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In a Public Notice issued yesterday, the FCC asked for comments from the public on whether broadcast stations should be able to enforce “Last In, First Out” (“LIFO”) pricing against political candidates in election races.  During the 45 days before a primary election or the 60 days before a general election, for advertising buys by a political candidate’s authorized campaign committee, a station cannot charge more than the lowest price charged to the station’s best commercial advertiser for that same class of advertising time.   What the Commission asks in its Public Notice is whether the practice of stations of deciding that particular classes of advertising time are effectively sold out discriminates against candidates – as candidates routinely buy their advertising time late in an election cycle.  These issues come up often, particularly late in any political window as demands on the advertising inventory of stations can become very tight as an election approaches.

So what does this petition ask?  First, let’s take a step back and look at how lowest unit charges work in broadcast (and cable) political advertising.  An easy example would be where a candidate wants to buy a fixed position advertisement on a radio station during its morning drive program.  For that ad, a candidate can be charged no more than the lowest price that the station charged to any commercial advertiser for a similar fixed-position spot that runs in that same time period.  Different classes of time have different lowest unit rates.  That means that, in that same morning drive program, there might be a lowest rate for these fixed position adverting spots that are guaranteed to run at the time that they are scheduled, but a lower price for spots that can be preempted by higher priced spots.  If there are different make-good rights associated with a class of preemptible time (e.g. one type of spot must be “made-good” by the station within a week if it is preempted, while another might just need to be made-good within the next month), both of those classes could have different lowest rates.  See more about lowest unit rate here and here. 
Continue Reading Comments Sought by FCC on Political Broadcasting Lowest Unit Rate Implications of Last In First Out Pricing

With the lowest unit charge window for the November elections kicking into effect tomorrow (September 5), we thought that it was a good idea to review the basics FCC rules and policies affecting those charges. With each election seemingly breaking spending records from prior cycles, your station needs to be ready to comply with all of the FCC’s political advertising rules. Essentially, lowest unit charges guarantee that, in the 45 days before a primary and the 60 days before a general election, candidates get the lowest rate for a spot that is then running on the station in any class of advertising time. Candidates get the benefit of all volume discounts without having to buy in volume – i.e. the candidate gets the same rate for buying one spot as your most favored advertiser gets for buying hundreds of spots of the same class. But there are many other aspects to the lowest unit rates, and stations need to be sure that they get these rules right.

It is a common misperception that a station has one lowest unit rate, when in fact almost every station will have several – if not dozens of lowest unit rates – one lowest unit rate for each class of time. Even on the smallest radio station, there are probably several different classes of spots. For instance, there will be different rates for spots that run in morning drive and spots that run in the middle of the night. Each of these time periods with differing rates is a class of time that has its own lowest unit rate. On television stations, there are often classes based not only on daypart, but on the individual program. Similarly, if a station sells different rotations, each rotation on the station is its own class, with its own lowest unit rates (e.g. a 6 AM to Noon rotation is a different class than a 6 AM to 6 PM rotation, and both are a different class from a 24 hour rotator – and each can have its own lowest unit rate). Even in the same time period, there can be preemptible and non-preemptible time, each forming a different class with its own lowest unit rate. Any class of spots that run in a unique time period, with a unique rotation or having different rights attached to it (e.g. different levels of preemptibility, different make-good rights, etc.), will have a different lowest unit rate.
Continue Reading The Political Window Opens Tomorrow – A Refresher on the Basics of Lowest Unit Charge

A new month in a new year, and a number of new regulatory dates are upon us for broadcasters – and important dates for webcasters also fall in this month.  So now that the holidays are quickly becoming just a foggy memory, it is time to sharply focus on those regulatory obligations that you have to avoid legal issues as the year moves forward.  January 10 brings one deadline for all broadcast stations – it is a date by which your Quarterly Issues Programs lists, setting out the most important issues that faced your community in the last quarter of 2013 and the programs that you broadcast to address those issues, need to be placed in the physical public inspection file of radio stations, and the online public file of TV broadcasters.

Full power TV and Class A TV stations by January 10 also need to have filed with the FCC their FCC Form 398 Children’s Television Reports, addressing the educational and informational programming directed to children that they broadcast.  Also, by that same date, they need to upload to their online public files records showing compliance with the limits on commercials during programming directed to children.
Continue Reading January Regulatory Dates for Broadcasters and Webcasters – Children’s Television Reports, Quarterly Issues Programs List, Webcaster Elections and Minimum Fees, the Return of Lowest Unit Rates and More!

Now that the Democratic and Republican conventions are over and the candidates begin the final sprint to the November 6 elections, the political broadcasting season goes into overdrive. Effective last Friday, lowest unit rates are in effect. In this year which will probably break all records for political spending, is your station ready to comply with all of the political rules? We thought that we’d provide a series of articles on some of the basics of the FCC political broadcasting rules, to make sure that your station is prepared to deal with the most common issues that arise in a political season.  Today, as the lowest unit charges have just kicked in, we’ll hit some of the common questions that we get about these rates.  In coming days, we’ll address other areas of the FCC’s political rules.

Essentially, lowest unit charges guarantee that, in the 45 days before a primary and the 60 days before a general election, candidates get the lowest rate  in any class of advertising time for a spot in that class that is then running on the station. Candidates get the benefit of all volume discounts without having to buy in volume – i.e. the candidate gets the same rate for buying one spot as your most favored advertiser gets for buying hundreds of spots of the same class.  But there are so many other aspects to the lowest unit rates, and stations need to be sure that they get these rules right.Continue Reading Political Broadcasting Reminder Part 1 – The Basics of Lowest Unit Charges

At its meeting today, the FCC voted to require that television stations maintain most of their public inspection files online, in a database to be created by the FCC (see the FCC’s Public Notice here).  While the details about this obligation have not yet been released, from the comments at the FCC meeting, much is already evident.   All TV stations will have to post their files to an online server to be maintained by the FCC.  Proposals for new obligations to post information about sponsorship identification and shared services agreements have been dropped, at least for now.  Most documents not already online at the FCC will need to be uploaded within 6 months of the rule becoming effective.  And, in the most controversial action, broadcaster’s political files will need to be posted to the new online database, though in a process that is to be phased in over time.

The political file obligation will apply at first only to affiliates of the Top 4 TV networks in the Top 50 markets.  And only new information for the political file will need to be posted.  Information in the file before the effective date of the order apparently will not need to be posted online, at least not initially.  The requirement for posting the political file online will be reviewed in a proceeding to begin one year after the effective date of the new rules.  As stations outside the Top 50 markets, and other stations in those large markets, will not need to comply with the political file obligations until July 2014, the FCC will be able to reexamine the impact of the disclosure obligations before the compliance obligation for the political file expands to all stations. Continue Reading FCC Votes to Require Online Public File for TV Stations – Rejects Compromise for Political File

While the off-year elections of 2011 are not yet history, the Lowest Unit Rate period for the 2012 Presidential election will soon be upon many stations in the early primary and caucus states.  Last week, Bobby Baker, the head of the FCC’s Office of Political Programming, and I conducted a webinar for 13 state broadcast associations to provide a refresher on the political broadcasting obligations of broadcasters.  The webinar covered all the basics of the political broadcasting rules – including reasonable access, equal opportunities, lowest unit rates, the public file and sponsorship ID obligations, and the issues of potential liability of broadcasters for political advertising not bought by candidates but by PACs, unions and other interest groups. PowerPoint slides from the presentation are available here, and the video of the presentation can be accessed here by members of the state associations that were involved.  Additional information about the FCC’s political broadcasting rules can be found in our Davis Wright Tremaine Guide to Political Broadcasting.

One particular issue came up in the webinar that warrants additional discussion and clarification. Rate issues are always the most difficult to explain, and the questions concerning package rates are among the most confusing.  The FCC has said that stations cannot force a candidate to purchase a package of spots containing multiple ads of different classes.  Instead, stations must break up the price of packages into their constituent spots and, if the package spots are running during a Lowest Unit Charge period (45 days before a primary or Presidential caucus or 60 days before a general election), determine if the spots in that package affect the lowest unit rates of the classes of time represented by advertising spots contained in the package.  For instance, if you sell a package of 10 morning drive spots with a bonus of 2 overnight spots on your radio station for $100, you need to break up the package price and allocate it to the spots from the two classes of time in the package – the morning drive and the overnight spots. So some of that $100 package price gets applied to the 10 morning drive spots (say, for example, $96) and the rest (for example, $4) is assigned as the value of the 2 overnight spots.  Thus, in this package using this allocation, the unit rate for morning drive spots would be $9.60, and the unit rate for overnights would be $2.  You then take these rates, and see if you have sold spots for these classes of advertising time at lower rates.  If so, the package has no effect on your LUR.  If not, the spots in the package may reduce the LUR for one or both classes of time.  In such cases, the determination of which classes’ LUC will be lowered may be affected by the allocation of the package price that you make.Continue Reading A Webinar Refresher on the FCC’s Political Broadcasting Rules – Computing Lowest Unit Rates in Spots Sold as Part of Advertising Packages

Broadcast stations must charge political candidates the lowest unit rate that they charge any commercial advertiser for a comparable advertising spot during the 45 days before a primary and the 60 days before a general election.  Broadcasters need to remember that this applies to state and local races, as well as Federal campaigns, so those…

In the waning days before the mid-term election, we have received many questions about the applicability of the political broadcasting rules to state and local candidates.  In particular, we have seen a number of letters from attorneys representing candidates who are running for state and local offices (everything from Governor to county commissioner or school board representative), who claim that an attack by an opposing candidate is unfounded and that a broadcast station must pull that ad from the air.  Just as is the case with Federal candidates, ads by state candidates cannot be censored by a station.  Thus, except in certain very unusual situations (where the language of the ad would violate some Federal criminal statute, e.g. if it is obscene), a station must air the ad as it was created.  It cannot be rejected because the station disagrees with the content or the tone, and it cannot be pulled even if the opposing candidate believes it to be defamatory.  Because the station cannot censor a candidate’s ad, they have no liability for the content of the ad, i.e. they cannot be held responsible for any defamatory content that it may contain, even if they are on notice of that content.  They cannot censor an ad by a candidate or a candidate’s authorized campaign committee – whether that candidate is running for a Federal, state or local office.

Note that, as we have written many times, this is in contrast to those situations where a candidate complains about an attack ad sponsored by a non-candidate group.  In those cases, the station does have the option of whether or not to run the ad (the no censorship provisions of Section 315 of the Communications Act do not apply).  Thus, if the station is on notice that there is potentially defamatory content in an ad, it must do some investigation of that ad, and make an informed decision about whether or not to allow the ad to continue to run.  If it does not investigate, and continues to run an ad that is defamatory after receiving notice of that fact, in some extreme cases, it could face liability for that defamatory content.Continue Reading Political Broadcasting Reminder – State and Local Candidates Subject to Lowest Unit Charge, No Censorship and Equal Opportunities Rules

While most of the FCC’s political broadcasting rules have remain unchanged for almost 20 years, each year there are a few new wrinkles that arise, and seemingly a few misconceptions that make the rounds among advertising agencies that work with political candidates.  One such misconception that seems to be circulating this year is that an ad for a state or local political candidate does not need to have their voice or picture to be a "use" under FCC rules.  Only "uses" are entitled to lowest unit rates and subject to the no censorship provisions.  For some reason, agencies in several states have tried to convince broadcasters that, as long as a spot has a sponsorship identification at the end (and, for television, a textual sponsorship identification 4% of screen height for 4 seconds), that spot is a "use."  But that is not correct.  A "use" requires that the recognizable voice or picture of a candidate be in the spot – and that is true even for spots for state and local candidates.  Some advertisers may be confused by the change in Federal laws (now itself almost a decade old) that required that Federal candidates identify themselves in their ads and personally state that they approved the message of the ad,  Perhaps some of the advertisers think that, because the law for Federal candidate is so detailed, and because it does not specifically cover state candidates (though several state laws now have imposed the same obligation on state and local candidates in their states), there is no requirement at all for state and local candidates to appear in their ads.  But they are not correct – for a spot to be a use, a candidate him or herself must have a recognizable voice or image in that ad.

While it is not illegal for a station to run a state or local candidate’s ad when the ad does not have a candidates voice in it, there are important ramifications for the station if the spot is not a "use".  First, without the candidate’s voice or picture, the ad is not entitled to lowest unit rates.  There has been some controversy, not settled by the Federal Election Commission and perhaps subject to interpretations under state election commission rules, about whether a station that charges a candidate lowest unit rates for a spot not entitled to such rates may be making a corporate campaign contribution to that candidate, which is prohibited under Federal law and in most states.  Most importantly for the stations, if the spot does not have the candidates voice or picture in it, the spot is not covered by the ‘No censorship" provision of Section 315 of the Communications Act.  That provision prohibits a station from rejecting a candidate’s ad based on its content.  But, because the station can’t reject the ad based on its content, the station has no liability for the contents of the ad.  Conversely, if the ad does not have the appearance by the candidate in it, then the station is free to reject it based on its content, and thus the station could theoretically have liability for the content of the ad.  As we approach a heated election season where stations don’t want the obligation to check the veracity of every claim made by one candidate about an opposing candidate in an attack ad, stations should be careful to insure that spots purchased by candidates are in fact uses, containing the recognizable voice or picture of the candidate – even for state and local candidates. Continue Reading Remember that Political Ads By State and Local Candidates Need to Have Candidate’s Recognizable Voice or Picture to Be a Use

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…