DISCLOSE act impact on broadcasters

Last week, we wrote about two dissenting opinions in a Supreme Court decision that highlight the debate that is underway on the principles that govern defamation liability in the United States.  While we are reviewing Supreme Court decisions that could have an impact on broadcasters, including on political advertising, we thought that we should highlight another decision of the Supreme Court, a case called Americans For Prosperity Foundation v. Bonta, Attorney General of California, that could have an even more direct effect on the political advertising disclosure obligations of broadcasters.  In that case, the Court struck down a California requirement that charities operating in California reveal to the state their major donors.  Even though the state was supposed to keep this information confidential, the Court felt that the potential for disclosure of the contributors to groups dealing with controversial issues could chill their willingness to donate to the charitable groups, due to fears of repercussions should their donations become public (thus, in effect, creating a restraint on their First Amendment right to free association).  But could this decision have a wider impact on First Amendment rights and potentially affect disclosure obligations about contributions used for political advertising?

At least one commentator, George Will, seemed to think so.  In a column that he wrote last week, he suggests that supporters of the DISCLOSE Act (we wrote about a similar bill introduced 5 years ago here) should be worried  about its constitutionality in light of this Supreme Court decision.  If creating fears about the repercussions of donations to charitable organizations is seen as constitutionally suspect, a court could draw a similar conclusion about donations to political speech organizations.  The Supreme Court’s decision does acknowledge that the government could justify narrowly tailored disclosure obligations that advanced an important government interest, and the Court has, in the past, upheld disclosure obligations for contributors to political campaigns.  But would today’s Court see things the same way?  Would it make distinctions between disclosures of donations directly to campaigns (which have been upheld in the past where they could be seen as being linked to an attempt to buy influence with a candidate) versus  donations to third-party organizations that may engage in political speech, including support or opposition to candidates, which the Court might view  as the donors exercise of its free speech rights (as were the political expenditures by corporations in the Citizen’s United case – see our articles here and here)?  Time will tell how the ramifications of the Court’s decision will play out.
Continue Reading Could a Supreme Court Decision Affect Disclosure Obligations on Political Advertising?

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

Last week, the FCC Commissioners appeared before Congress for an "oversight hearing." In such hearings, Congressmen often raise many different issues that may be on their mind – everything from issues about the administration of the FCC to detailed policy issues. In the hearing before the Senate Commerce Committee last week, one issue arose that broadcasters should monitor carefully to see what develops. During the course of the hearing, the FCC Commissioners were asked why the FCC had not taken steps to make sure that the sponsors of political advertisements were disclosed on the air. While the FCC rules already require disclosure of the sponsor of any ad, and enhanced disclosure for political ads or other "issue ads" on matters of public importance, what were the Senators after in this line of inquiry? 

It appears that the Senators were asking the FCC to ask for more information about the source of the money used by political action groups to buy television advertising time on election issues – including the money used by PACs, SuperPACs and the other types of advocacy groups that spent so much money in the last election cycle, and are already beginning to run ads in states that have Senate races that are likely to be hotly contested in 2014. What do the FCC rules currently require?Continue Reading Making the Broadcaster the Source for the Disclosure of Political Spending? What the FCC’s Disclosure Rules Require and What Congress Might Want the FCC to Do

The DISCLOSE Act recently passed the Committee in the House of Representatives charged with dealing with it, without many of the provisions that most worried broadcasters and cable companies.  We recently wrote about the DISCLOSE Act legislation proposed in both the House and Senate in response to the Citizens United Supreme Court case (which freed

In reaction to the Citizens United Supreme Court decision invalidating restrictions on corporate spending on advertising and other messages explicitly endorsing or attacking political candidates (about which we wrote here), new legislation, called the DISCLOSE Act,  has just been introduced in both houses of Congress seeking to mitigate the perceived impact of the Court’s decision.  While the announced goal of the legislation is aimed at disclosure of the individuals and companies who are trying to impact the political process, the draft legislation, if adopted would have significant impact on broadcasters and cable companies, including potentially extending lowest unit rates and reasonable access to Federal political party’s campaign committees (and not just the candidates themselves).  The draft legislation also proposes lower Lowest Unit Rates in political races where there are significant independent expenditures, more disclosure by broadcasters through an on-line political file, and even mandates for audits by the FCC of the rates charged by television stations to political candidates.  The language could also be read as an expansion of the current applicability of the political rules to cable television – applying reasonable access to cable systems and lowest unit rates and equal opportunities to cable networks.  As Congressional leaders are proposing to move this legislation quickly (with votes before July 4) so that it can be in place for the coming Congressional elections, broadcasters and cable companies need to carefully consider the proposals so that they can be discussed with their Congressional representatives before the bills are voted on by Congress.

While much of the bill is intended to force disclosure of those sponsoring ads and otherwise trying to influence the political process, the portions of the bill that amend provisions of the Communications Act include the following:

  • An extension of Reasonable Access to require that broadcasters give reasonable access not just to Federal political candidates, but also to Federal political parties and their campaign committees.  In recent years where the Democratic and Republican Congressional Campaign Committees have been big buyers of broadcast time.  The extension of reasonable access to these groups could put even greater demands on broadcast advertising time on stations in markets with hot races, as stations could not refuse to provide access to "all classes of time and all dayparts", as required by the reasonable access rules.  This could crowd out other advertisers, and even make it harder for ads for state elections (as state and local candidates have no reasonable access rights) in states where there are hotly contested races.
  • Extends the Reasonable Access requirements to require reasonable access to "reasonable amounts of time purchased at lowest unit rates."  The purpose of this change is not clear, as all political time must be sold to candidates at lowest unit rates in the 60 days before a general election and the 45 days before a primary. 
  • Extends the requirement for Lowest Unit Rates to Federal political parties and their campaign committees.  Currently, the lowest unit charges apply only to the candidate’s campaign committees, not to political parties.  Under the proposed language, LUC rates would also apply to the parties, and to groups like the Republican and Democratic National Campaign Committees
  • Extends the "no censorship" provisions to Federal political parties and their campaign committees.  This change may be a positive for broadcasters.  As we have written before, a broadcast station cannot censor a candidate’s ad.  But, as they have no power to reject a candidate’s ad based on its contents, they have no liability should that ad contain material that could potentially be defamatory or otherwise subject the station to liability.  This proposed language would extend the no censorship rule to cover ads from Federal political parties, so that stations would not have liability for those ads either.  As many of the hardest hitting attack ads often come from these committees, if this legislation were to pass, stations would not have to worry about evaluating the truth or falsity of the committee’s ads, as they would have no liability for the contents of the ads as they would be forbidden by law from rejecting the ads based on their contents.
  • Provides for a lower Lowest Unit Rate in races where there are independent expenditures by any group of more than $50,000.  If a corporation or other group spends $50,000 in any political race, then all stations would be required to charge all candidates in the race the lowest charge made for "the same amount of time in the last 180 days" – not just the lowest charge for the same class of time as is then currently running on the station.  First, this would force stations to look back 6 months to determine their lowest unit rates.  For a primary election in June or July, rates in the doldrums of January or February could set the June political rates.  Moreover, the legislation does not state that it would look at the lowest rate for the same "class" of time over the previous 180 days, but instead it talks only about the same "amount" of time.  It is unclear if this is an intentional attempt to make stations sell prime time spots at overnight rates, but the current language of the bill seems to avoid the traditional distinctions on spots being sold based on their class.
  • Forbids the preemption of advertising by a legally qualified candidate or national committee except for unforeseen circumstances.  This provision may well be intended to force stations to sell candidates advertising at their lowest nonpreemptible rates, and then treat the spots as they would much more expensive non-preemptible fixed position spots
  • Requires the FCC to conduct random audits during the 45 days before a primary and the 60 days before a general election.  Audits would have to be conducted as follows: 
    • 6 of the Top 50 TV markets
    • 3 of the markets 51-100
    • 3 of the markets rates 101-150
    • 3 markets below 150
    • Audits would be required of the 3 largest networks, 1 independent TV network, 1 cable network, 1 provider of satellite services, and 1 radio network.  The language here, too, seems odd, as the requirements for audits are for "networks" of broadcast, cable and radio stations, not for local operators, and for an "independent television network" which would seem to be an inherently contradictory term – if a station is truly an independent, it is not affiliated with a network, so how can the FCC audit an "independent television network"?  It is unclear of whether this provision is requiring audits of the networks themselves, or of affiliates of the networks in the markets in which audits must be conducted. 
  • Requirements that stations keep on their website information about all requests for the purchase of broadcast time by candidates, political parties or other independent political groups. Right now, the rules specifically do not require that political files be kept online.

Continue Reading The Impact of the Proposed DISCLOSE Campaign Reform Act on Broadcasters and Cable Operators – Lowest Unit Rates and Reasonable Access for Political Parties, On Line Political File, FCC Audits and More