Last week, the FCC’s Enforcement Bureau issued an Advisory reminding broadcasters about their obligation to provide sponsorship identification information to their audiences whenever they receive something of value in exchange for airing any programming. The Enforcement Bureau’s advisory was quite concise, basically just reminding broadcasters of their sponsorship identification obligations. But the FCC also highlighted two other issues – (1) that broadcasters have an obligation to exercise reasonable diligence to make sure that any third-party program providers also include sponsorship identification when they are paid to include material in programs that they provide to the station and (2) the FCC can impose substantial fines on stations that do not live up to these obligations.
On the question of exercising reasonable diligence in insuring that program providers meet the sponsorship identification obligations, the FCC pointed to this language form Section 317(c) of the Communications Act:
The licensee of each radio station shall exercise reasonable diligence to obtain from its employees, and from other persons with whom it deals directly in connection with any program or program matter for broadcast, information to enable such licensee to make the announcement required by this section.
This means that a broadcaster needs to ask any party providing syndicated programming to a station to ensure that the rules are met. The same obligation would apply to time brokers who place programming on the station. The station owner needs to be sure that these programmers are aware of their obligations under the sponsorship identification rules, and that they observe those obligations. Reminders to program providers, and review of the programs that they provide, would seem to be part of this reasonable diligence obligation. We have previously written about this requirement – see for instance our article here.
The reminder on the potential for fines is, if anything, perhaps understated. The FCC has not hesitated to fine broadcasters whose on-air programs did not carry proper sponsorship identification. We wrote about one radio case in which a broadcaster agreed to pay a penalty of over half a million dollars for not sufficiently identifying the sponsor of an ad in favor of a proposed power-generation project. That same radio broadcaster, while under a consent decree from the first violation, received a second fine of over $200,000 for two spots run on multiple stations (each only 13 times) – both for the violations themselves and for not timely reporting them to the FCC as required by the consent decree. Another case resulted in a $44,000 fine to a station for running an ad 11 times without providing the full name of the sponsor and specifically identifying the company as the sponsor of the program, even though the company was alluded to in the ad itself. On the TV side, we’ve seen fines over $10 million for an extensive campaign for a local hospital chain that included news segments and promos that were not tagged as being sponsored.
The release of the Enforcement Bureau’s advisory would seem to signal that this will be an area of concern for the new FCC. If you receive anything of value for running material on the air, disclose that the programming was sponsored or the FCC will be concerned. Read the advisory carefully and talk to your legal advisors to be sure that your stations are fully compliant with all aspects of the FCC’s sponsorship identification obligations, as violations can be very costly.