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.
Given that the station had announced many of the terms of the contest, and had written rules that appeared to cover the situation at hand, some may view this fine as being unnecessarily strict. The FCC rule dealing with broadcast contests, Section 73.1216, requires broadcast of the "material terms" of a contest "periodically" on the station. Material terms include those terms "which define the operation of the contest and which affect participation therein." According to the rule, these factors include, but are not limited to:
- How to enter or participate
- Eligibility restrictions
- Entry deadline dates
- When prizes can be won
- The extent, nature and value of the prizes
- The basis for the valuation of the prizes
- Time and means of selection of the winner(s)
- Tie-breaking procedures
Summaries of some of the other cases where the FCC enforced this policy, fining stations for ambiguities in contest rules or the failure to broadcast the material rules, can be found here, here and here.
Apparently, at least one broadcaster, Entercom Communications, has decided to challenge this interpretation of the rules. Entercom was fined by the FCC for not announcing all material rules for a contest on the air, but it did not pay the fine. If a party does not voluntarily pay an FCC fine, the FCC cannot itself collect the fine or otherwise penalize the station for nonpayment, unless the Department of Justice brings a lawsuit and secures a judgment to collect the fine. Here, DOJ brought that suit, and the licensee has, according to trade press reports, continued to appeal the ruling and to contest the collection action arguing that the FCC should not fine a station simply for not announcing all the rules on the air. While we will see where that challenge goes, the FCC seems intent on enforcing the rule. So make sure that the appropriate announcements are run on air for any contest that your station conducts.