A consent decree entered into by a radio broadcaster, which included a $12,000 "voluntary contribution" to the US Treasury, demonstrates once again the FCC’s concerns about sponsorship identification issues.  The week before last, we wrote about the FCC fine levied on a television broadcaster for not including sufficient sponsorship information when a "video news release" was broadcast on a local television station without disclosing that the video footage had been produced by the automobile company whose products were featured.  The recent FCC Report on the Information Needs of Local Communities (formerly known as the Future of Media report) also focused on the need for more disclosure in connection with sponsored material carried on broadcast stations and other media (see our summary here).  With a long outstanding Rulemaking proceeding on these issues that remains unresolved (see our summary here), the Commission almost appears as if it is setting its policies in these areas through case law rather than through the rulemaking process.

In this most recent "payola" case, a complaint was lodged against a Texas radio station owned by Emmis Broadcasting alleging that the host of one music program was receiving compensation from a local music club, a local record store, and a manager of local bands in exchange for featuring music on the show.  The allegation contended that other local bands could not get their music played on this show without sponsoring Station events hosted by this particular personality.  The Consent Decree does not resolve the question of whether these allegations were true, but instead requires that the licensee make the voluntary contribution, adopt procedures to make sure that Station employees are aware of the requirements of the sponsorship identification rules, and report  to the Commission on a regular basis on the actions taken by the licensee to ensure compliance with the FCC rules.  In addition to general requirements that the Station educate its employees about the sponsorship identification rules, the Consent Decree also contained conditions setting forth rules governing the relationship that station employees could have with record labels, even though the decree makes no mention of any allegations of improper consideration having come from record companies.  These conditions were ones that appear to have come from consent decrees entered into with a number of broadcasters 4 years ago in the last major FCC payola investigation (which we wrote about here).


Continue Reading $12,000 Consent Decree Payment Demonstrates FCC Concerns About Sponsorship Identification Policies

The FCC has issued a Forfeiture Order, confirming a $4000 fine levied against a Minneapolis TV station for airing a video news release ("VNR") without sponsorship identification.  This case was previously discussed in our March 25th blog entry, when the Commission issued a Notice of Apparent Liability ("NAL") against the station for this violation.  The primary lesson to be learned from this decision is that video supplied for free may require sponsorship ID if furnished for the purpose of identifying a product or furthering a sponsor’s message beyond any independent (i.e., newsworthy) reason a station has for airing it.

In arguing against the NAL, the station put forth several arguments, all of which were rejected by the FCC.  The station argued that its use of a video supplied by General Motors for a story about the popularity of convertibles in the summer was equivalent to use of a company press release, which the FCC has found acceptable in the past.  But the FCC said that use of a press release without sponsorship ID is permitted only if references to products or brand names are "transient or fleeting."  Here, by contrast, the FCC found the identification of GM cars to be "disproportionate to the subject matter of the news report."


Continue Reading FCC Confirms $4000 Fine For Televising Video News Release Without Sponsorship ID

Politico ran a story last week, indicating that a number of radio talk show hosts were paid to endorse, during their shows, certain causes and groups that might be of interest to their listeners.  The article suggests that the endorsements included live read commercials, as well as other comments made during the course of the program, as asides or during discussions of the issues of the day.  While we have not reviewed any of these programs, and have no idea if the story is accurate or how any paid mentions were handled during the program, radio stations do need to be cautious in this area, and consider the sponsorship identification issues that may be raised by such conduct.  And this consideration is not just in connection with political talk programs – but wherever any on-air talent receives consideration for making a plug for a product or service on the station.

This issue has already been a big deal on the video side of the media house, with both broadcasters and cable companies having been fined for including material in their programs without disclosing that they had received consideration for the inclusion of the material.  Recently, we wrote about two TV stations who were fined by the FCC for broadcasting "video news releases", where the stations broadcast content from third parties which was deemed to have a promotional message included for the third party’s product, where the station did not specifically disclose that the video material had been provided at no charge to the station.  The provision of the tape alone was deemed to be consideration.  Almost four years ago, we wrote about another station that was hit with a fine when a syndicated TV talk show host was revealed to have been receiving government money to promote a government program (No Child Left Behind), was promoting that government program during his show, and not mentioning that he had received this consideration.  The station was fined – even though they did not produce the program, as they had not inquired about whether any sort of consideration had been received by the host.  The Communications Act puts the burden on stations to reveal sponsors when consideration has been paid for the airing of any programming, and the FCC has said that this burden requires that the station take efforts to make sure that all programming – even that coming from syndicators – complies with the rules.   


Continue Reading Radio Talkers Paid to Endorse Causes During Their Shows? What Should Stations Do?

Broadcasters are inevitably moving toward a digital future – exploiting new Internet and mobile platforms to supplement their traditional over-the-air operations.  Last week, I conducted two sessions in Salt Lake City for the Utah Broadcasters Association, one on the legal issues to be considered in connection with broadcasters’ use of the digital media, and a second updating broadcasters on all the legal and regulatory issues that they face from Washington with their over-the-air operations.  Slides from the digital media presentation, Broadcasters Online: Legal Issues in the Cyber Jungle, are available here, and those from the broadcast update, the Top Ten Washington Issues that Should Keep Broadcasters Awake at Night, are available here.

To show how quickly things move in Washington, since the seminar, there have been two new developments that relate to topics discussed at the seminar.  On the day of the seminar, the Commission’s Enforcement Bureau came out with a policy statement about a certification that broadcasters need to include in all of their advertising contracts certifying that the advertising was not sold with a discriminatory purpose – as there will be a specific question about the certification in all license renewal applications.  We have summarized the requirements for the clause to be included in the advertising contract here


Continue Reading Digital Media Issues and a Washington Update for Broadcasters – Presentations to the Utah Broadcasters

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

A recent stir was created when a Midwestern television company was reported to have signed a contract with a state government agency, promising to market the agency and its programs throughout the state.  This promotion was to include a segment in the company’s televised news promoting the effects of the work of the agency.  Questions were immediately raised about whether this was prohibited by FCC rules.  But, when the news pieces ran, the company was very careful to state after these segments that they were sponsored by the station and the state agency.  As the FCC has no rules about what can be included in the "news" (and probably could not consistent with the First Amendment), the only real issue was one of sponsorship identification.  As the licensee did here, if the sponsor of the story is identified, making clear to the public who was attempting to persuade them on the issue addressed, there should be no FCC issues.

This is different from the issues that have arisen previously at the FCC, where there have been fines levied against television stations and cable systems for airing programming that was sponsored, but for which no sponsorship identification was provided (see our posts here and here).  This includes the video news release or VNR issues, where the FCC has fined stations for using news actualities provided by groups with a financial interest in the issue that was being addressed, but without identifying the fact that the material was provided by the interested parties.  Where a program addresses a controversial issue of public importance, the disclosure rules are more strict, requiring that the station not only disclose that it received money to air a story – but to also disclose anything that it got from the interested party – including tapes or scripts.


Continue Reading Selling Stories In a Broadcast Station’s News Programs – Remember the Sponsorship Identification

The FCC has taken the unusual step of issuing a Notice of Apparent Liability, i.e. an announcement that it has fined a broadcaster, against two TV station owners for failing to provide a sponsorship identification for political material sponsored by another Federal agency–the Department of Education ("DOE").  The proposed fines for these two broadcasters totaled over $70,000.  In connection with the same broadcasts, the Commission also issued a citation against the producer of the programs for failing to include a disclosure of the sponsor of the programs, warning that company that it would be fined if it were to engage in such activity in the future, even though the entity was not an FCC licensee.  These actions demonstrate the concern of the Commission over programs that attempt to influence the public, particularly those dealing with controversial issues of public importance, where those who have paid to do the convincing are not evident to the public.

These cases all stem from programs associated with conservative political commentator Armstrong Williams, who was paid by DOE to promote the controversial No Child Left Behind Act ("NCLBA") supported by the current administration.  He did so on two television programs:  his own show, titled "The Right Side with Armstrong Williams" and on "America’s Black Forum," where he appeared as a guest.  These shows were aired by various television stations without any sponsorship identification to indicate that Williams was paid by DOE to promote NCLBA on the air.

In one case, the television broadcaster received $100 per broadcast for airing Right Side, but failed to reveal that it had received any consideration.  The broadcaster claimed that the consideration received was "nominal," which is generally an exception to the sponsorship ID requirement.  However, the FCC noted that the exception for "nominal" consideration applies only to "service or property" and not to "money," holding that receipt of any money, even if only a small sum, triggers the requirement for sponsorship identification.


Continue Reading FCC Proposes Fines for Political Sponsorship ID Violations