At a continuing legal education seminar held by the Federal Communications Bar Association a week ago, Bobby Baker, the FCC’s chief of the Office of Political Programming, confirmed an issue that has been confounding broadcasters for many months. In recent years, several organizations, including Google’s dMarc service, have begun to take remnant advertising inventory from broadcasters, and to market that inventory on-line. For this left-over spot time, prices that are charged for such time are often less than a local advertiser would pay for similar time on the same radio station.

Given that we are now in a political window, the issue has been raised as to the impact that the sale of a station’s advertising time through one of these on-line services has on the services lowest unit rate for political candidates. The simple answer given last week was that, if a commercial advertiser can buy a particular spot on a particular station using an on-line service, and that spot carries with it the same rights that a spot purchased directly from the station has (e.g. it runs in the same time period, has the same protections against pre-emption, it carries similar make-good rights), then the spot must be considered in the station’s lowest unit rate analysis for spots of the same class. While not specifically addressed by Bobby at the seminar, it would seem that  even if the spot has unique properties from spots sold locally (e.g. high level of preemptibility, no make good or preemption protection, a different rotation), it would form a different class of time that must be offered to the candidate who requests information about all classes and rotations, even if the candidate buys direct without using one of these electronic services. Spots sold through these on-line services would be like spots sold by a station’s rep firm, which similarly must be considered in a lowest unit rate analysis.

However, if the spot is sold as part of a package with other stations, where the advertiser buys on a cost-per-thousand basis or based on some other form of audience delivery, and where the advertiser does not have the ability to buy spots on any single station, then the spot does not impact on the station’s lowest unit rate. This would be an application of the FCC’s policy with respect to unwired networks and other sales of multiple stations, which has held that such sales do not affect lowest unit rates.  As other advertising issues arise during this political season, look for advice here.

It has been reported that a draft Notice of Proposed Rule Making regarding the effects of communications towers on migratory birds is circulating among the Commissioners.  In April of this year, it was reported that an NPRM on this issue was expected in the (then) near future.  (See for example, TelecomWeb and BroadcastEngineering.)  It’s now the end of September, and it seems this item is finally gaining traction, according to trade press reports.  These reports indicate that Chairman Martin’s office is circulating a draft NPRM on the issue on among the FCC Commissioners.  In 2003, the Commission issued a Notice of Inquiry on this matter under then-Chairman Michael Powell, and opened a proceeding as docket WT 03-187.  Although the NPRM was not included on the agenda for this week’s Open Meeting, it seems the item is no longer on the back burner.

Together with the FAA’s current proceeding on requiring additional FAA applications when changes are made to communications towers (which we discussed in June, here), this new proceeding could make construction and modification of new towers more difficult.  Parties interested in commenting in this proceeding should sharpen their pencils and update their data, to be prepared when the NPRM is actually released.   

As we reported on July 7 and 17, the FCC had intended to issue final rules on Ibiquity digital radio standard in July, but suddenly pulled the item off their agenda.  Currently, all broadcast stations operating in a digital mode are doing so on temporary authorizations pursuant to interim rules, and multicast operations are conducted pursuant to experimental authorizations. 

Rumors at the time, reported in our blog entries, attributed the delay to attempts to work out issues over the public interest obligations of broadcasters on their multicast channels.  Today, at the annual convention of the Maine Association of Broadcasters, an FCC representative, while not confirming that this was the basis of the delay, did say that there were requests by public interest groups for some quantification of the public interest obligations for these multicast channels, and also said that there was a pending proposal that leasing a digital subchannel to a community organization could be one way of meeting such obligations.

In thinking about this issue, it seems to me that the imposition of strict public interest obligations on these multicast channels may well impede their development.  These channels may be used in ways that are far different than traditional broadcast stations.  For instance, a station could use some of its multicast spectrum for an "all traffic and weather channel" (like that offered by satellite radio), or an all local sports channel.  Uses like these may develop as a way to give local audiences programming that they may want on demand, as a way to compete with satellite or on-line offerings.  If there are strict public interest obligations, requiring specified amounts of news or public affairs programs, the development of these innovative uses of the broadcast spectrum might be delayed.  The FCC should tread carefully, as they don’t want to stifle the development of digital radio – or over-the-air radio’s ability to compete with new technologies. 

With only a week to go before comments are due in the FCC proceeding to determine whether or not to change the Multiple Ownership Rules (our summary of the issues on which the Commission sought comment can be found here), a controversy has arisen over a 2004 study concerning the effects of local ownership on news programming.  During the confirmation hearing on Chairman Martin’s second term on the Commission, soon after the Chairman expressed his open mind about the outcome of the multiple ownership proceeding, California Senator Barbara Boxer produced a surprise.  She produced a report written by FCC economists purporting to show that television stations that are locally owned air more local news programming.  This report, though written in 2004, had never been released to the public.

The clear implication was that the Commission had tried to bury the report though as it contradicted FCC proposals to loosen ownership restrictions.  According to a report in TV Newsday,  the Chairman today sent a letter to Senator Boxer stating that neither he nor any of the other Commissioners knew of the existence of the report or any efforts to suppress its release.  However, in another news report released today, a former FCC attorney said that senior managers at the Commission ordered "every last piece" of the report destroyed. 

Continue Reading Flurry Over Consolidation Study

A front page article in today’s Washington Post reports that the National Republican Congressional Committee expects to spend about $45 million on negative campaign ads this year, attacking Democratic challengers on personal and character issues.  One academic quoted in the article indicated that this year’s election may be "a more negative campaign that any in recent memory."

If the Republican Party spends money, no doubt the Democrats and other interest groups will be spending as well in this tight election with control of Congress potentially at stake.  For broadcasters, this means that they will be in for lots of controversy, and lots of work. 

When a legally-qualified candidate buys advertising time on a broadcast station, the station cannot censor that ad.  Therefore, the station is exempt from any liability for the content of that ad.  But when the ad is purchased by a non-candidate third party group, the station has no obligation to run the ad, and therefore, if the ad is defamatory, the broadcaster could have liability for running it.  Particularly if the broadcaster knows or suspects from the content of an ad that it is false, or is put on notice that the facts contained in the ad are untrue, the broadcaster faces liability if it does nothing to investigate the truth of that ad.  So, if a broadcaster is running an attack ad and gets a complaint about the truth of the ad (most likely from the candidate being attacked), the broadcaster needs to verify the truth of the claims being made before any further airing of the ad.  And usually the proponent of the ad will have reams of paper to support the claims that are made – support that needs to be evaluated by the broadcaster.

Continue Reading Negative Ads Expected to Increase

Another executive of an on-line betting site was arrested late last week when changing planes in the United States.  According to a New York Times story, the executive of SportingBet was detained based on a warrant issued by Louisiana state authorities. 

As we wrote on July 18 and August 12, the arrest of an officer of BetOnSports.com caused the website to cease its operations in the United States.  This new arrest, based on the actions of state authorities, rather than Federal officials, may signal a new offensive against such sites.  In the past, we have found that many state authorities have been the first to approach broadcasters with threats of legal actions over advertisements for gambling websites.  This action may indicate that authorities will also be going after the sites themselves.

We warned in an August advisory that broadcasters needed to exercise great care in accepting advertising in any way related to on-line gaming.  Even the "dot net" sites, which don’t take money for bets, but are for "educational purposes" or for fun using free points instead of money for betting, need to be approached with suspicion.  Check out the advisory for cautions on how to approach this increasingly hot topic.

Today, the FCC released an order fining a station over $16,000 for not having a local main studio, for operating over its authorized power at night, and for not maintaining a local public inspection fine.  Many might think that these violations are obvious ones.  Yet weekly, the FCC issues notices of fines for stations all over the country.  So not all stations are paying attention.  Back in April, we published a bulletin highlighting a number of problem areas where the FCC has been finding violations and fining stations.  These are worth another look, as today’s fine makes clear that the FCC remains vigilant in enforcing its rules.