Many stations seem unsure of how to apply the recent FCC guidance that no charge spots given to advertisers to help them through the pandemic do not need to be counted in computing a station’s Lowest Unit Charge, as long as the no-charge spots are not part of paid advertising contracts and are not otherwise considered bonus spots. We wrote about that guidance last week when it was first released by the FCC, here. Because this issue can get complicated quickly, we recommend that individual stations talk to their counsel about any specific application of the FCC’s Public Notice to their situation. However, as we were involved in seeking the guidance from the FCC, what follows are some general thoughts as to issues that stations should keep in mind in applying the FCC’s decision.
To be exempt from Lowest Unit Charge calculations, any no-charge spots should not be added to any existing advertising package, nor should they be used as a direct incentive to buy a new package, e.g., no promises should be made to give 20 no-charge spots to an advertiser if they buy a paid schedule of 20 spots. The whole idea is that these spots are gifts to the advertiser to help them through the crisis, separate and apart from any commercial advertising transaction – while at the same time building goodwill for the station and helping the station fill holes in their inventory that have resulted from cancelled advertising. These gifts should be viewed as a temporary measure to get through the crisis. Because these no-charge spots cannot be tied to paid packages, stations should be careful on how they promote them to advertisers. Here are some ideas:
- Don’t call them “bonus spots” in any communications. Call them “goodwill spots” or “covid-19 spots” or something else, but you do not want to imply that they are a bonus associated with another package.
- Don’t give them in strict proportion to any existing contract, e.g., don’t give an advertiser 10% of its paid schedule in “goodwill spots.” That also makes it look too much like they are part of a paid schedule.
- Don’t list them on the same invoice or affidavit of performance that you provide to an advertiser showing its paid spots. There is no requirement that you provide specific documentation to advertisers of what you run, but if you do, keep it apart from the documentation of paid schedules.
- The spots should be preemptible. Don’t make any promises or guarantees of any specific number of spots that will be provided and remind advertisers that this situation is temporary and simply an expression of good will on your station’s part during these difficult times for everyone. You also should not guarantee any particular audience size or reach or frequency.
- While not required, having a unique message relating to the pandemic, or packaging multiple advertisers together in spots to promote local businesses, can help differentiate these spots from normal paid schedules that are still subject to LUC consideration.
This is a unique solution for a unique time, but one that some stations may be able to employ as a win-win for both the stations and their communities. Talk to your counsel for more details on how to employ this kind of program without running afoul of the FCC guidance.