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.
Continue Reading FCC Issues Reminder On Sponsorship Identification Requirements – Including Obligation to Ensure Syndicated and Brokered Program Providers Comply With the Rules

Here are some of the FCC regulatory and legal actions of the last week of significance to broadcasters, with links to where you can go to find more information as to how these actions may affect your operations.

  • The FCC released the agenda for its June 9 Open Meeting announcing that it will consider an

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

Last week, the FCC issued several fines to noncommercial broadcasters who had underwriting announcements that sounded too commercial.  In these decisions, the Commission found that the stations had broadcast promotional announcements for commercial businesses – and those announcements did not conform to the FCC’s rules requiring that announcements acknowledging contributions to noncommercial stations cannot contain qualitative claims about the sponsor, nor can they contain "calls to action" suggesting that listeners patronize the sponsor.  These cases also raised an interesting issue in that the promotional announcements that exceeded FCC limits were not in programming produced by the station, but instead in programs produced by outside parties who received the compensation that led to the announcement.  The FCC found that there was liability for the spots that were too promotional even though the station itself had received no compensation for the airing of that spot.

The rules for underwriting announcements on noncommercial stations (including Low Power FM stations) limit these announcements to ones that identify sponsors, but do not overtly promote their businesses.   Underwriting announcements can identify the sponsor, say what the business of the sponsor is, and give a location (seemingly including a website address).  But the announcements cannot do anything that would specifically encourage patronage of the sponsor’s business.  They cannot contain a "call to action" (e.g. they cannot say "visit Joe’s hardware on Main Street" or "Call Mary’s Insurance Company today").  They cannot contain any qualitative statements about the sponsors products or services (e.g. they cannot say "delicious food", "the best service", or "a friendly and knowledgeable staff" ).  The underwriting announcements cannot contain price information about products sold by a sponsor.  In one of the cases decided this week, the Commission also stated that the announcements cannot be too long, as that in and of itself makes the spot seem overly promotional and was more than was necessary to identify the sponsor and the business that the sponsor was in.  The spot that was criticized was approximately 60 seconds in length. 


Continue Reading FCC Fines for Noncommercial Stations Having Underwriting Announcements That Were Too Commercial – Even Where the Station Received No Money