Ban On "Electioneering Communications" Tossed By Supreme Court

Posted on January 21, 2010 by Jeff Gee

Court affirms right of corporations, unions, to advertise in support of or in opposition to political candidates

The U.S. Supreme Court has struck down a long-standing ban on corporate spending on political advertising, as well as a related portion of the McCain-Feingold campaign finance reform act that prohibited “electioneering communications” by corporations and unions in the days leading up to an election. This is welcome news to broadcasters and others in the media business as the decision is widely predicted to introduce a new pool of buyers of political advertising time.

The case (which we previously described here and here) arose, oddly enough, from a documentary movie about Hillary Clinton. The film, released in the thick of Ms. Clinton’s 2008 run for the presidential nomination, was – how can we say this delicately? – brutally critical of Ms. Clinton. Its producers wanted to broadcast ads for the film, but were concerned such ads might be deemed “electioneering communications” and, therefore, might violate the law. Accordingly, they took the matter to court, and the rest is now history.

The Supreme Court’s decision, which affirms the First Amendment rights of corporations and unions, involves (among other political advertising laws) the McCain-Feingold Act, more properly referred to as the Bipartisan Campaign Reform Act of 2002 or “BCRA”. In relevant part, BCRA prohibited “electioneering communications” by corporations and labor unions. Specifically, BCRA barred such entities from directly spending money on broadcast, cable or satellite communications that (a) referred to clearly identified candidates within 60 days of a general election or 30 days of primary election and (b) reached 50,000 or more persons. The Court found that that restriction (and earlier cases upholding bans on corporate political speech) amounted to unconstitutional censorship based solely on the identity of the speaker. 

Although the Court’s decision greatly expands the free speech rights of corporations, it does not lift all restrictions on political advertising. Corporations are still prohibited from making contributions directly to the campaigns of political candidates (although Political Action Committees, or “PACs”, may still do so). Moreover, the Court specifically upheld BCRA’s disclaimer and disclosure requirements (the spoken and textual announcements of who is responsible for an ad and whether it was authorized by any candidate). Also untouched by the decision are BCRA’s “stand by your ad” announcement and certification requirements that federal candidates must meet to qualify for lowest unit rates.

Nevertheless, for broadcasters facing a down advertising market, the positive effect of the Court’s decision may be considerable. Corporations and labor unions are now permitted to spend money directly from their treasuries on ads that support or oppose political candidates and ballot issues. This greatly expands the market for the upcoming mid-term election season and brings in players with even deeper pockets than PACs and candidate committees. A complete copy of the 183-page decision (with various concurring and dissenting opinions) can be found here (the official Supreme Court site, where access to the opinion was intermittent within a day of its release, possibly because of high demand) or here (the www.scotuswiki.com site).

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Supreme Court Says A Lot by Saying Little

Posted on July 2, 2009 by Kevin Goldberg

The United States Supreme Court engaged in a flurry of activity as it brought to the 2008-2009 term to a close this week.  However, for those interested in communications matters, the biggest effect will likely be from cases in which the Court did not issue an opinion.  In two terse-to-the-point-of-cryptic orders – one setting one case for a second set of oral arguments, the other a standard denial of certiorari – the Court sent important signals about both (a) the future of election laws as they pertain to advertising and (b) the application of copyright law to new technologies.

BCRA on the ropes?

Broadcasters, First Amendment advocates and others eagerly awaited the Court's opinion in Citizens United v. Federal Election Commission (No. 08-205), a case we summarized when the Court granted certiorari and initially set the case for oral argument.  Now, instead of issuing an opinion, the Court has set the case for re-hearing on September 9, setting off rampant speculation that a Supreme Court may be gearing up to declare the Bipartisan Campaign Reform Act of 2002 (a/k/a BCRA, a/k/a McCain-Feingold) facially invalid. 

Rather than simply deciding whether a full-length documentary movie about Hillary Clinton constituted the type of electioneering prohibited by BCRA, the Court instead directed the parties to answer the following question:

For the proper disposition of this case, should the Court overrule either or both Austin v. Michigan Chamber of Commerce, 494 U.S. 652 (1990), and the part of McConnell v. Federal Election Comm’n, 540 U.S. 93 (2003), which addresses the facial validity of Section 203 of the Bipartisan Campaign Reform Act of 2002, 2 U.S.C. §441b?

For readers unaccustomed to the patois of high-falutin’ constitutional litigators, a “facial” challenge is the classic blunt instrument, a broadside attack in which an entire statutory scheme is targeted. The alternative to a “facial” attack is an “as applied” attack, in which the party challenges not the entire statute, but rather just that portion of the statute that has been applied to the challenger. To analogize to the surgical arena, an “as applied” attack is akin to delicate laparoscopic surgery involving cute little incisions leaving minimal scars; a “facial” challenge is akin to Civil War battlefield amputations (think the hospital scene in Gone with the Wind).

Not surprisingly, courts tend to prefer the “as applied” approach – so it’s a big deal when the Supreme Court itself announces that it’s prepared to consider arguments about the facial validity of a statute.

When we discussed the Court's most recent pronouncement on BCRA (Federal Election Commission v. Wisconsin Right to Life, Inc.), we took particular note that  Justice Scalia, joined by Justices Thomas and Kennedy, would have declared BCRA unconstitutional, and that Justice Alito was moving in that direction.  With its order in the Citizens United, the Court could be indicating that another Justice or two may be ready to toss all, or at least a major chunk, of BCRA. (Note that the oral argument has been set for September 9, which in itself is highly unusual. Ordinarily, the Court recesses from the end of June until the first Monday in October.)

Betamax 2009

The Court's next big statement consisting of few words was the simple denial of certiorari in a case (Cable News Network v. CSC Holdings, No. 08-448) brought by several television networks and Hollywood studios against Cablevision. The nets and studios claimed that Cablevision's remote storage DVR (RS-DVR) system violates their copyrights by making an unauthorized copy at the cable system’s headend. Of course, the alternative to an RS-DVR system entails making the recordings on about a gazillion separate set-top DVR boxes located in the cable subscribers’ homes. The RS-DVR approach merely shifts the locus of the mechanical recording to a more efficient, centrally-located facility, while providing the end-user precisely the same end-result – the ability to view video content of the viewer’s choosing at a time and place convenient to the viewer.

The networks and studios initially won their case in United States District Court, convincing that court that Cablevision's system constituted a copyright violation.  Cablevision countered that there was no effective difference between (a) this cheaper method of storing content and (b) the use of multiple set-top DVR units. Since the latter approach was directly analogous to reliance on separate VCRs, and since individualized, private-use VCR recording had been held not to constitute copyright infringement, Cablevision prevailed on appeal to the U.S. Court of Appeals for the Second Circuit.  The nets and studios asked the Supremes to review the Second Circuit’s decision, and the Supremes have now declined the opportunity with the standard, brutally unilluminating, nine-sentence order (“The petition for a writ of certiorari is denied.”). That leaves the Second Circuit decision in place and Cablevision’s RS-DVR system alive and kicking.

This becomes the latest in a long line of cases, dating back to the Court's 1984 decision in Sony Corp. of America v. Universal City Studios, Inc. (the "Betamax" case), that allow for "time shifting" of television programs by a viewer for his or her later viewing in his or her own home.  It is expected to increase the use of cable set-top boxes with DVRs, which will, in turn, impact the advertising revenues collected by television networks.
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