CommLawBlog : Broadcast & Communications Lawyers & Attorneys : Fletcher Heald & Hildreth Law Firm : Telecommunications, FCC Regulation, Communications Act

According to the Bureau, the references to the cable company’s “targeted advertising” and “specialized channels” “distinguish [the cable company] from competitors and seek to promote its services”. Ditto for the bank’s claims of “meet[ing] all your banking needs” and “banking the old fashioned way” – in the Bureau’s eyes, those terms alone are “comparative and qualitative” (not to mention “visit one of our four branches”, which the Bureau concluded was an impermissible “call to action”). And double ditto for Bank of America’s reference to “flexible financing”, which “impermissibly seeks to induce patronage by encouraging listeners to explore the bank's financing options”, according to the Bureau.

And “cold refreshing beer”? Well, that “promote[s] that product through use of qualitative terms”, as the Bureau sees it.

Total cost of the resulting fine? A cold, refreshing $2,500, knocked back to $2,000 because the licensee has previously kept its nose clean, according to the Commission’s records.

As we observed last March, there is considerable latitude between the obviously promotional and the permissibly descriptive. While we object as much as the next guy to hearing (or seeing) “commercials” on noncommercial stations, the mere use of accurate, descriptive terminology – to our minds, at least – does not ordinarily offend our sensibilities. And it’s hard to imagine anything more accurate or neutrally descriptive than “cold refreshing beer”. After all, is it even beer if it’s not cold and refreshing? (When was the last time you were able to order up a warm, unsatisfying beer anywhere?)

And as soon as we get ourselves appointed to run the Enforcement Bureau, our views might count for something. Until then, though, they don’t – so we reiterate our suggestion from last March that all NCE licensees might want to take a closer look at their underwriting scripts and weed out any quasi-promotional language that may have snuck in over time. And given the most recent Bureau decisions in this area, it would be best to calibrate your commercial-o-meter to “hyper-sensitive”, just to be on the safe side.

The Commission “affords latitude to the judgments of licensees” in this area: if the licensee exercises reasonable, good faith judgment in this area, the FCC says it won’t second-guess that judgment. Which is all well and good, but danger still lurks in these waters because the Commission has provided only very broad guidelines with which to navigate them.

The Commission has posted on its website a couple of general discussions of its policies in this area. These include a 1992 reprint of a 1986 policy statement and a set of comments presented by Kenneth Scheibel, the Commission’s resident guru on such things, back in 1999. The policies can be summarized like this: underwriter announcements may identify the for-profit contributor and the goods or services which it offers, but those announcements may not “promote” those goods or services.

A prohibited “promotion” usually involves one or more of the following elements:

• Price information – Underwriter announcements may not contain any information about pricing. Particular prices of any goods or services, other indications of savings or monetary value associated with the goods or service, special discount offers that might be available – they’re all to be avoided.
• “Calls to action” – Language which encourages the audience to patronize the underwriter is also verboten. “Stop by our showroom” or “Try our product the next time you’re in the market” or “Call us today for more information” – steer clear of them all.
• Special inducements – This tends to bridge the first two elements, above. Think things like “We’re giving a special bonus to customers who sign up this week” or “Free samples to the first 50 callers” or “Pre-holiday discounts now in effect”.
• Qualitative or promotional language – This is where things tend to get fuzzy. You’re supposed to avoid language which appears to promote the qualitative desirability of the underwriter’s goods or services – for instance, “comparative” references stating or implying that the underwriter’s goods/services are somehow preferable (“the best plumbers in town” or “cheaper than everybody else” or “largest service department”). The prohibition also extends to language which goes beyond the mere identification of the underwriter’s goods or services. For example, you could say that an underwriter “provides a full line of widget products”, but not that that underwriter “provides a full line of widget products in a rainbow of beautiful colors and wonderful textures guaranteed to delight the eye and stay within your budget”.

The trouble is that the there is a lot of room between the obviously promotional and the narrowly identifying. And let’s be frank here: underwriters usually want, and probably expect, more than a “name/rank/serial number” announcement in return for their contribution. So the NCE licensee ends up pulled between the need to comply with the FCC’s less than specific limitations and the underwriter’s preference for at least a little bang for its buck.

The recent LPFM decision suggests that the NCE licensee’s ability to cater to that preference may be shrinking. The Enforcement Bureau identified the following terms as prohibited:

• With respect to restaurants: “a unique eatery” whose food is “made with only the freshest ingredients”; “their world-famous pepperoni rolls”.
• With respect to a copy center: “your one-stop shop for black and white [and] color copies. You can stop by one of our two locations.”
• An automotive service center: the owner “takes pride in their honest and reliable service”.

While we understand that these could all be read as “promotional” in some sense, each of these descriptives seems, well, descriptive. They certainly don’t go overboard and could reasonably have been deemed to be within the “latitude” that the FCC says it accords to NCE licensees.

Curiously, in singling out these particular portions of the various announcements, the Commission made no mention of several fairly clear price references elsewhere in the same announcements: “at affordable prices”, “she wasn’t charged an arm and a leg”, “park for free”, “free local shuttle service”. Since price information is forbidden, one might have thought that the Commission would be concerned about such references – but if it was, you can’t tell it from the decision. In other words, the Commission overlooked some seemingly blatant problematic language and instead whacked the licensee for language which appears – to us, at least – as much closer to, if not comfortably inside, the permissible range.

Meanwhile, the decision also includes the observation that “many” of the announcements in question “appear to exceed thirty seconds in length”. Of course – as the Bureau expressly acknowledges – there is no limit on the length of underwriting announcements. But that doesn’t stop the Bureau from raising its regulatory eyebrow for all to see: the Commission “has found that the longer the announcements, the more likely they are to contain material, as here, that is inconsistent with the ‘identification only’ purpose of such announcements.” So even though the Commission has not imposed any length limits on such announcements, it clearly has limits in mind – um, let’s say 30 seconds -- and it doesn’t seem shy about trying to get that message across.

This case may be an aberration, and may not signal a tightening of standards on underwriting announcements.  But at a minimum it should encourage all NCE licensees to take a closer look at their underwriting scripts and to weed out any quasi-promotional language that may have snuck in over time. This may require some uncomfortable conversations with underwriters unhappy that their announcements are being neutered, but that could be the cost of compliance.

Careful script review would be especially prudent in view of the current economic environment. Commercial broadcasters historically have often bridled at NCE underwriting announcements that tended to sound like real spots. After all, one station’s “underwriting contribution” is another station’s “advertising revenue”. Beyond a fair amount of grousing, though, the commercial folks have not seemed particularly enthusiastic about trying to call in the Federales to stop improper underwriting. But as the number of available advertising dollars shrinks, there may be more incentive for some commercial broadcasters to file complaints with the Commission in an effort to re-direct dollars from the NCE’s to their own bottom-lines. As Sergeant Esterhaus used to admonish the Hill Street Blues squad, “Let’s be careful out there.”

Not surprisingly, a number of the tossed-out NCE folks asked the Commission to give this another think.  And after five (count ‘em, five) years of re-thinking, the Commission has now decided that the NCE applicants deserve a break.  Accordingly, the Media Bureau staff will be announcing, in the near future, a window period during which the NCE applicants in the 19 or so mixed groups will be given a one-time-only chance to amend their applications “for the sole purpose of applying for a commercial station.”  This means that NCE applicants in the affected groups who wish to proceed will have to move forward as if they were commercial applicants – which means that they will have to participate in an auction. 

In its decision the Commission did not identify the particular MX groups, although it did say that the 19 or so groups include 13 FM’s, four TV’s and two FM translators.  (In order to be included in those groups, the affected NCE applications must have been both filed, and MX with a commercial application, as of April 10, 2003.)   Keep an eye out for the Bureau’s public notice of the opening of the window if you think that you may be one of the lucky ones.

NCE TV operators need not worry about incurring costs in acquiring and installing the newly-mandated gear: all NCE stations subject to the requirement will be compensated for reasonable costs of compliance by the Assistant Secretary of Commerce for Communications and Information (that would be our friends at NTIA, dipping into the same fund being depleted by DTV converter box coupons - these are your tax dollars at work). As it is expected that many stations will need to request funding in advance in order to complete the installation, the equipment installation deadline is the latter of the following dates: 18 months from the receipt of this funding, or 18 months from the effective date of the order (60 days after publication in the Federal Register, which has not occurred as of the date of this post).

Since the FCC will apparently be looking to PBS to provide the interface feed, it is not clear how non-PBS NCE stations will be factored into the system.  This will presumably be one of a number of questions which will (ideally) be clarified in the coming months.