Posted on May 3, 2009 by David Oxenford

Selling Stories In a Broadcast Station's News Programs - Remember the Sponsorship Identification

A recent stir was created when a Midwestern television company was reported to have signed a contract with a state government agency, promising to market the agency and its programs throughout the state.  This promotion was to include a segment in the company's televised news promoting the effects of the work of the agency.  Questions were immediately raised about whether this was prohibited by FCC rules.  But, when the news pieces ran, the company was very careful to state after these segments that they were sponsored by the station and the state agency.  As the FCC has no rules about what can be included in the "news" (and probably could not consistent with the First Amendment), the only real issue was one of sponsorship identification.  As the licensee did here, if the sponsor of the story is identified, making clear to the public who was attempting to persuade them on the issue addressed, there should be no FCC issues.

This is different from the issues that have arisen previously at the FCC, where there have been fines levied against television stations and cable systems for airing programming that was sponsored, but for which no sponsorship identification was provided (see our posts here and here).  This includes the video news release or VNR issues, where the FCC has fined stations for using news actualities provided by groups with a financial interest in the issue that was being addressed, but without identifying the fact that the material was provided by the interested parties.  Where a program addresses a controversial issue of public importance, the disclosure rules are more strict, requiring that the station not only disclose that it received money to air a story - but to also disclose anything that it got from the interested party - including tapes or scripts.

As we have written, the entire sponsorship identification field is under review in the Commission's proceeding which is to consider embedded advertising, product placement, and the whole gamut of broadcast sponsorship issues.  In that proceeding, the FCC made clear that broadcasters have an obligation to make sure that no one is receiving any undisclosed consideration for the placement of any type of promotion for a good or service into a program.  Broadcasters have this obligation, according the FCC, even if the program is being produced by a third party.  Thus, broadcasters should be asking for certifications from their program producers that they have not received anything of value in exchange for featuring a product or service or, if they have, that it is disclosed.  As we wrote last year, one television broadcaster was fined when an on-air host who produced his own show was found to have received consideration for the point of view that he expressed - something not revealed in his program, and something that the station did not inquire about.

Broadcasters, whether radio or TV, should use care when accepting anything of value in exchange for agreeing to broadcast any material on the air - whether it be music or news or any other type of programming.  We wrote about some of the considerations that stations should use in connection with payola concerns, which is really another aspect of the same issue.  With the FCC's scrutiny on this area, stations need to err on the side of caution, and be sure to identify sponsored programming whenever it appears. 
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Posted on July 25, 2008 by David Oxenford

Comment Dates Set for Embedded Advertising and Sponsorship Identification Proceeding - While Coffee Cups on the Anchor Desk Put the Issue in the Headlines

The FCC's Notice of Inquiry and Notice of Proposed Rulemaking on Sponsorship Identification issues (which we summarized in our firm's advisory and about which we wrote here), which deals with a host of issues including embedded advertising and product placement, was published in the Federal Register late last week, starting the clock on the filing of comments.  Comments on this wide-ranging proceeding are due on September 22, and replies on October 22.  With the broad range of issues that are discussed in this proceeding, from proposed rules on the size and length of textual sponsorship identifications in television advertising to sponsorship identification requirements for live-read radio commercials, there is something on which almost every broadcaster will want to comment.

A recent New York Times article helped bring the proceeding to the attention of the general public.  The article writes about television stations which are paid to have morning show hosts place coffee cups with identifiable logos (in this case cups of McDonalds coffee) on the desk of the news anchors of a morning news program.  Under some of the proposals identified in the Notice of Inquiry in this proceeding, some sort of identification (perhaps a crawl or superimposed message) of the sponsor for the placement of those cups would be required concurrently with the visual images of the cups on the screen.  The same would be true of the appearance of a product in any scripted comedy or drama, and perhaps even when feature films are run on TV in which the filmmaker was paid to include specific products in the movie.   Adoption of any of these suggestions could certainly change to face of broadcast television, particularly as it adapts its advertising practices to deal with Digital Video Recorders and other technological advances.  For broadcasters to retain their flexibility in such matters, they should file comments on or before the September 22 filing deadline. 

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Posted on December 11, 2007 by David Oxenford

FCC Meeting Agenda for December 18 - Potentially One of the Most Important in Recent Memory - Multiple Ownership, Localism, Minority Ownership, Product Placement and Cable TV National Ownership Caps

The FCC has released its agenda for its December 18 meeting - and it promises to be one of the most important,and potentially most contentious, in recent memory.  On the agenda is the Commission's long awaited decision on the Chairman's broadcast multiple ownership plan relaxing broadcast-newspaper cross-ownership rules (see our summary here).  Also, the FCC will consider a Further Notice of Proposed Rulemaking on Localism issues (pending issues summarized here) following the conclusion of its nationwide hearings on the topic, as well as an Order and Further Notice of Proposed Rulemaking on initiatives to encourage broadcast ownership by minorities and other new entrants (summary here).  For cable companies, the Commission has scheduled a proposed order on national ownership limits.  And, in addition to all these issues on ownership matters, the FCC will also consider revising its sponsorship identification rules to determine if new rules need to be adopted to cover "embedded advertising", i.e. product placement in broadcast programs.  All told, these rules could result in fundamental changes in the media landscape.

The broadcast ownership items, dealing with broadcast-newspaper cross-ownership, localism and diversity initiatives, all grow out of the Commission's attempts to change the broadcast ownership rules in 2003.  That attempt was largely rejected by the Third Circuit Court of Appeals, which remanded most of the rules back to the FCC for further consideration, including considerations about their impact on minority ownership.  The localism proceeding was also an outgrowth of that proceeding, started as an attempt by the Commission to deal with consolidation critics who felt that the public had been shut out of the process of determining the rules in 2003, and claiming that big media was neglecting the needs and interests of local audiences.

The cable ownership item has also been hanging around for years, after previous attempts at rule changes were rejected by the courts.  Broadcast local ownership caps, including the rules that prohibit the common ownership of two television stations in the same market ("TV duopoly") unless there are eight independent television owners (and forbidding any combination of any of stations in the top 4 in audience ratings in a market), have also been thrown out by the Courts as being insufficiently justified, yet these rules were not mentioned in the Chairman's proposal as to the resolution of this proceeding.  See our memo here for a discussion of other broadcast ownership issues not discussed in the Chairman's proposals.  We will see if these issues are discussed in the final order in this adopted in this proceeding.

Finally, the Commission will consider an issue that only recently has jumped into play - the initiation of a proceeding to determine if the FCC's sponsorship identification rules are sufficient to deal with product placement in broadcast programming.  With the recent proliferation of TiVos and other digital video recorders ("DVRs"), some broadcast programmers have taken to including products in the body of programs so that they will still be seen even if the viewer fast-forwards through the true commercial message.  While we will not know the specifics of the FCC proposal until the meeting next week, we can expect that the Commission will want to consider tougher disclosure requirements to let the public know who is trying to persuade them to buy a product.

With all of these crucially important and very controversial items on the agenda, the meeting will be one worth watching.  And, with the Commission's recent track record of starting controversial meetings hours after their scheduled time (the last meeting starting after 9 PM), interested parties may want to bring a sleeping bag and some provisions in case the Commission again gets a late start on its work.
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