David Oxenford and FCC's Bobby Baker Prepare Broadcasters for 2010 Elections with Webinar on Political Broadcasting Rules

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.

 

The Run-Up to Super Tuesday - Rush, the Super Bowl, Union Ads and an Hour on the Hallmark Channel

In the last few days before the Super Tuesday series of presidential primaries, efforts are being made across the political spectrum to convince voters to vote for or against the remaining candidates.  With Obama buying Super Bowl ads in many markets, Clinton planning a one-hour program on the Hallmark Channel the night before the primaries, Rush Limbaugh and other conservative radio host attacking McCain, and third-party interest groups and unions running ads supporting or attacking various candidates, a casual observer, looking at this media blitz, may wonder how all these efforts work under the rules and laws governing the FCC and political broadcasting.

For instance, sitting here watching the Super Bowl, I just watched a half-time ad for Barack Obama.  Did the  Obama campaign spring for one of those million dollar Super Bowl ads that we all read about?  Probably not.  It appears, according to press reports, that instead of buying a national ad in the Fox network coverage, the campaign purchased local ads in certain media markets.  And with reasonable access requirements under the Communications Act and FCC rules, he could insist that his commercial get access to the program as all Federal candidates have a right of reasoanble access to all classes and dayparts of station programming.  Moreover, the spot would have to be sold at lowest unit rates.  While those rates are not the rates that an advertiser would pay for a spot on a typical early Sunday evening on a Fox program, they still would be as low as any other advertiser would pay for a similar ad aired during the game.  In this case, by buying on local stations, at lowest unit rates, his campaign apparently made the calculation that it could afford the cost, and that the exposure made it not a bad deal.

On Monday night, the Clinton campaign has purchased an hour long block of time on the Hallmark cable channel to cover a town hall meeting.  Cable, unlike over-the-air broadcasting, is not subject to reasonable access requirements , so there was no obligation for the channel to sell time to the campaign.  And for network cable, it is still an open question as to what other FCC political rules apply.  The Commission recently went out of its way to avoid answering whether the equal opportunities rules apply to network cable by deciding that CNN did not violate the equal time rules by denying Dennis Kuchinich an opportunity to participate in a recent debate (see our summary of the case here).  From the lengths that the Commission went to in avoiding providing a direct answer to the question of whether equal opportunities applies to network cable programs, it could almost be inferred that, if push came to shove, the FCC would ultimately apply these rules if it could not otherwise avoid the issue.  But even if the rules applied, the sale of the programming block to the Clinton campaign would just give the Obama campaign the right to buy an hour of time, which it may or may not want.  And what rates would apply?  Applying the rules used for broadcast stations, if hour long blocks of time are not customarily sold by a network, the network could charge a reasonable amount, including a mark-up for lost audience in following time periods, according to recent FCC statements about the sale of block programming.

Around the country, in anticipation of the voting, third party groups including labor unions and other advocacy organizations are running ads supporting or opposing candidates.  These ads are not entitled to lowest unit rates (which are for candidates only), and stations need not sell time to these groups if they do not want to (reasonable access also applies only to candidates).  If a station does sell time to these groups, is there a requirement that a station sell time to supporters of both sides?  That is an open question.  While the FCC did away with most of the "Fairness Doctrine" over a decade ago, there is still a last thread of that doctrine that has never been officially abolished - the "Zapple Doctrine."  That doctrine was essentially equal time for supporters of a candidate - if a station sold time to the supporters of one candidate, it had to sell that time to the supporters of the other.  While the doctrine has not been applied in the last two decades, it has not been explicitly overruled so, if a station refused to sell to supporters of one side, the FCC might be forced to deal with that issue.

In fact, would that doctrine come into play in connection with the radio talk show hosts that are overtly partisan on the air?  According to press reports, many of the conservative radio talk show hosts have been aggressively anti-McCain in their programs.  As there are usually no appearances by the candidates on these programs, there are no equal opportunities issues, as equal opportunities is triggered only by the actual appearance of a candidate.  But could the Zapple Doctrine apply?  Traditionally, that doctrine applied to the purchase of time.  However, four years ago, when certain television stations thought about airing the "documentary" from the Swift Boat veterans attacking John Kerry, the Kerry campaign argued that the supporters of the Kerry campaign were entitled to free time under the Zapple Doctrine.  That case never reached a decision as the stations dropped their plans to air the film, but it remains an open issue (though more than a bit of a long-shot as it would seemingly render the abolition of the Fairness Doctrine meaningless, and raise significant First Amendment issues).

For more discussion of the FCC rules regulating broadcasters and political broadcasting, click on the Political Broadcasting subject heading on the right of this page, and read our Political Broadcasting Guide.  And watch for more discussion of political issues, as they arise, here.

FCC Rules Against Kucinich Request for Inclusion in CNN Presidential Debate

The FCC has now joined the Nevada Courts (see our post here) in denying Dennis Kucinich entry into the Presidential debates.  In a decision released this week, the FCC found that they could not force CNN to include Kucinich in its Democratic Presidential Debate, as such an action would violate the First Amendment.  The FCC only has the jurisdiction to determine if Kucinich was entitled to equal opportunities for not being included, and the Commission rejected that claim as well, finding that the carriage of the debate was on-the-spot coverage of a news event, exempt from equal opportunities. 

This decision is what we predicted in our post when the court's denied Kucinich access to the Nevada Presidential debate.  As we set out in that post, to encourage political debates, the FCC has determined that debates are on-the-spot coverage of news events as long as more than one candidate is included, and the decision as to which candidates to invite is made based on some rational criteria that is not exercised in some discriminatory, partisan fashion.  In this case, the Commission found that CNN's criteria - that a candidate had to have finished in the top 4 in a previous primary and be polling over 5% in an established national Presidential preference poll were not standards that were being applied arbitrarily for partisan reasons. The Commission concluded that the mere fact that Kucinich was receiving Federal funds and had unique positions on the issues was not enough to conclude that CNN was required to either include him in the debate or provide him equal time.

One other interesting aspect of this case was the fact that the Commission went through the entire equal opportunities analysis for a cable network program.  As we have written before, in connection with the now-ended candidacy of Fred Thompson (and that of Stephen Colbert), the Commission has never explicitly decided if equal opportunities applies to programming supplied to local cable systems by national cable programmers.  In this case, the FCC went out of its way to decide that Kucinich had no claim to equal opportunities, noting in a footnote that, as there was no claim of equal opportunities, the Commission did not have to address the question of whether the doctrine even applies to cable networks.  Thus, it remains an issue to be addressed another day and, with Fred Thompson withdrawing from the race, it most likely now will be an issue addressed in another election.

Will On-Line Spot Auctions Have an Impact on Lowest Unit Rate? - Only the FCC Knows For Sure

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.