’d provide a series of articles on some of the basics of the FCC political broadcasting rules, to make sure that your station is prepared to deal with the most common issues that arise in a political season.  Today, as the lowest unit charges have just kicked in, we’ll hit some of the common questions that we get about these rates.  In coming days, we'll address other areas of the FCC's political rules.

Essentially, lowest unit charges guarantee that, in the 45 days before a primary and the 60 days before a general election, candidates get the lowest rate  in any class of advertising time for a spot in that class that is then running on the station. Candidates get the benefit of all volume discounts without having to buy in volume – i.e. the candidate gets the same rate for buying one spot as your most favored advertiser gets for buying hundreds of spots of the same class.  But there are so many other aspects to the lowest unit rates, and stations need to be sure that they get these rules right.

It is a common misperception that a station has one lowest unit rate, when in fact almost every station will have several – if not dozens of lowest unit rates. Even on the smallest radio station, there are probably several different classes of spots.  For instance, there will be different rates for spots that run in morning drive and spots that run in the middle of the night. For each of these time periods with different rates, that class of time has a different lowest unit rate. On television stations, there are often classes based not only on daypart, but even down to the individual program. Each rotation on the station is its own class, with its own lowest unit rates (e.g. a 6 AM to noon rotation is a different class than a 6 AM to 6 PM rotation, which is different from a 24 hour rotator – and each can have its own lowest unit rate). Even in the same time period, there can be preemptible and non-preemptible time, each forming a different class with its own lowest unit rate. Any class of spots that run in a unique time period, with a unique rotation or having different rights attached to it (e.g. different levels of preemptibility, different make-good rights, etc.), has a different lowest unit rate.

One question on which we’ve written many times before, is one that still comes up with surprising regularity – that is whether these rates apply to state and local candidates, as well as Federal candidates. Indeed they do – so if your station is running advertising for candidates for mayor or city council; or for governor or the state senate; or even for the board of education, municipal court judge, or state attorney general – they and any other candidate in any public election gets lowest unit rates. See our past articles on this topic here and here.

In this season where PACs, Super PACs and other non-candidate interest groups are buying much political advertising time, broadcasters need to remember that these spots don’t require lowest unit rates. Stations can charge these advertisers anything that the station wants – no need to stick to lowest unit rates.

We are hearing that stations are facing the one exception to the above paragraph, where political parties are requesting lowest unit charges. In some cases, parties may in fact be entitled to these rates – but only where they are using specific types of donations subject to political campaign limitations, and where the advertising purchases are authorized and “coordinated” with a candidate (and, in Federal races, where the spots make that coordination clear with the “I approved this message tag”). Not all party spots are entitled to this treatment – only this special class of coordinated expenditures – and stations are entitled to get written confirmation from the party or the candidate that the expenditures are coordinated under the election laws. If not coordinated, the parties get charged the same as any other third-party organization.

Various advertising sales packages, and how they are factored into lowest unit rate calculations, also seem to lead to many questions by broadcasters. Candidates cannot be forced to buy packages on stations to get low unit rates. Instead, the package must be broken down by the station into a price per spot.  That is done by allocating the package price to the various spots of each class that are contained in the package. Then the allocated rates, on a unit basis, are compared to other spots of the same class that have been sold on the station to determine if the spots from this package have any impact on the station’s lowest unit rates. This allocation is done in an internal station record, which does not need to go into the file, and does not need to be revealed to the candidate.  Other than the station, only the FCC will see it should they do some sort of inspection.  We wrote more about this process of allocating spots in a package here.

And these are just some of the myriad issues that arise in computing lowest unit rates. Stations need to be familiar with these rules, and apply them accurately through the remainder of the lowest unit rate window. Watch for our next installment on political broadcasting basics – when we write about equal opportunities.

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While the off-year elections of 2011 are not yet history, the Lowest Unit Rate period for the 2012 Presidential election will soon be upon many stations in the early primary and caucus states.  Last week, Bobby Baker, the head of the FCC's Office of Political Programming, and I conducted a webinar for 13 state broadcast associations to provide a refresher on the political broadcasting obligations of broadcasters.  The webinar covered all the basics of the political broadcasting rules - including reasonable access, equal opportunities, lowest unit rates, the public file and sponsorship ID obligations, and the issues of potential liability of broadcasters for political advertising not bought by candidates but by PACs, unions and other interest groups. PowerPoint slides from the presentation are available here, and the video of the presentation can be accessed here by members of the state associations that were involved.  Additional information about the FCC's political broadcasting rules can be found in our Davis Wright Tremaine Guide to Political Broadcasting.

One particular issue came up in the webinar that warrants additional discussion and clarification. Rate issues are always the most difficult to explain, and the questions concerning package rates are among the most confusing.  The FCC has said that stations cannot force a candidate to purchase a package of spots containing multiple ads of different classes.  Instead, stations must break up the price of packages into their constituent spots and, if the package spots are running during a Lowest Unit Charge period (45 days before a primary or Presidential caucus or 60 days before a general election), determine if the spots in that package affect the lowest unit rates of the classes of time represented by advertising spots contained in the package.  For instance, if you sell a package of 10 morning drive spots with a bonus of 2 overnight spots on your radio station for $100, you need to break up the package price and allocate it to the spots from the two classes of time in the package - the morning drive and the overnight spots. So some of that $100 package price gets applied to the 10 morning drive spots (say, for example, $96) and the rest (for example, $4) is assigned as the value of the 2 overnight spots.  Thus, in this package using this allocation, the unit rate for morning drive spots would be $9.60, and the unit rate for overnights would be $2.  You then take these rates, and see if you have sold spots for these classes of advertising time at lower rates.  If so, the package has no effect on your LUR.  If not, the spots in the package may reduce the LUR for one or both classes of time.  In such cases, the determination of which classes' LUC will be lowered may be affected by the allocation of the package price that you make.

The allocation itself is supposed to be done at the time that the package is being written, so you should be looking at packages that you are writing now, as some are likely to still be running during the LUC window.  By making these allocations wisely, you can preserve rate integrity in high value time periods (if no allocation is made, it could be assumed all spots are of equal value - in our example dramatically reducing the value of the morning drive spots).  The allocation is an internal station document - not one that needs to go in your public file - so you write it down and put it in a station file, only to be disclosed if the FCC requests it.  The allocation that is made is one made by the station for the purposes of computing the true value of the spots in a package for LUC purposes, and need not be the same allocation that is shown on the face of any invoice provided to the purchaser of the advertising time.

The allocation of a package price only needs to be made when the spots are sold on the same station.  Packages that include spots sold on multiple stations need not affect the LUC on any individual station (though the package price should offered to candidates should allow the candidate to get the benefit of volume discounts, even if they don't buy in volume).  Network spots (wired or unwired) similarly don't affect the rates at any single station in that network.

The allocation process also can be of benefit to stations, as it can be used to allocate the price of spots in long-term packages, even if all the spots are all of the same class.  In many presentations, Bobby Baker has talked about how stations can take long term contracts, that may show a uniform rate for spots over a long period - like a full year's contract - and allocate the total purchase price by the true value of the spots.  For instance, if you sell a year-long package of 1200 spots to be run in prime time over the course of 12 months for $12,000, and the advertiser pays $1000 per month for 100 spots per month allowed under the contract, the value of the spots for LUC purposes need not be $10 per spot.  Instead, if there are real economic differences in the 12 month period that are reasonable (and are not set up to simply inflate the price of spots during the LUC periods), the station can allocate the package price differently than what is shown on the invoice that the commercial advertiser receives - allocating, for instance, a lower value to spots that run during January and February when the demand for spots is less, and higher values in the fourth quarter when holiday shopping may drive demand higher.  But remember, the allocation must add up to the total package price.  This allocation can also be used for sports packages, where an advertiser buys a season worth of games, but the games within the package against big rivals may in reality command higher prices, while those against also-ran teams may be less valuable.  These kinds of allocations are used to help value spots at their real economic value, as opposed to some arbitrary average that does not reflect the demand-based changes that are evident in any station's yearly advertising sales cycle.  Again, the allocation should be done when the package is written, in writing, in an internal document maintained in the station's internal files.

This is a complicated area, and broadcasters not fully understanding this process should consult their counsel.  While it may seem complicated to compute, and a paperwork burden, it does allow stations to preserve the value of spots that run in more highly valued dayparts when such spots are sold in combination with spots in less valued dayparts or with spots to be run at less valuable times.  So look at your packages carefully, as the packages that you are writing now may affect the value of the spots of various classes of time within those packages if those spots run during the LUC periods. 

We will, from time to time, write more about political advertising issues that may arise.  So check back from time to time, or look at our archive of past articles on political broadcasting topics, here. 

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With the President declaring his candidacy for reelection in 2012, broadcasters thoughts may be turning to that election and the expected flood of money that may come into the political process.  But visions of next year's elections should not be distracting broadcasters from their current political broadcasting obligations.  I've received many calls this year about whether broadcasters need to provide lowest unit rates to candidates in the races that are going on in 2011 - including many municipal elections and some special elections to fill various political posts.  As we have written before, if a station decides to sell time to a political candidate in a local race, that sale must be at the lowest unit charge for the class of time sold during the 45 days before a primary and the 60 days before the general election.  While state and local candidates need not be afforded the "reasonable access" that applies to Federal candidates, that merely means that stations do not need to sell these candidates any advertising time at all, or that stations may limit the purchase by state and local candidates to only the dayparts during which the station has more inventory.  But once the time is sold to one candidate in a race, most other political rules - including lowest unit charges, equal opportunities and the no censorship rule, all apply to the local candidate's spots.

With the President now filing to become a candidate, and many Republican candidates likely to be filing soon, what obligations are imposed on stations?  For the most part, there is no effect on the rates to be charged to candidates or their campaign committees - those rates only become effective 45 days before the primaries - so the lowest unit charges for Presidential campaigns likely will not kick in until very late this year, or early next, for the early Presidential primaries and caucuses in states like Iowa and New Hampshire. But, as candidates become legally qualified, there will be reasonable access and equal opportunities obligations that will arise.  Candidates for President can request reasonable access to all classes and dayparts - even outside the 45 and 60 day windows before a primary and general election, respectively.  In the case of a Presidential campaign, a candidate becomes legally qualified in all states once he has become legally qualified in 10 states. There may be few Democrats who are to likely to challenge the President, so equal opportunities will most likely be a major issue only on the Republican side.  And, as we've written before, the FCC has determined that most interview programs where the content is under station control - even those that have little news value on the normal day - are deemed "news interview programs" exempt from equal time rules.  Thus, equal time is normally only an issue in making sure that all candidates have equal opportunities to buy spot time, and in those rare circumstances where a candidate appears on a purely entertainment program (e.g. as a character on a scripted TV show) or where the candidate is themselves a host of a broadcast program - and usually stations ensure that the candidates are long gone from hosting programs once they formally declare that they are running for a political office

Another area where broadcasters need to pay attention is in connection with third party ads dealing with Federal issues.  Already, in many contested Congressional districts around the country, there are ad being run sponsored by various political action committees and other interest groups -targeting potential candidates for the House of Representatives or the Senate. Sometimes the ads are subtle digs at the positions that a potential candidate is taking ("call Congressman X and tell him that he should stop voting for bills that are bankrupting the country"), and sometimes they are more direct attacks on the potential candidate.  Sometimes they don't directly address a particular politician at all, but are instead directed at an issue being debated in Congress.  And sometimes, as reportedly happened just recently, they ask callers to tell a Congressman to vote in a particular way on an issue where he has already voted in the way the ad requests.  In any case, if the ads are dealing with Federal candidates or other issues being considered by the US House of Representatives or Senate, then they are Federal issue ads on which the station must maintain full public file information, similar to that which is kept for any candidate advertising - the full schedule of advertising that is to be run, the class of time sold, the sponsor of the ad, and even the price that was paid for the spots (see our post here on the public file requirements for Federal issue ads).

Finally, with the 2012 election fast approaching, stations should start planing for the election season.  Some stations are no doubt already selling long-term contracts that will still be in effect during the primary season.  Stations should be considering how to allocate the purchase price of these long-term contracts to reflect their actual seasonal value - rather than simply booking them as having a flat rate throughout the entire year - including the pre-election lowest unit rate periods. As we wrote in our Political Broadcasting Guide, the FCC allows you, in internal station documents, to allocate for lowest unit rate purposes, the purchase price of a long-term contract in a manner different than shown on invoices given to commercial clients, as long as that allocation more accurately reflects the seasonal value of the spots sold, adds up to the total purchase price of the package, and is not done simply to avoid the lowest unit rate periods.  Consult with your attorney to make sure that you properly apply this process, but it could save you money in the long term.  For other things that you should be thinking about in preparation for the election, check out our Political Broadcasting Guide. 

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In the waning days before the mid-term election, we have received many questions about the applicability of the political broadcasting rules to state and local candidates.  In particular, we have seen a number of letters from attorneys representing candidates who are running for state and local offices (everything from Governor to county commissioner or school board representative), who claim that an attack by an opposing candidate is unfounded and that a broadcast station must pull that ad from the air.  Just as is the case with Federal candidates, ads by state candidates cannot be censored by a station.  Thus, except in certain very unusual situations (where the language of the ad would violate some Federal criminal statute, e.g. if it is obscene), a station must air the ad as it was created.  It cannot be rejected because the station disagrees with the content or the tone, and it cannot be pulled even if the opposing candidate believes it to be defamatory.  Because the station cannot censor a candidate's ad, they have no liability for the content of the ad, i.e. they cannot be held responsible for any defamatory content that it may contain, even if they are on notice of that content.  They cannot censor an ad by a candidate or a candidate's authorized campaign committee - whether that candidate is running for a Federal, state or local office.

Note that, as we have written many times, this is in contrast to those situations where a candidate complains about an attack ad sponsored by a non-candidate group.  In those cases, the station does have the option of whether or not to run the ad (the no censorship provisions of Section 315 of the Communications Act do not apply).  Thus, if the station is on notice that there is potentially defamatory content in an ad, it must do some investigation of that ad, and make an informed decision about whether or not to allow the ad to continue to run.  If it does not investigate, and continues to run an ad that is defamatory after receiving notice of that fact, in some extreme cases, it could face liability for that defamatory content.

Most of the other rules governing political broadcasting apply to state candidates as well as Federal candidates.  The requirement that candidate be charged lowest unit rates for the class of advertising time that the candidate purchases in the 60 days before the general election applies with equal force to state and local candidates as it does to Federal candidates.  And equal opportunities requires that a station sell comparable amounts of advertising time to competing candidates, or give free time to one candidate if their opponent appeared on a non-exempt program on the station, also applies to state and local as well as Federal candidates.  Public inspection file obligations - that a station put in its political file information about the amount of political time purchased by a candidate, the class of time sold, the price of the spots, and the schedule that will run - apply to state and local as well as to Federal candidates.

The principal political rule that does not apply to state and local candidates is the "reasonable access" provisions of the rules.  That is to say that stations need not sell time to candidate for all local races.  They can pick and choose in which races they will sell time, or they can restrict candidates for a specific race to buying time in particular dayparts in which the station has more inventory.  But once the decision to sell to candidate for a particular office is made, the other rules mentioned above apply.

More information about the political advertising rules can be found in the Davis Wright Tremaine Political Broadcasting Guide.

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While most of the FCC's political broadcasting rules have remain unchanged for almost 20 years, each year there are a few new wrinkles that arise, and seemingly a few misconceptions that make the rounds among advertising agencies that work with political candidates.  One such misconception that seems to be circulating this year is that an ad for a state or local political candidate does not need to have their voice or picture to be a "use" under FCC rules.  Only "uses" are entitled to lowest unit rates and subject to the no censorship provisions.  For some reason, agencies in several states have tried to convince broadcasters that, as long as a spot has a sponsorship identification at the end (and, for television, a textual sponsorship identification 4% of screen height for 4 seconds), that spot is a "use."  But that is not correct.  A "use" requires that the recognizable voice or picture of a candidate be in the spot - and that is true even for spots for state and local candidates.  Some advertisers may be confused by the change in Federal laws (now itself almost a decade old) that required that Federal candidates identify themselves in their ads and personally state that they approved the message of the ad,  Perhaps some of the advertisers think that, because the law for Federal candidate is so detailed, and because it does not specifically cover state candidates (though several state laws now have imposed the same obligation on state and local candidates in their states), there is no requirement at all for state and local candidates to appear in their ads.  But they are not correct - for a spot to be a use, a candidate him or herself must have a recognizable voice or image in that ad.

While it is not illegal for a station to run a state or local candidate's ad when the ad does not have a candidates voice in it, there are important ramifications for the station if the spot is not a "use".  First, without the candidate's voice or picture, the ad is not entitled to lowest unit rates.  There has been some controversy, not settled by the Federal Election Commission and perhaps subject to interpretations under state election commission rules, about whether a station that charges a candidate lowest unit rates for a spot not entitled to such rates may be making a corporate campaign contribution to that candidate, which is prohibited under Federal law and in most states.  Most importantly for the stations, if the spot does not have the candidates voice or picture in it, the spot is not covered by the 'No censorship" provision of Section 315 of the Communications Act.  That provision prohibits a station from rejecting a candidate's ad based on its content.  But, because the station can't reject the ad based on its content, the station has no liability for the contents of the ad.  Conversely, if the ad does not have the appearance by the candidate in it, then the station is free to reject it based on its content, and thus the station could theoretically have liability for the content of the ad.  As we approach a heated election season where stations don't want the obligation to check the veracity of every claim made by one candidate about an opposing candidate in an attack ad, stations should be careful to insure that spots purchased by candidates are in fact uses, containing the recognizable voice or picture of the candidate - even for state and local candidates. 

We have written about this issue of potential liability for the content of spots many times before, most recently in connection with ads by non-candidate groups that are now allowed from corporations and labor unions following the Supreme Court's Citizens United decision.  Our most recent article on that case can be found here.  For more information about the FCC's laws and policies regarding political broadcasting, check out the Davis Wright Tremaine Political Broadcasting Guide, available here. 

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The DISCLOSE Act recently passed the Committee in the House of Representatives charged with dealing with it, without many of the provisions that most worried broadcasters and cable companies.  We recently wrote about the DISCLOSE Act legislation proposed in both the House and Senate in response to the Citizens United Supreme Court case (which freed corporations and labor unions to spend money during political campaigns to explicitly support or oppose the election of particular candidates).  When introduced, in addition to provisions mandating new disclosure requirements for corporations, labor unions and other third parties who decide to run political ads, the legislation had a section expanding the requirements for lowest unit rates and reasonable access - extending these rights to political parties (as opposed to being limited to the candidate's own campaign committees, who are the only ones eligible under current law) and mandating advertising rates even lower than the current lowest unit charges in certain circumstances.  That section of the original bill also required that the FCC conduct audits of broadcasters' compliance with the political rules, and seemingly expanded the FCC political advertising obligations of cable systems.  The House of Representatives Committee on Administration this week approved the bill, sending it on to the full House for consideration.  The DISCLOSE Act's sponsors want to have the bill approved and in place by July 4th so that it will have an impact on the November elections.  The approval without these provisions, which may well have caused broadcasters and other media companies to come out in opposition to the bill and delayed its passage, signals that the Act may in fact move on the rapid timeline that its sponsors envision.

Of course, this is not the end of the story.  The Senate still has to consider the bill in committee, and the full House and the full Senate have to vote on the legislation before it is adopted.  At any point, amendments can be offered that could have the impact of returning some of these provisions of concern.  But, at least for now, while imposing some additional disclosure requirements on political advertisers, the House version of the legislation is much more palatable to the broadcasting community.  But watch this bill as it progresses through Congress in the coming month to see what else may develop. 

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In reaction to the Citizens United Supreme Court decision invalidating restrictions on corporate spending on advertising and other messages explicitly endorsing or attacking political candidates (about which we wrote here), new legislation, called the DISCLOSE Act,  has just been introduced in both houses of Congress seeking to mitigate the perceived impact of the Court's decision.  While the announced goal of the legislation is aimed at disclosure of the individuals and companies who are trying to impact the political process, the draft legislation, if adopted would have significant impact on broadcasters and cable companies, including potentially extending lowest unit rates and reasonable access to Federal political party's campaign committees (and not just the candidates themselves).  The draft legislation also proposes lower Lowest Unit Rates in political races where there are significant independent expenditures, more disclosure by broadcasters through an on-line political file, and even mandates for audits by the FCC of the rates charged by television stations to political candidates.  The language could also be read as an expansion of the current applicability of the political rules to cable television - applying reasonable access to cable systems and lowest unit rates and equal opportunities to cable networks.  As Congressional leaders are proposing to move this legislation quickly (with votes before July 4) so that it can be in place for the coming Congressional elections, broadcasters and cable companies need to carefully consider the proposals so that they can be discussed with their Congressional representatives before the bills are voted on by Congress.

While much of the bill is intended to force disclosure of those sponsoring ads and otherwise trying to influence the political process, the portions of the bill that amend provisions of the Communications Act include the following:

• An extension of Reasonable Access to require that broadcasters give reasonable access not just to Federal political candidates, but also to Federal political parties and their campaign committees.  In recent years where the Democratic and Republican Congressional Campaign Committees have been big buyers of broadcast time.  The extension of reasonable access to these groups could put even greater demands on broadcast advertising time on stations in markets with hot races, as stations could not refuse to provide access to "all classes of time and all dayparts", as required by the reasonable access rules.  This could crowd out other advertisers, and even make it harder for ads for state elections (as state and local candidates have no reasonable access rights) in states where there are hotly contested races.
• Extends the Reasonable Access requirements to require reasonable access to "reasonable amounts of time purchased at lowest unit rates."  The purpose of this change is not clear, as all political time must be sold to candidates at lowest unit rates in the 60 days before a general election and the 45 days before a primary. 
• Extends the requirement for Lowest Unit Rates to Federal political parties and their campaign committees.  Currently, the lowest unit charges apply only to the candidate's campaign committees, not to political parties.  Under the proposed language, LUC rates would also apply to the parties, and to groups like the Republican and Democratic National Campaign Committees
• Extends the "no censorship" provisions to Federal political parties and their campaign committees.  This change may be a positive for broadcasters.  As we have written before, a broadcast station cannot censor a candidate's ad.  But, as they have no power to reject a candidate's ad based on its contents, they have no liability should that ad contain material that could potentially be defamatory or otherwise subject the station to liability.  This proposed language would extend the no censorship rule to cover ads from Federal political parties, so that stations would not have liability for those ads either.  As many of the hardest hitting attack ads often come from these committees, if this legislation were to pass, stations would not have to worry about evaluating the truth or falsity of the committee's ads, as they would have no liability for the contents of the ads as they would be forbidden by law from rejecting the ads based on their contents.
• Provides for a lower Lowest Unit Rate in races where there are independent expenditures by any group of more than $50,000.  If a corporation or other group spends $50,000 in any political race, then all stations would be required to charge all candidates in the race the lowest charge made for "the same amount of time in the last 180 days" - not just the lowest charge for the same class of time as is then currently running on the station.  First, this would force stations to look back 6 months to determine their lowest unit rates.  For a primary election in June or July, rates in the doldrums of January or February could set the June political rates.  Moreover, the legislation does not state that it would look at the lowest rate for the same "class" of time over the previous 180 days, but instead it talks only about the same "amount" of time.  It is unclear if this is an intentional attempt to make stations sell prime time spots at overnight rates, but the current language of the bill seems to avoid the traditional distinctions on spots being sold based on their class.
• Forbids the preemption of advertising by a legally qualified candidate or national committee except for unforeseen circumstances.  This provision may well be intended to force stations to sell candidates advertising at their lowest nonpreemptible rates, and then treat the spots as they would much more expensive non-preemptible fixed position spots
• Requires the FCC to conduct random audits during the 45 days before a primary and the 60 days before a general election.  Audits would have to be conducted as follows: 
  • 6 of the Top 50 TV markets
  • 3 of the markets 51-100
  • 3 of the markets rates 101-150
  • 3 markets below 150
  • Audits would be required of the 3 largest networks, 1 independent TV network, 1 cable network, 1 provider of satellite services, and 1 radio network.  The language here, too, seems odd, as the requirements for audits are for "networks" of broadcast, cable and radio stations, not for local operators, and for an "independent television network" which would seem to be an inherently contradictory term - if a station is truly an independent, it is not affiliated with a network, so how can the FCC audit an "independent television network"?  It is unclear of whether this provision is requiring audits of the networks themselves, or of affiliates of the networks in the markets in which audits must be conducted. 
• Requirements that stations keep on their website information about all requests for the purchase of broadcast time by candidates, political parties or other independent political groups. Right now, the rules specifically do not require that political files be kept online.

There is also a provision changing the definition section of the Section 315 of the Communications Act which sets out the lowest unit charge provisions of the Act, along with no censorship and equal opportunities, which currently apply to broadcasters and the operators of cable television systems.  The proposed changes would add to the definition of a broadcast stations the phrase "and a provider of cable or satellite television service", making clear that all such services are included in the lowest unit rate provisions of the rules - which might be read as an attempt to include cable television networks within the scope of the rules.  In fact, as provided above, the law requires an audit of a cable network, implying that they will be subject to the rules if this law is adopted.  The law also adds a reasonable access provision to Section 315, which would seem to extend the concept of reasonable access to cable as well as to broadcast. The clear intent is unstated, but given the definitional language used in the language of the bill, and the fact that this new provision dealing with reasonable access is added to Section 315 which applies to cable (as contrasted to the Section 312 reasonable access provisions which do not), the extension of reasonable access to cable is seemingly the impact of this language.

The bill also extends the "stand by your ad" provisions of the Federal Election law to ads by third party groups, so a spokesman for any third party group buying ad time in connection with a political campaign will be forced to appear on the ad and take "credit" for that ad.  Disclosure of the Top 5 contributors to non-candidate political committees would also be required by this bill.

It is clear that the DISCLOSE Act could fundamentally change the way that broadcasters and cable companies deal with political advertising during election periods.  With the push to decrease rates and increase access to the airwaves, there could well be a a significant reaction by those being regulated.  Given the more expansive reading of First Amendment rights from the Supreme Court in the Citizens United case which spurred this proposed legislation, it would be quite possible that some broadcast or cable group could choose to challenge the mandatory access rights given to political parties under these rules, or the very cheap rates for political ads that could be read into the provisions of this bill.  There will be much to debate on this legislation, and the language of the bill could very well change as it makes its way through the Congressional processes.  But there are many important issues to consider - and broadcasters need to be aware of their possible impact. 

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On March 16, David Oxenford spoke at a Continuing Legal Education Seminar on the FCC’s Political Broadcasting rules. The panel, sponsored by the Federal Communications Bar Association, included another attorney in private practice, an attorney from the NAB, Bobby Baker (the head of the FCC’s Political Broadcasting office), and a media time buyer for political candidates. The panel not only discussed the basic rules governing political advertising on broadcast stations, but also dealt with topics including the impact of the Citizen’s United case on FCC rules (see our post here on that topic), issues of what to do if a political spot contains objectionable content, and how stations should deal with complaints from candidates about the content of political ads. Many of these topics and others are discussed in the Davis Wright Tremaine Political Broadcasting Guide, available here.  The discussion also provided a useful reminder on certain aspects of the law regarding how much broadcast stations can charge political candidates for the purchase of advertising time on broadcast stations.

At the session, the political time buyer complained that broadcast stations were trying to charge political candidates premium prices for purchases of advertising time outside the “political window.” During the window, 45 days before a primary and 60 days before a general election, stations are required to charge candidates the “lowest unit rate” charged for any spot of the same class of time run on the broadcast station. Outside the window, broadcasters do not have to charge lowest unit rates but, as the buyer reminded the audience, they do still need to charge “comparable rates” to what the station charges advertisers for the same type of purchase. So, while candidates do not get volume discounts without buying in volume (as they do during the window), if they do buy in the required volume, they should get the same discount that other advertisers get. Stations should not “mark up” the rates charged to political candidates outside of the window.

Another question that came up dealt with the sale of advertising time on election day, whether it be the day of the primary or the general election.  As the law requires that stations charge the lowest unit rate for the 45 days before the primary and the 60 days before the general election, what do stations charge for time sold on election day?  After significant discussion, it was agreed that stations should charge the lowest unit rate on election day as well as during the political window before the election.  However, even for Federal candidates, there is no right of access to political time on election day.  That is, stations can decide themselves whether or not to sell time on election day.  But, if they do, it should be at lowest unit charge.

Watch our Blog as we highlight other election issues that arise during this election season. 

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David Oxenford today conducted a webinar for the Kansas Association of Broadcasters on the rules for political advertising.  In addition to the elections for the US House of Representatives, Kansas has a race to fill a vacant US Senate seat, as well as elections for Governor and a whole host of state and local offices.  With an August primary and the November general election, the 2010 election season could be a busy one in the state.  David's presentation covered reasonable access, equal opportunities, lowest unit rates, FCC paperwork obligations and the other related issues that govern how broadcasters need to treat political candidates and other political advertisers.  The slides from David's presentation are available here.  Broadcasters should also refer to Davis Wright Tremaine's Political Broadcasting Guide for information about preparing for the upcoming campaign, and spotting legal issues that may arise during the election season.

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The 2010 political broadcasting season is almost upon us, with Texas leading the way.  With the first 2010 primaries on March 2, candidates in Texas are already in windows during which they need to file the paperwork to qualify for a place on the primary ballot.  Once they qualify for that ballot spot, they become "legally qualified candidates" in the eyes of the FCC, triggering reasonable access (for Federal candidates) and equal opportunities requirements.  Soon after, broadcast stations in Texas need to start according lowest unit rates to candidates (Federal, state and local) in the primary - such rates to start on January 16.  To help broadcasters prepare for the primary and the rest of the election season, David Oxenford and Bobby Baker, the head of the FCC's Office of Political Programming, conducted a webinar for the Texas Association of Broadcasters on December 2, 2009, originating from the TAB offices in Austin.  The PowerPoint slides used in the presentation is available here.  The Davis Wright Tremaine Political Broadcasting Guide that forms that basis of the TAB's political guide can be found here.

Texas will have an unusually active political season, with a primary election for Governor, where the State's sitting Governor's re-election is being challenged in his own party by one of the state's US Senators.  Races for the Texas State legislature will also likely be a hotbed of activity as the state will be electing the legislators who preside over Congressional redistricting after the 2010 census - a process that was particularly controversial in Texas after the last census.  Given the likely level of activity, broadcasters in Texas need to immediately start planning for the 2010 election and the obligations that it imposes on broadcasters.   And broadcasters in the rest of the country should similarly be preparing, as these same issues will be arising for them very soon, and advertising sold now could well have an impact on their political rates later in 2010 (see information about the webinar that David and Bobby conducted for 13 other state broadcast associations here). 

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On November 10, Davis Wright Tremaine's David Oxenford and Bobby Baker, the head of the FCC's Office of Political Broadcasting, conducted a webinar on the FCC's political broadcasting rules and policies.  The webinar originated from Lansing, Michigan, before an audience of Michigan Broadcasters, and was webcast to broadcasters in 13 other states.  Topics discussed included reasonable access, equal opportunities, lowest unit charges, and political sponsorship identification and public file rules. 

Seminar participants were provided with Davis Wright Tremaine's Political Broadcasting Guide, available here.  The PowerPoint presentation used in the seminar is available here.

 

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While it seems like we just finished the election season, it seems like there is always an election somewhere.  We are still getting calls about municipal and other state and local elections that are underway.  And broadcasters need to remember that these elections, like the Federal elections that we've just been through, are subject to the FCC's equal time (or "equal opportunities") rule.  The requirement that lowest unit rates be applied in the 45 days before a primary and 60 days before a general election also apply to these elections.  "Reasonable access," however, does not apply to state and local candidates - meaning that stations can refuse to take advertising for state and local elections (unlike for Federal elections where candidates must be given the right to buy spots in all classes and dayparts on a station), as long as all candidates for the same office are treated in the same way. So stations can take ads for State Senate candidates, and refuse to take ads for city council, or restrict those ads to overnight hours, as long as all candidates who are running against each other are treated in the same way.

One issue that arises surprisingly often is the issue of the station employee who runs for local office.  An employee who appears on the air, and who decides to become a candidate for public office, will give rise to a station obligation to give equal opportunities to other candidates for that same office - free time equal to the amount of time that the employee's recognizable voice or likeness appeared on the air.  While a station can take the employee off the air to avoid obligations for equal opportunities, there are other options for a station.  See our post here on some of those options.

So stations need to remember that they do have political broadcasting obligations for elections that may occur in their towns, cities, counties and states this year.  See the Davis Wright Tremaine Political Broadcasting Guide for more information about these issues.

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2009 - a new year, and a whole new cycle of regulatory requirements.  We wrote last week about the potential for changes in regulations that may be forthcoming but, like death and taxes, there are certain regulatory dates each year that broadcasters need to note and certain deadlines that must be met.  Those dates are set out in our advisory - Important Dates For Broadcasters in 2009 - a calendar of the year's regulatory filings.  Dates include the deadlines for routine FCC filings - ownership reports, children's television reports, quarterly issues programs lists, EEO Public File reports, etc.  Dates for the payment of royalties for Internet radio streaming operations are also included, as well as the lowest unit rate windows for upcoming gubernatorial races in New Jersey and Virginia.  And the all-important DTV deadlines are also listed.  So, to keep track of your regulatory obligations, check out our broadcaster's calendar, here. 

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Political Broadcasting season is now in full swing, with the Democrats just ending their convention, and the Republicans beginning theirs next week.  Already, we've seen disputes about third party attack ads (see our post here), and there are bound to be many more issues about the FCC's political broadcasting rules that arise during what looks to be a very contentious political season.  For guidance on many political broadcasting issues, you can check out our Political Broadcasting Guide, with discussions of many common political broadcasting issues (including reasonable access, equal opportunities, lowest unit rates, public file issues, and political disclosure statements) in what we hope is an easy to follow question and answer format.   Broadcasters should also remember that the Lowest Unit Rate "political window" opens on September 5, meaning that stations cannot charge political candidates any more than the lowest rate that is charged a commercial advertiser for the same class of time run at the same time as the candidate's spot. 

We have reminded broadcasters that the Lowest Unit Rate (or "Lowest Unit Charge,"  often abbreviated as" LUC" or "LUR")must be available to all candidates for public office - including state and local candidates.  While state and local candidates have no right of reasonable access (meaning that a station can decide not to sell time to those candidates, or to restrict their purchase of time to particular limited dayparts), if the station sells state and local candidates time, it must be at Lowest Unit Rates during the political window. 

 Some of the other aspects of Lowest Unit Rates as discussed in our Political Broadcasting Guide:

 What is a class of time?

  

A class is a type of spot that has unique rights and characteristics. For instance, spots that run

in different dayparts which have different rates are of a different class, e.g. morning drive is a

different class from mid-day, which is different from afternoon drive. Each of those classes

would have its own lowest unit rate.

 

Even within a given daypart, a station may have spots of many different classes.  Basically, a spot is of a different class if it has different rights. Thus, in any daypart, there may be multiple classes of time, each with its own lowest unit rate. For instance, a preemptible spot would be of a different class than a fixed position spot each with a different lowest unit rate even if they both run during the same daypart. Different rotations can also be different classes with their own lowest unit rate, e.g. a spot which could run anytime between 6 a.m. and midnight could be a different class from one that can run between 6 a.m. and 6 p.m. If the stations sells these rotations, and sells them with differing rates, rights of preemption, or make good privileges, then they would be of a different class and each would have a different lowest unit rate. A candidate can buy spots of any of those classes at the lowest unit rate for that class, and he gets the same rights that commercial advertisers who buy that spot get (e.g. if the candidate buys spots in a 6 a.m. to midnight rotation, his spots are treated just like those of a commercial advertiser who buys those spots and they can run anywhere between those hours).

 

What commercial spots do you look at in determining the lowest unit rate for a given class

of time?

  

You look at the spots of that class running at the same time as the candidate s spots. You need

not look any further than those spots running (or being offered on a rate card) during the 45 days

before a primary or the 60 days before a general election. But even within the 45 and 60 day

periods, the rates can change. If, for instance, a long term package sets your lowest unit rate for a

particular class of time, and the last spot from that package is run midway through the political

window, after the last spot from the package runs, the rates for that class of time can go up for

the rest of the political window. Similarly, if spots are sold on a demand basis, the lowest unit

rate can change on an almost daily basis. If there are fire sales of spots during particular

periods within a window, the lowest unit charge for the fire sale does not set the rates for periods

outside of the fire sale period.

 

Do candidates have to buy in volume to get volume discounts?

 

No. Candidates get the benefit of all volume discounts, even if they do not buy in volume. For

instance, if spots are $10 each, or 12 for $100, the candidate can buy one spot for $8.33 (100

divided by 12) even though a commercial advertiser would have to spend $100 to get the volume

discount.

Check out the Guide for further information about these and other topics dealing with the law of political advertising.

 

 

 

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With the shifting dates for the upcoming Presidential primaries, questions have arisen as to when broadcast stations must start to give Lowest Unit rates to candidates for these elections.  As it appears that, in some states, the primaries or caucuses for the Republicans and the Democrats may be held on different dates, the Lowest Unit rate periods in those states will be different for each party.  For instance, this week's decision by the Iowa Republican party to move its caucuses up to January 3 will move the beginning of the 45 day period for Lowest Unit Charges for Republican presidential candidates in Iowa to November 19. If the Democrats continue to hold to their planned January 14 caucus date, the Lowest Unit Charge period for Democratic Presidential candidates in Iowa will not start until November 30. Remember, Lowest Unit rates are in effect only for 45 days before a primary (or an open Presidential caucus such as that in Iowa) and the 60 days before a general election. They apply on a race by race basis. Just because you are within the LUC period before one election or primary does not mean that Lowest Unit rates apply to any other race.

This often comes up in Presidential election years when the Presidential caucus or primary in a given state is held early in the year, while the primary for the Congressional, state and local elections are held later in the year.  Even though there are declared candidates for those Congressional, state and local elections, Lowest Unit Charges will not apply to these candidates during the early Presidential primary window, but instead will apply only during the 45 days before their own primary elections (and, during those periods in the late spring or summer after the Presidential primaries and more than 60 days before the general elections, the Lowest Unit rates would not apply to the Presidential candidates).  Broadcasters need to remain alert as these dates are bound to keep shifting - perhaps right up to election day.

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Last week’s announcement of the partnership between eBay and Bid4Spots and the impending full launch of Google’s service to sell online radio spots beg for FCC action to clarify how these services will be treated for lowest unit rate purposes. We have written about this issue before (see our note here), and the increasing number of online sales tools for broadcast advertising inventory highlights the issue. If advertisers can buy spots using these online systems on a single station, or if stations offer their spots to a particular advertiser at a set price for a specific class of spot, it would seem that these spots could have an effect on the station’s lowest unit rate if the spots sold through the online systems run during lowest unit rate periods (45 days before a primary or 60 days before a general election.). For the peace of mind for all broadcasters, it would be worth the FCC clarifying the status of these services as we hurtle toward what will probably be the busiest political year ever.

In looking at some of these systems, it appears that some of these systems are premised on specific stations offering spots to advertisers on a cost-per-point basis, for specific dayparts as designated by the advertiser and agreed to by the station.  For instance Bid4Spots system advertises that it holds an auction to sell the spots on Thursday for the following week.  And it appears that spots must be sold by a station in specific dayparts on a non-preemeptible basis. For the week in which the spots are offered, the sale of such spots would appear to set a lowest unit rate for non-preemptible spots that run in the same time period. 

Before broadcasters panic, however, they need to remember that the Commission has always recognized that where spots are sold as a “network” – packaged together and sold as at a single price for multiple stations, the sale of the spots does not have a lowest unit rate impact on any of the stations in the network. If the spots are packaged and sold so that no advertiser is buying any particular station, and no station is selling to any particular advertiser, it would as if these online systems would operate as networks and not affect the lowest unit rates for any station using the service.   It is our understanding that some of the on-line auction systems work this way with spots from one station being packaged with spots from other stations so that the advertiser merely gets a certain audience delivery from the package of different stations that the on-line system puts together.

Even where there is a specific deal for one station to sell ads to one advertiser, the rates would not carry through the entire election cycle. In its 1992 revision of its political policies, the FCC recognized that lowest unit rates could vary throughout an election cycle. Stations could have “fire sales,” selling spots at a very low price during a few days where there was excess inventory, and those rates would only apply during that period of time (and as necessary to respond to any requests for equal opportunities that may flow from the sales of the spots that during these fire sale periods). In fact, as many stations adopt more sophisticated inventory control systems, rates can vary on a daily basis, with the lowest unit rte being set by the cheapest spot running during a particular time period. Thus, stations may be willing to use even the online systems that allow specific matching of stations and advertisers if they recognize that, for the periods during which they offer spots through the on-line system, the spots sold could affect lowest unit rates during that limited period.

But these concerns are all speculative, given the lack of specific guidance from the FCC.   We understand that the FCC has considered these systems and some guidance may be in the works.  Hopefully, that guidance will come soon, so that broadcasters and advertisers may recognize, if these choose, the benefits of this new technology without the fear of unforeseen implications on their political rates and practices.

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