Payola and Sponsorship Identification

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There are so many legal issues that facing broadcasters that it is sometimes difficult to keep up with them all. This Blog and many other activities that those at my firm engage in are meant to help our clients and other broadcasters keep up to date on all of the many regulatory challenges with which…

To help broadcasters sort out the confusing rules about political advertising, we have updated our Political Broadcasting Guide for Broadcasters (note that the URL for the updated version has not changed from prior versions, so your bookmarks should continue to work). The revised guide is much the same as the one that we published two years ago, formatted as Questions and Answers to cover many of the issues that come up for broadcasters in a political season. This guide is only that – a guide to the issues and not a definitive answer to any of the very fact-dependent legal issues that arise in election season. But we hope that this guide at least provides a starting point for the analysis of issues, so that station employees have a background to discuss these matters with ad buyers and their own attorneys.

In looking at the Guide that we prepared two years ago, really not much has changed. But there are some specific updates that should be noted. For instance, sponsorship identification seems to be a hot issue in the last two years. We wrote here about the $540,000 fine paid as part of a consent decree when a Cumulus radio station did not fully identify the sponsor of advertising on a controversial issue of public importance. We have also written here and here about issues that are currently pending at the FCC about the proper sponsorship identification tag that belongs on an ad paid for by a PAC that is funded by one individual. This is an issue to which stations should be alert. The online public file for radio is mentioned, as this will affect how radio broadcasters maintain their political file starting at some point later this year (see our article here about the online public file requirements for radio broadcasters). Also, we note the adoption by many stations of programmatic selling, and suggest that stations need to carefully review how these sales platforms may impact lowest unit rate issues. We have made some other clarifications and revisions as well.
Continue Reading Updated Political Broadcasting Guide – Questions and Answers about Broadcasters’ Obligations During this Election Season

It’s that time of the year when we need to dust off the crystal ball and make predictions about the legal issues that will impact the business of broadcasters in 2016.  While we try to look ahead to identify the issues that are on the agenda of the FCC and other government agencies, there are always surprises as the regulators come up with issues that we did not anticipate. With this being an election year, issues may arise as regulators look to make a political point, or as Commissioners look to establish a legacy before the end of their terms in office.  And you can count on there being issues that arise that were unanticipated at the beginning of the year.

But, we’ll nevertheless give it a try – trying to guess the issues that we will likely be covering this year.  We’ll start today with issues likely to be considered by the FCC, and we’ll write later about issues that may arise on Capitol Hill and elsewhere in the maze of government agencies and courts who deal with broadcast issues.  In addition, watch these pages for our calendar of regulatory deadlines for broadcasters in the next few days.

So here are some issues that are on the table at the FCC.  While the TV incentive auction may well suck up much of the attention, especially in the first half of the year, there are many other issues to consider.  We’ll start below with issues affecting all stations, and then move on to TV and radio issues in separate sections below. 
Continue Reading What Washington Has in Store for Broadcasters in 2016 – Looking at the Legal Issues that the FCC Will Be Considering in the New Year

The FCC yesterday released, and trumpeted, a Consent Decree reached with Cumulus Radio for a violation at one of its New Hampshire stations where full sponsorship identification announcements were not made on issue ads promoting an electric company’s construction project in New Hampshire.  In the Consent Decree, Cumulus agreed to pay a $540,000 penalty to the FCC for the violations of the rules – plus it agreed to institute a company-wide compliance program to make sure that similar violations did not occur in the future.  In connection with the fine, the FCC released a press release highlighting the fine and the importance of identifying the true sponsor of issue advertising.  Travis LeBlanc, Chief of the FCC’s Enforcement Bureau stated “While failure to disclose these identities generally misleads the public, it is particularly concerning when consumers are duped into supporting controversial environmental projects.”  This fine is yet another example of the enhanced enforcement of all FCC rules by the new Enforcement Bureau, enforcement that has been controversial both among those being regulated and even among the FCC Commissioners themselves.  What was behind this extreme penalty, which probably dwarfs the profits that this radio station will make for the next several decades?

According to the FCC’s Consent Decree, the Cumulus station broadcast 178 announcements promoting the Northern Pass Project, a proposed hydro-electric project involving the construction of 180 miles of power lines in Canada and New Hampshire.  While the actual texts of the announcements were not provided in the FCC decision, and apparently included several versions of the ad, all supported the approval of the Northern Pass project, but none included the language “paid for” or “sponsored by” Northern Pass Transmission LLC, the full name of the company that paid for the ads and was behind the project.  Cumulus claimed that the station’s employees believed that references in the ads to the Northern Pass project were sufficient to inform the public of who was behind the ads, the FCC says that is not enough – the full name of the sponsor, making clear that it was the sponsor of the ad, is required.  This is not the first time that the FCC has, in the context of the Consent Decree, imposed a big penalty for a lack of a full sponsorship identification on broadcast programming but, outside of the context of “payola” violations, this may well be the largest fine imposed on a radio station for this kind of violation.
Continue Reading $540,000 FCC Penalty for Cumulus Station Missing Formal Sponsorship Identification on Issue Ad Campaign

The Sunlight Foundation, along with Common Cause and the Campaign Legal Center, have filed with the FCC complaints against 18 TV stations claiming that these stations violated the FCC’s sponsorship identification rules by not identifying former New York City mayor Michael Bloomberg as the true sponsor of issue ads bought by the Independence USA political action committee.  The complaint (available on the Foundation’s website as part of a press release on the action) alleges that stations have an obligation to look behind the named organizational sponsor to identify Mr. Bloomberg as the true sponsor of these ads, as he has provided all of the organization’s funding and directs its actions.  These same organizations filed a similar set of complaints last year, some also targeting Mr. Bloomberg and the PAC with which he is associated, complaints which, for the most part, remain pending at the FCC (see our article here).

These complaints are very similar to the ones filed in 2014, arguing that where a PAC is 100% financed by a single individual, the individual should be identified on the air as the sponsor, not the PAC itself.  The petitioners claim that, by not identifying Mr. Bloomberg as the true sponsor, the public is deceived as to who is behind the ads.  This is despite the fact that, in the required sponsorship disclosure statements filed in the stations’ public files, Mr. Bloomberg is identified, as required by the rules, as the Chairman of the PAC and as one of its two officers.  Apparently, this required disclosure is deemed insufficient by these groups.  But what will the FCC think?
Continue Reading More Complaints Filed Against TV Stations for Allegedly Not Disclosing the True Sponsor of PAC Ad on Political Issues

A bill introduced in the House of Representatives last week proposes that the FCC be required to amend its sponsorship identification rules to require not just the name of the sponsor of an ad addressing “a controversial issue of public importance,” but also the names of any “significant donors” to the…

April is one of those months with many routine FCC obligations. Quarterly Issues Programs lists need to be in your public file by the 10th of the month. This is an obligation for all full-power broadcast stations – commercial or noncommercial. Similarly, all TV stations have an obligation to submit their Children’s Television Reports on FCC Form 398 demonstrating compliance with the obligations to provide educational and informational programming directed to children, and at the same time put into their public files documents showing their compliance with the limitations on commercials within programming directed to children.

EEO public file reports are due for stations that are part of an employment unit with 5 or more full-time (30 or more hours per week) employees which is located in any of the following states: Delaware, Indiana, Kentucky, Pennsylvania, Tennessee, and Texas. Noncommercial TV stations in Delaware, Indiana, Kentucky, Pennsylvania, and Tennessee; and noncommercial radio stations in Texas, need to file their Biennial Ownership Reports with the FCC on April 1. Finally, license renewal applications in the last license renewal window for this license renewal cycle are due to be filed on April 1 by TV stations (and TV translators and LPTV stations) in Delaware and Pennsylvania. The next regularly scheduled license renewal will be filed by radio stations in certain states – but not until June 2019!
Continue Reading April Regulatory Dates for Broadcasters – Including Quarterly Issues Programs and Children’s Television Reports; Comments In Proceedings Including One on Digital Auxiliaries; and More Incentive Auction Seminars

A group of radio broadcasters have asked the FCC to agree to waive some provisions of the current sponsorship identification rules of the FCC to permit stations that have sponsored music or sports programming to move some of the required sponsorship identification online (the request is available here). This is to provide listeners with a more detailed and accessible means of determining the sponsor of certain broadcast programming. The FCC’s Mass Media Bureau has asked for public comments on this proposal, with comments due by April 13, and reply comments by May 12.

The examples of situations where the waiver would be used as provided in the Petition are for sponsored music programming (e.g. if a particular music label was to purchase an hour to feature their recordings) or sports programs (e.g. if a team were to purchase time on a station to do a coaches program or even a full game). The current rules require that the identification must be broadcast at the time of the broadcast – which has often been interpreted to mean at the time of the program, which is why you see the sponsorship acknowledgements at the end of TV quiz shows, acknowledging all the companies who provided free stuff to the program producers to get their products mentioned on air. The proponents of the new approach set out in this petition suggest that the online disclosure might actually provide more information to listeners of a radio program as, if the listeners don’t happen to be listening at the top of the sponsored hour (or three hours for a sponsored baseball game broadcast), they don’t hear the fleeting announcement. So the broadcasters have suggested what they see as a better way of providing that announcement.
Continue Reading FCC Asks for Comment on Radio Broadcasters Proposal for Moving Online Some Sponsorship Identifications

Each year, at about this time, we pull out the crystal ball and make predictions of the issues affecting broadcasters that will likely bubble up to the top of the FCC’s agenda in the coming year.  While we try each year to throw in a mention of the issues that come to our mind, there are always surprises, and new issues that we did not anticipate. Sometimes policy decisions will come from individual cases, and sometimes they will be driven by a particular FCC Commissioner who finds a specific issue that is of specific interest to him or her.  But here is our try at listing at least some of the issues that broadcasters should expect from Washington in the coming year.  With so many issues on the table, we’ll divide the issues into two parts – talking about FCC issues today, and issues from Capitol Hill and elsewhere in the maze of government agencies and courts who deal with broadcast issues.  In addition, watch these pages for our calendar of regulatory deadlines for broadcasters in the next few days.

So here are some issues that are on the table at the FCC – starting first with issues affecting all stations, then on to TV and radio issues in separate sections below. 

General Broadcast Issues

There are numerous issues before the FCC that affect both radio and television broadcasters, some of which have been pending for many years and are ripe for resolution, while others are raised in proceedings that are just beginning. These include:

Multiple Ownership Rules Review: In April, the FCC finally addressed its long outstanding Quadrennial Review of the broadcast multiple ownership rules – essentially by punting most of them into the next Quadrennial Review, which probably won’t be resolved until 2016.  Issues deferred include any revisions to the local ownership limits for radio or TV (such as loosening the ownership caps for TV stations in smaller markets, which the FCC tentatively suggested that they would not do), any revision to the newspaper-broadcast cross-ownership rule (which the FCC tentatively suggested that they would consider – perhaps so that this rule can be changed before the newspaper becomes extinct), and questions about the attribution of TV Shared Services Agreements (which the FCC is already scrutinizing under an Interim Policy adopted by the Media Bureau).
Continue Reading What Washington Has in Store for Broadcasters in 2015 – Part 1, What’s Up at the FCC

On Friday, the FCC released an Order and Consent Decree by which Journal Broadcasting agreed to pay a fine of $115,000 and to enter into a compliance program to settle complaints that it had not adequately identified that a program aired on its Las Vegas TV station was sponsored by a local car dealership.  According to the FCC press release issued at the same time as the Order and Consent Decree, the program was labeled a “Special Report,” was hosted by a station employee who stated that she was “reporting on behalf of Channel 13,” was made to look like a news report (with the reporter interviewing various employees of the dealership about their liquidation sale), and was run immediately adjacent to the local news.  The Press Release stated that this action was important to insure “transparency” where consumers are not misled as to who is trying to persuade them about commercial product.  “[A] pseudo news report invites viewers to rely on their perception of the station’s independence and objectivity when, in fact, the message has been bought and paid for by an undisclosed third party,” stated the FCC in the press release.

While the licensee argued that the context of the program made clear that it was a sponsored ad, the Commission’s insistence on the payment of a fine here is evidence of much the same thinking as the decisions the FCC has reached in past cases where there was entertainment or informational programming presented without a sponsorship identification even where the programming was sponsored by a commercial entity.  Even simply providing a recorded program unduly promoting a commercial product has been found to be sufficient to trigger the FCC’s requirement that a sponsor be identified when a station receives valuable consideration for the airing of a program broadcast to the public (see our article here).
Continue Reading TV Station Agrees to $115,000 FCC Fine for Not Identifying Sponsor of Program Promoting a Sale at Auto Dealership