The advertising to children of food deemed unhealthy has been the subject of government concern for many years.  We wrote about the efforts of then-Senator Brownback to limit such ads – either by voluntary industry action or by government regulation.  These concerns led to the formation of a public-private task force to come up with voluntary actions to limit advertising unhealthy foods to children.  The FTC this week released a draft of that report – proposing prohibitions on advertising most unhealthy food to children that would be in place by 2016 (with certain additional restrictions becoming effective 5 years later).  These guidelines would apply not only to broadcast advertising, but also to marketing on the Internet and in many other media.  While the report talks about voluntary industry guidelines, the NY Times quotes some as asking just how voluntary such guidelines really would be – asking if the government might not step in to mandate compliance if industry was unsuccessful (see the Times article here, subscription may be required).  Comments on the FTC proposals are due on June 13, 2011.

The guidelines published by the FTC ask many questions about how to define what foods are considered unhealthy, and also about whether the timeline of 2016 for implementing a ban on unhealthy food advertising is reasonable (the later 2021 deadline would apply to certain restrictions on salt in food).  Advertising would be restricted for those up to 17 years of age, and extends to 20 categories of advertising including radio and TV, online ads, sweepstakes, ads in video games, and other marketing in traditional and digital media directed to children.  Broadcast programming that reaches an audience that is 30% children 2 to 11 would be deemed "targeted" to them, for children 12 to 17, the programming would be deemed targeted to children if there were a 20% representation of those age groups in the audience.  Internet ads would also use the 20% standard.Continue Reading FTC Requests Comments on Guidelines for Advertising Unhealthy Foods to Children

The FCC has issued two Notices of Apparent Liability, each proposing fines of $4000 to TV station licensees, both for airing video news releases ("VNR") in news or information programs without sponsorship identifications.  In both cases, the station received the VNRs for free, but was paid nothing for including them in their programming.  The station had no indication that any other party supplying the VNRs were paid for providing them to the station.  Nevertheless, relying on some very old statements of policy contained in an FCC Public Notice from 1975, the FCC concluded that the provision of the VNRs in and of themselves, constituted valuable consideration to the station, and the fact that they highlighted the commercial products of the companies that produced them "to an extent disproportionate to the subject matter of the film", mandated a sponsorship identification.

Both cases rely on an FCC Public Notice, first issued in 1963 and updated in 1975 (which I have been unable to locate on the FCC’s website), which sets out examples of how to comply with the sponsorship identification rules. These two old Public Notices were cited, but not reproduced, in a 2005 Public Notice, warning broadcasters to be careful with their use of VNRs.  The specific example cited by the FCC was one set out in these notices dealing with a film on scenic roadtrips provided by a bus company.  In the examples provided, the FCC stated that if the video did not show the bus company’s name, or the bus company’s name was shown only "fleetingly" in pictured of the highway in a manner reasonably related to the program, there would be no sponsorship identification requirement.  In cases where the bus company’s name was clearly shown, "disproportionate to the subject matter of the film", then sponsorship identification would be required "as the broadcaster has impliedly agreed to broadcast an identification beyond that reasonably related to the subject matter of the film."  Based on these examples, the FCC levied the fines in the cases just released.  An examination of the facts of these cases is important to understand these fines and how far the FCC ruling in these cases extends.Continue Reading FCC Fines Two TV Stations $4000 For Airing Video News Releases Without Sponsorship Identification, Even Though the Stations Were Not Paid for the Broadcast

Last week, we wrote about the new requirement for a nondiscrimination clause in all broadcast advertising contracts.  In the new license renewal applications, broadcasters must certify that they do not discriminate in the sale of advertising time and that their contracts contain the required certification.  Today, the Enforcement Bureau of the FCC issued an Enforcement Advisory, answering questions about the new requirement.  Unfortunately, that advisory really does little but reiterate what the FCC has already said – that the Commission is concerned about "No Urban, no Spanish dictates", and that broadcasters must make sure that there is no discrimination in the purchase of advertising time on their stations.  But, the Commission does make clear in an accompanying News Release, through a statement from Chairman Genachowski, that the Commission "will vigorously enforce its rules against discrimination in advertising sales contracts."  The advisory does highlight one new matter – that stations that use advertising rep firms or other sales agents must make sure that these agents have nondiscrimination clauses in their own contracts used to sell advertising time on the station. 

This policy has raised several questions from broadcasters.  Many have asked what they should do if they have no advertising contracts.  Apparently, many broadcasters, especially in smaller markets or when dealing with regular customers, book advertising through emails or phone calls – not formal contracts.  The FCC does not address how this should be handled.  We’ve suggested that broadcasters include the nondiscrimination clause in the exchanges that essentially form the contract – e.g. the email confirming the schedule, the rate cards offering the spots for sale, or other communications between the station and the advertiser.  We also suggest that stations adopt written contracts, as these contracts can cover issues that are important to broadcasters, e.g. indemnifications from advertisers that they have the rights to all the music and other material used in their ads, statements that the broadcaster reserves the right to preempt ads if they don’t like the content or if the broadcaster needs to run something more important, that advertising sold to one party should not be re-sold to anyone else, that the broadcaster is not liable for any consequential damages if an ad does not run for technical or other reasons, and similar issues.Continue Reading FCC Issues Advisory on Nondiscrimination Clause Required to Be Included in All Broadcast Advertising Contracts – What Should the Clause Say? – Why An Advertising Contract is Important

As medical marijuana has become legalized or decriminalized in many states, broadcasters have looked at advertising for the services of clinics and dispensaries as a potential new revenue source. As some community newspapers and other local media have begun to advertise dispensaries in states where medical marijuana is legal, we’ve been asked many times whether broadcasters can start to run such ads as well. Many radio and TV stations have even been approached by the operators of these clinics, seeking to run advertising schedules. Should broadcasters accept such ads? We urge caution.

Even though many states have decriminalized medical marijuana, possession and distribution of marijuana is still a Federal crime.  And broadcasters, unlike most other local media outlets, operate with Federal licenses. While the current US Attorney General has said that he will not criminally prosecute medical marijuana cases, the prohibition against marijuana remains on the books.  A careful reading of the Attorney General’s directive on medical marijuana shows that the Department of Justice has not said that medical marijuana is a legal substance, but only that, as a matter of prosecutorial priorities, the DOJ will not use its resources to target dispensaries and clinics operating under the color of state laws.  So, while this Attorney General may not direct his Department to prosecute medical marijuana users or distributors, the possession of marijuana remains a Federal crime, and the Attorney General’s memo makes clear that state laws cannot change this conclusion.  Thus, there may be some zealous local Federal prosecutor who decides to enforce the law on his or her own. Or, perhaps of more concern to the broadcaster, is the fact that there may be some local citizen in an area served by a radio or television station that runs such an ad who complains about the content of the ad to the FCC. In fact, we understand that there are already such complaints pending at the FCC. Continue Reading Advertising Medical Marijuana on Broadcast Stations – Is It Legal, What Will the FCC Think?

The FCC today released a Public Notice announcing new provisions in its license renewal Form 303S – the form that radio and television stations will be using to file license renewal applications, starting with license renewals for radio stations in DC, Virginia and West Virginia in June.  The Notice addressed several changes in the license renewal form – including the addition of certifications concerning whether a station was off the air at any point during the license term for a period of more than 30 days, whether principals of the licensee have interests in daily newspapers in the same area, and whether the station is in compliance with the RF radiation rules.  Two other issues of note were raised in the Public Notice – one dealing with stations that have not received a license renewal from the last license cycle, and one dealing with the newly required certification that stations must make – that their advertising contracts contain a nondiscrimination provision to assure that advertisers are not purchasing advertising on the station for a discriminatory purpose

We’ve written about the advertising anti-discrimination certification before, suggesting language that stations include in their contracts.  What is new in today’s notice is that the FCC has clarified that the certification only covers the period from today’s notice until the filing of the license renewal application.  So stations that do not have such certifications can still get them into their contracts now to avoid certification issues later.  In our previous articles on this subject, we’ve noted that this is a confusing requirement, and that even its supporters have urged the FCC to clarify it. Today’s Notice only says that stations must avoid advertising purchases made on the basis of "no urban, no Spanish" dictates, but does not go any further in interpreting the requirements of this policy. Continue Reading FCC Clarifies Requirement for Antidiscrimination Clause in Advertising Contracts – And Sets Out Other License Renewal Changes

Yesterday, the House of Representatives passed the CALM Act, directing the Federal Communications Commission to adopt regulations controlling the volume of commercials on television broadcast stations, cable systems, satellite, and other multichannel video programming providers. This bill was passed by the Senate in September.  Once signed by the President, the Federal Communications Commission will be required to adopt a rule to implement the legislation within one year, and the rule is to become effective within one year after its adoption. The FCC rule is to adopt parts of the ATSC A/85 standard, which seeks to target the volume of commercials in digital programming to the volume of dialogue (or other “anchor element”) in the accompanying program. An interesting description of the issues that must be addressed in determining just what is "loud," and for controlling that volume, can be found in a recent Wall Street Journal article (here, subscription may be required). 

Congressional estimates are that the costs of necessary equipment range from a few thousand dollars to $20,000 per device, for an aggregate industry cost of tens of millions of dollars. Congress anticipated that the costs may be burdensome for small cable operators and smaller market television broadcasters, and provided that waivers may be granted for financial hardship for one year renewable terms  The Commission may also grant waivers or exemptions from the rule that it adopts for classes of broadcasters and multichannel video programming distributors under the FCC’s general waiver authority.Continue Reading Congress Passes CALM Act to Restrict Loud Commercials

In 2008, the FCC adopted a requirement that broadcast stations include in their advertising contracts a provision that says that advertisers will not discriminate on the basis of race or gender.  We wrote about that requirement here, and our post was greeted with significant surprise by many broadcasters as the requirement did not glean much publicity when it was first adopted.  Today, the FCC issued an Erratum to that two year old requirement, eliminating from the certification its application to discrimination in advertising based on gender.  Instead, the Erratum stated it was only discrimination based on race or ethnicity that was prohibited.  The Erratum stated that this language "more accurately" reflected the "Commission’s clear intent" in adopting the requirement for the certification in advertising contracts.

The removal of "gender" from the advertising discrimination certification seems to recognize the common-sense advertising principal that some advertising, by its very nature, may be targeted to one gender or another.  But the correction of this language through an Erratum seems to avoid many of the hard issues that remain with this certification.  The Commission was very terse in its explanation of how this certification was supposed to work and exactly what it was supposed to prevent.  There were certain situations that seem to fit within the prohibitions – situations where the advertiser of a general market product refuses to allow it to be advertised on stations that target minority audiences (see our discussion of the Mini Cooper advertising controversy here).  This was to avoid the "no Spanish, no urban dictates", ruling out advertising on stations with urban formats or those programmed in Spanish, that some felt were attached to some advertising orders.  But there are many other questions that remain to be clarified.Continue Reading FCC Corrects Advertising Nondiscrimination Certification – Removes Gender From Certification

Using music in commercials is not as simple as just paying your ASCAP, BMI and SESAC royalties.  While many broadcasters think that paying these royalties is enough to give them the rights to do anything they want with music on their stations, it does not.  The payments to these Performing Rights Organizations (PROs) only cover the right to publicly perform music, i.e. to broadcast it.  They do not give you the right to take the music and "synchronize" it with other words or video material, e.g.  you cannot put music in a recorded commercial or otherwise permanently fix it into a recorded audio or video production.  Instead, to make such a production, the producer needs to get the rights to both the underlying musical composition (the words and musical notes) and, if you are planning to use a particular recording of a song, the rights to use that particular recording ( the "sound recording" or "master recording").  Getting these rights may very well require that you deal both with the record company or performing artist whose recording you plan to use, and the publishing company that represents the composer of the music.  And, as some artists may have concerns about having their music used to pitch some products, getting the rights to that artist’s version of a particular song may not be easy. 

Even using the tune of a familiar song in an advertisement, with different words, is not permitted without getting the rights to do so from the publishing company.  A copyright holder in a musical composition has the right to prepare "derivative works" of that composition.  A derivative work is one that uses the original copyrighted material, but changes it somehow – like putting new words to an old tune.  Many think that "fair use" permits the making of a parody of a song, so they are allowed to use the tune as long as they produce a new version that is funny.  However, in the copyright world, fair use is not that simple.  A parody, to allow use of the original tune, must be making commentary or criticism of the original song.  Being independently funny or amusing, or otherwise dealing with some independent social or political issue, does not give you the right to use the music without securing permission from the composer of the music first.  A recent story in the Hollywood reporter’s legal blog, THR,esq.com, told the story of a Congressional candidate, Joe Walsh, who thought that it would be cute to use the music of former Eagle Joe Walsh, to make fun of Democratic politicians.  As set out in that story, Eagle Joe Walsh’s attorney did not find the campaign song very funny, and sent a very strong letter objecting to that use (the LA Times site had at one point had a link to a video of a band playing the candidate’s version of the Joe Walsh song "Walk Away", but it now says that the video has been taken down due to a copyright objection). Don’t let your station be the recipient of such a letter – get the rights to use music in commercials or other productions. Continue Reading Using Music in Advertising or In a Video Production? Secure the Necessary Rights – ASCAP, BMI and SESAC Licenses Are Not Enough

With the Super Bowl and the Winter Olympics less than 2 weeks away, and March Madness not far behind, we once again need to remind our readers that all three are trademarked terms, meaning that their use, particularly for commercial purposes, is limited.  We’ve wrote here last year about the use of the term "Super Bowl" in commercials, and about the use of "Olympics" two years ago (here).  Our warning then bears repeating now – the trademarked terms should not be used in commercial messages except by authorized advertisers.  These advertisers have paid big bucks to be able to say that they are an Olympic sponsor, or that they are having a Super Bowl sale.  The holders of these trademarks enforce them rigorously (so that they can get the big bucks from the official advertisers), so don’t risk their use without official permission.  See our Super Bowl post from last year for details on how to refer to these events without running afoul of trademark limitations.

As we wrote last year, this does not prevent all use of these terms.  News reports about the events can still be given.  DJs can still chat about who is going to win the Super Bowl, or about the latest judging controversy in Ice Dancing at the Winter Olympics.  But don’t try to commercially exploit these terms (e.g. saying that you are "Springfield’s March Madness station") unless you have really paid for the rights to use the trademarked term.  Be careful, as a cute promotional idea can end up costing your station far more than you intended. Continue Reading Remember “Super Bowl”, the “Olympics” and “March Madness” Are Trademarked Terms – Don’t Use Them In Advertising Without Permission

On December 1, 2009,  FTC revised Guidelines went into effect updating policies dealing with advertising using testimonials and endorsements, specifically affecting celebrity endorsements and sponsorship disclosure.  These revised guidelines directly impact the established practices of broadcasters and new media companies.  These revised endorsement and testimonial guidelines effectively ban the old standard “results not typical” disclaimer so commonly in use in connection with a great deal of testimonial advertising, confirm independent liability for the “endorser” (including celebrities) for false product or service claims, and expand and clarify the need for disclosure of “material connections”, that is consideration (money and other “freebies”) received by new media companies in connection with reviews or other online coverage of products or services.  It is vital that media companies, in particular new media, understand the key provisions of these guidelines to make sure that they don’t become a target of any FTC enforcement action.  The FTC has indicated that for now at least, its focus will be on enforcement in the new media world (bloggers, social media, viral campaigns) and other “non-traditional” advertising (celebrity guests on news and entertainment shows, endorsements by media personnel such as on-air DJ’s).

Like all FTC Guidance concerning advertising, the revised guidelines are specific regulations, but instead they set out standards (in essence a safe harbor) that outline how the FTC will review advertising to determine if it is “false and deceptive” or otherwise misleading to the consumer in violation of Section 5 of the FTC Act.  The revised guidelines provide specific examples as to how they will apply to insure sufficient disclosure so that the listener has all the background necessary to be able to evaluate the strength of the endorsement for him or herself.  For broadcast advertising, the new guidelines make clear that endorsers can themselves be liable for misleading statements made during a product pitch.  So a radio announcer paid to try a diet plan or some other product and to report about its results on the air needs to be sure not only that his statements are truthful, but that the “results” claimed are in line with what the advertiser can actually prove for the product through clinical study and research.  The radio pitchman cannot turn a blind eye to claims that are inherently incredible.  In the past, a simple disclosure that "your results may vary" or "these results are not necessarily typical" was sufficient.  Today, that disclaimer is no longer enough.  Instead, the new guidelines state that any testimonial about the results of using a product be accompanied with a disclosure of the results that a typical user can expect to get from the product.  So the announcer must be informed as to what results can be expected by the typical user, and that these results are objectively verifiable, so that the proper disclosure can be made.  As the announcer (or the station) can now be liable for statements made in such testimonials, stations should take care to be prepared to make the required disclosures. Continue Reading New FTC Guidelines on Endorsements and Sponsorship Disclosure – Broadcasters and New Media Companies Beware