A Closer Look at the 4A's Non-Discrimination Policy

Posted on November 8, 2011 by Anne Goodwin Crump

Commissioners cheer new policy, but is it really what they had in mind?

In late October, amid much congratulatory buzz, the American Association of Advertising Agencies (which sometimes refers to itself as the 4A’s) adopted a new “best practices” policy recommending that ad agencies adopt “non-discrimination vendor policies and procedures”. In the eyes of some – Commissioners Copps and McDowell, for two prominent examples – this move was just what the Commission had in mind back in 2007-2008, when it first announced that broadcasters would have to certify (in their renewal applications) that they (that would be the broadcasters) don’t discriminate on the basis of race or ethnicity in their advertising contracts.  The Commission’s action was designed to put a stop to, or at least curb, so-called “No Urban/No Spanish” dictates in ad time buys.

The Commission’s policy is not without its conceptual shortcomings. Not the least of those shortcomings is the fact that, since it’s applicable only to broadcasters, the FCC’s policy leaves a gaping hole in protection against the supposed discriminatory practices to which it is directed. After all, broadcasters are in the business of selling time for others’ commercial messages; broadcasters are thus generally not the ones making the decisions as to which station’s time will be purchased. Moreover, stations are often at least one step removed from those decisions, since advertisers frequently rely on ad agencies in crafting their campaigns, including the stations on which the ads are to be placed.

The new 4A’s best practices statement would seem at first blush largely to fill that hole. As noted above, the announcement was met with laudatory statements from two Commissioners. Commissioner Copps effused that “[t]hese best practices from the advertising agencies will pave the way for more equal treatment,” and that they will have “a positive impact in communities across the country.” 

Hold on there. Let’s take a look at the actual language of the “Non-Discrimination Policy Related to Vendor Selection”.

As it turns out, the policy includes some significant qualifying language which could cause it to fall short, in practice, of what the FCC had in mind.  As announced by the 4A’s, the policy reads:

NON-DISCRIMINATION POLICY RELATED TO VENDOR SELECTION

[Insert here name of agency: hereafter Agency] is dedicated to a policy of equal opportunity for all media vendors, suppliers and agents (“Vendors”). Subject to the protection of Agency’s and its clients’ confidential information, Agency will clearly communicate selection criteria to all appropriately qualified Vendors. Consistent with each Agency client's marketing communications strategies, effective media target audience planning, and efficient media buying practices, Agency policy is to grant equal opportunity to all such Vendors.

Complaint Review Process

A Vendor that feels it has been the victim of discriminatory buying practices by Agency shall be provided the opportunity to voice its dissatisfaction through Agency’s complaint review process. For purposes of this review process, discriminatory buying practices shall be defined as any buying policy that is in conflict with FCC media regulations, and thereby negates equal opportunity.

Agency will provide each of its Vendors with the opportunity to present in writing the basis of its dissatisfaction to Agency’s Discrimination Complaint Review Committee. Based on its findings, the committee may request a meeting with the Vendor to discuss all pertinent information related to the complaint.

Consider that language carefully: the equal opportunities to be accorded Vendors are to be “[c]onsistent with each Agency client’s marketing communications strategies, effective media target audience planning, and efficient media buying practices” (we added that emphasis.) What does that mean? Doesn’t it expressly acknowledge that “audience target[ing]”, “marketing strategies” and consideration of “efficien[cy]” are factors which are to be accommodated in the quest for “equal opportunity” for vendors? 

How would that work in practice? 

For example, what if a promoter hoping to sell season tickets to the opera believed, based on reliable and objective market research, that he could more efficiently reach his target audience by advertising on, say, a news/talk station rather than on one with an Urban format? This isn’t to say that no Urban listener would ever buy a ticket to the opera; but if you’re looking to reach a lot of opera buffs all at once, assume that the available research strongly indicates that by far your best bet is with news/talk audiences and not with Urban audiences. If the advertising agency representing that promoter acted accordingly and imposed a “No Urban” limitation on its ad buys, would that still be OK according to the 4A’s non-discrimination policy?  

What about an importer of a food product considered a delicacy among some South American cultures who wishes to advertise that product exclusively on Spanish-language stations – to the exclusion of other foreign-language or English language stations, including Urban music stations – would that be acceptable? 

Both approaches would seem to pass muster under the new 4A’s policy – since the buys in question would be (a) in line with the client’s marketing strategies and (b) designed efficiently to deliver the client’s message to the client’s chosen target audience. And neither approach appears to be motivated by any pernicious racism. But both approaches would, at least arguably, discriminate on the basis of race or ethnicity, and both would appear to involve the type of express “No Urban” order that the FCC seems intent on stamping out. Is that what the Commission had in mind?

And beyond that, when a Vendor that believes it has suffered from discriminatory buying practices, the 4A’s policy statement affords that Vendor an opportunity to express its concerns through a complaint review process. For purposes of this process, discriminatory buying practices are defined as “any buying policy that is in conflict with FCC media regulations, and thereby negates equal opportunity.” But there are no FCC rules (or “media regulations”) whatsoever on this subject. Nor are there likely to be. Sure, the FCC has raised its eyebrows at buying practices that exclude certain stations, and it has required broadcast stations to certify that they themselves maintain nondiscriminatory contracting practices, but the FCC has no jurisdiction over either the advertisers or the advertising agencies that make the actual buying decisions. So the 4A’s policy on its face does not impose any blanket prohibition against any particular type of advertising restriction.

This is not to say that we think for a minute that the 4A’s promotes improper discrimination or that its new policy is just a cleverly worded effort to sidestep the FCC’s wishes while seeming to embrace them.

Rather, the 4A’s policy appears to be a genuine, good faith effort to acknowledge and address the fact that the purchase of advertising, by its very nature, is a fundamentally discriminatory activity. Not “bad” discriminatory, but discriminatory in the sense that the advertiser has to decide where to spend his/her/its limited advertising dollars, and that decision-making process requires the drawing of lines. And when an advertiser draws lines, discrimination is occurring – discrimination based not on bias against race or ethnicity, but on the advertiser’s ability to achieve his/her/its particular commercial goals. 

With that in mind, perhaps it’s time to take another look at this whole issue, starting with the unarguable premise that all players in the advertising game are in it to make money. From the advertiser’s point of view, the goal is to sell as much of the advertiser’s product as possible. No non-discrimination policy will deter advertisers from attempting to meet that goal as efficiently as possible. Perhaps the 4A’s new policy, with its less-than-absolute language and its apparent acknowledgment of the priority of advertisers’ strategic interests, may be the best policy after all.

Now if only the FCC would recognize the practical reality that not all “discrimination” – including some discrimination which might arguably be based on race, ethnicity, gender or other factors – is necessarily unlawful, inappropriate or even undesirable.
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Saber-Rattling On The Nondiscrimination-In-Advertising Front

Posted on March 22, 2011 by Davina Sashkin

“Enforcement Advisory” wags threatening finger at broadcasters, but still leaves questions unanswered. After three years, that’s par for the course.

The FCC has unleashed a new “Enforcement Advisory” announcing its intention (in the Chairman’s words) to “vigorously enforce its rules against discrimination in advertising sales contracts”. The Advisory also “alerts” broadcasters about their “new” obligations concerning nondiscriminatory advertising contracts. Unfortunately, the Advisory (and its accompanying news release) leave something to be desired.

Which is par for the course with respect to the nondiscrimination-in-advertising policy (NIAP).

Three years ago, the FCC released what has come to be known as the Diversity Order, a sprawling piece of work by which the Commission sought to increase, um, “diversity” in the broadcast industry. The order included new and amended rules, a sprinkling of new and revised policies, some expressions of good intentions, and a bunch of proposals.

In two paragraphs buried in the middle of the Diversity Order (those would be Paragraphs 49 and 50, if you’re looking), the Commission announced that it would henceforth “require broadcasters renewing their licenses to certify that their advertising sales contracts contain nondiscrimination clauses that prohibit all forms of discrimination, as outlined below.” The phrase “as outlined below” suggested that further details about what this meant for affected broadcasters might be found elsewhere in the Diversity Order. 

But no such details were to be found.

To the contrary, citing the First Amendment, the Commission explicitly declined to tell broadcasters precisely what language their advertising contracts should or should not contain. Instead, the Commission simply reiterated that it would “require broadcasters renewing their licenses to certify that their advertising contracts do not discriminate on the basis of race or gender and that such contracts contain nondiscrimination clauses.”

Overall, the Diversity Order’s terse treatment of the NIAP was less than thorough – a fact underscored two years later when the Commission issued an “erratum” revising the phrase “race or gender” to read “race or ethnicity”. Oops.  No explanation was offered. Nor did the erratum address the fact that, by deleting “gender”, the Commission was at least implicitly condoning discrimination based on gender.

Importantly, the NIAP was not incorporated in any rule proscribing discrimination in advertising. (By contrast, the Commission did adopt a specific rule – Section 73.2090 – prohibiting discrimination in the sale of broadcast stations.) All the NIAP did was to impose a new certification requirement in the broadcast renewal application. Since the NIAP was announced in 2008, and the next cycle of broadcast renewals wasn’t due to start until 2011, little was heard of the NIAP in the meantime.

Time moved on, the years passed, and lookee here – it’s 2011! Already! Which means that thousands of broadcasters will soon be required to sign off on the certification in their renewal applications. 

But since the Commission hasn’t bothered to shed any meaningful light on the underlying conduct that broadcasters are expected to be certifying about, many broadcasters have been hoping that maybe, just maybe, the Commission would provide some guidance: Do I need to re-write all of my advertising sales orders to include some magic language (and if so, what might that language be)? What if the advertiser uses a standard form contract for everyone – am I expected to forego a sale if they refuse to incorporate this language? How can a broadcaster confidently certify anything about the intent of the advertiser? If the Commission’s trying to stop discrimination against urban and Spanish format, what happens if an advertiser chooses ONLY Spanish stations or ONLY urban stations – isn’t that race/ethnicity-based discrimination too? If an advertiser sells cowboy hats, is it wrong that he advertises on my country music station but chooses not to buy time on my R&B station? (We could go on, but you get the point.)

So when the Enforcement Advisory appeared, there was at least some hope that the Commission was finally ready to let the industry in on the secret.

No such luck.

Instead of guidance, the Advisory offers not-so-veiled threats about enforcement of the policy without any particular indication of what will constitute a violation. Indeed, in the public notice the Chairman, apparently unaware that the policy is just that – merely a policy – refers incorrectly to the policy as “rules” or a “rule”. If it were a rule, it would show up somewhere in 47 C.F.R. It doesn’t. If it were a rule, the Commission would be able to impose a fine for its violation. It can’t.  

[Of course, there’s always a chance that we’re missing something here. Nobody’s perfect. So if anyone can point us to a section of the FCC’s rules that contains any provision that codifies the NIAP, we would appreciate it if you would let us know by any means that you feel comfortable with – email, phone, comment below, whatever. We’ll happily post a correction, with full credit to you.]

Now let’s be clear. Inappropriate discrimination – on the basis of race, ethnicity, gender, religious belief or other similar factors – is wrong and should not be tolerated. But while there are some areas in which the Commission can effectively police improper conduct, it’s not clear that private contractual arrangements are among those areas. After all, even in the Diversity Order the Commission referred to “nondiscrimination laws”, acknowledging that there are legal mechanisms other than FCC regulation with which the government can address such problems. And the misconduct which appears to be the FCC’s primary concern is not misconduct by broadcasters, but rather by advertisers and/or their agents. Rattling the enforcement saber at broadcasters seems a curiously misdirected effort, especially when there are other Federal agencies (the FTC comes to mind as one example) which should already be enforcing the “nondiscrimination laws” to which the FCC itself referred.

We have addressed the question of how one might deal with the NIAP in previous posts (for example, here), long before the Advisory. The Advisory provides little reason to alter what we have said there. But the problem with the situation the Commission has created is that it is difficult, if not impossible, to know for certain what the Commission expects here. Indeed, even the Enforcement Bureau can’t seem to figure it out. The public notice accompanying the Advisory says that the Bureau “will work in close collaboration with the Media Bureau to give this new requirement meaning.”  How could the “new” requirement (that is, the policy that was adopted more than three years ago) still need to be given “meaning”?  

Unfortunately until the Commission sheds more light, broadcasters will have to tread carefully to certify according to their reasonable beliefs and due diligence efforts – whatever that means.
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Revving Up For Renewal Season II

Posted on March 15, 2011 by Dan Kirkpatrick

Media Bureau formally announces revised renewal form, procedures for upcoming license renewal cycle

The Media Bureau has released a Public Notice announcing revisions to the Form 303-S license renewal application and providing a few more details regarding the upcoming renewal process. (You knew this was going to happen because we told you it was going to.) The notice largely tracks the information we have previously reported, but it does include a couple of interesting surprises worthy of mention and a couple of non-surprises worthy of attention. 

First, the revised renewal form requires commercial applicants to certify that: (a) their advertising contracts do not discriminate based on race or ethnicity; and (b) those contracts in fact contain nondiscrimination clauses. We knew that was coming; what we didn’t know for sure was the precise time frame that the certification would cover. Now we do: while the language of the certification is still in the present tense (“Licensee certifies that its advertising sales agreements do not discriminate...and that all such agreements…contain nondiscrimination clauses” [emphasis added]), the Notice indicates that the certification will refer retrospectively back to March 14, 2011 (i.e., the date of the Notice). 

Since the FCC first generally alerted broadcasters in 2008 that some certification would be required, licensees have had plenty of opportunity to get their nondiscriminatory houses in order. Those who haven’t done so can still correct the problem by notifying all advertisers on the books as of March 14 that all advertising sales agreements effective on or after that date are deemed to include the necessary nondiscriminatory provisions. (We have previously posted some sample language that might do the trick here.)

The second surprise – actually, it turns out to have been more like a head fake, we think – involves certifications of compliance with the RF exposure guidelines.

When the Bureau’s anticipated changes in the renewal form first emerged last Fall, one of the highlights was the fact that radio licensees would be relieved of the burden of submitting any exhibits to their RF certifications. But the Notice now could be read to say otherwise:

For stations that have had a material change in their RF environment since they last received a grant of a license application or license renewal application, either an exhibit or a worksheet demonstrating compliance with the RF exposure limits is required.

That seems to say that, at least in some limited cases, it may be necessary to submit something – like an exhibit or worksheet. But that would be flatly inconsistent with what the Commission said last Fall when it spoke, repeatedly and unequivocally, of the “elimination of the exhibit requirement for radio broadcasters”. What’s up with that?

After reading this over several times and chatting informally with the Commission’s staff, we think that the key to understanding the Notice is as follows: while the Notice does say that an exhibit or worksheet demonstrating compliance is, in some instances, “required”, it does not say that that exhibit/worksheet is “required to be submitted with the application”. That is, where there has been a material change in the RF environment of your transmitter site since grant of your last renewal or license application, you will have to work through the worksheets to confirm that the site is still in compliance. (And if the worksheets don’t confirm that, you’ll need to enlist the help of a consulting engineer to study the situation.) But once you get to the point that you can confirm compliance, you would simply so certify and that would be that. No separate supporting documentation would need to be submitted with the renewal application (although it would be a good idea to hold onto your worksheets or engineering study, in case somewhere down the line the FCC asks you to explain your certification).

We’re reasonably confident that this is what the Bureau has in mind – but we’ll keep our eyes out, and if we get any contrary information, we’ll post it here. In any event, though, if you are a radio licensee and there have been material changes at your site since your last renewal/license grant, you probably want to begin looking at the worksheets and, if necessary, lining up engineering services soon.

The Notice also included a couple of useful reminders. 

For one, this renewal cycle the Media Bureau will not be mailing postcards to licensees reminding them of their upcoming renewal applications. In other words, each licensee is on its own to remind itself when its renewal is due. (Where the Bureau has an e-mail address, it will attempt to remind the licensee by e-mail – but if no such reminder arrives, that will not excuse a failure to file on time.) As a reminder, the first license renewal applications are due for radio stations in D.C., Maryland, Virginia and West Virginia on June 1.

Second, the Notice advises that the earliest date on which renewals may be filed is May 2. Form 303-S may be available on CDBS prior to May 2, but it can’t be submitted until then – no matter how many eager beaver licensees may prefer to get it over with before then. While there is currently (i.e., as of March 15) a version of Form 303-S listed on CDBS, don’t be fooled: that’s probably NOT the new version. Check under the official OMB number at the top right side of the first page – if it doesn’t say “March 2011”, it’s not the new version. If it’s not the new version,  don’t spend any time looking at it (or the instructions, which are also outdated). If you want to see a PDF version of the new form and instructions, you can find that on the FCC’s forms page. But that version is just for reading – you can’t complete and submit it on line. You’ll have to wait for May 2 for that.

As always, check back here for updates.
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Update: Form 303-S

Posted on February 16, 2011 by FHH Law

Broadcast renewal form still in flux following OMB approval

In reporting on the OMB’s approval of the New and Improved Form 303-S, we mentioned that, according to the FCC, the certification concerning non-discrimination in advertising would not appear when the form was being filled out by a noncommercial licensee. The form would be smart enough to know not to bother to present the certification option to a noncom applicant, since that option would theoretically be irrelevant to noncoms. Schweet!!!

Oops. It turns out that, even though that’s what the Commission told OMB, that’s not the way it’s going to work. The Commission has instead chosen to do it the old-fashioned way, i.e., by providing an “N/A” (for “not applicable”) option for NCE respondents. It seems that the fancy now-you-see-now-you-don’t approach to the certification would have required more tinkering with CDBS than the Commission was willing to undertake . . . particularly in view of the fact that the Commission is looking to phase CDBS out as part of a wholesale overhaul of its electronic systems over the next couple of years.  No need to trick out the old Datsun if you're going to be trading it in on a Volt pretty soon.

So despite what the Commission told OMB in the initial go-around, the new form (when it’s unleashed in the near future) will include the classic “N/A” option relative to noncommercial applicants. 

Look for a public notice from the Commission addressing the overall renewal process (including the New and Improved Form 303-S) in the near future.

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Form 303-S: Improved And Approved

Posted on February 11, 2011 by FHH Law

Revised broadcast renewal clears OMB hurdle, now ready for first round of radio renewals

The recently revised broadcast license renewal form (FCC Form 303-S) has received the formal blessing of the Office of Management and Budget (OMB) – which means that it’s now just about ready for use by radio licensees whose renewals are due by June 1. (That would be licensees in Maryland, the District of Columbia, Virginia and West Virginia.) OMB signed off on the updated form on February 2 (a scant week after the close of the comment period); that approval has now been published in the Federal Register. Following a 30-day post-publication waiting period, the revised form will officially be “effective”.

The limited materials generated in connection with the OMB review process do contain a couple of items worthy of mention.

First, the FCC’s “supporting statement” confirms our post from last September relative to the basis for the new certification about non-operation. In its statement the Commission specifically quotes from a 2001 decision holding that a “licensee will face a very heavy burden in demonstrating that it has served the public interest where it has remained silent for most or all of the prior license term.” Since serving the public interest is a crucial component of the renewal process, prolonged failure to operate could be a serious impediment to renewal.

Second, our friend John Crigler (on behalf of a number of noncommercial broadcast organizations) filed comments suggesting that the new certification concerning non-discrimination in advertising contracts should include a “not applicable” option for noncoms. That would make sense because, by definition, noncommercial licensees can’t sell “advertising” and thus don’t have any “advertising” contracts to certify about. The Commission rejected that suggestion, however. It turns out (according to the Commission, at least) that when an NCE licensee indicates (in the first section of the form) that it’s noncommercial, the form will not display the advertising certification at all.

As noted, the revised form will be “effective” as of March 14, 2011, i.e., 30 days following Federal Register publication. Media Bureau officials have indicated that they’re planning to issue a public notice on or about that effective date to provide additional guidance for renewal applicants. Check back here for updates.

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Update: Revised Forms Head To OMB

Posted on December 27, 2010 by FHH Law

The mills of bureaucracy grind slowly, but they do eventually grind. 

Last October we reported on changes to the broadcast license renewal application form (Form 303-S) that were in the works. Those changes appear to have passed the first bureaucratic hurdle: having invited public comments (which were due by December 13) and then having waited a decent interval (that would be about two days), the Commission has passed its proposed changes along to the Office of Management and Budget for OMB’s review. Notice of that development has now been published in the Federal Register. This gives everybody yet another opportunity to toss in any comments they might have about the revised form – but this time those comments should be directed to OMB. If you’ve got anything to say to OMB, you’ve got until January 26, 2011 to say it. Once that deadline has come and gone, look for the revised form to be officially released by the Commission, just in time for the next round of renewal applications which are due by June 1.

And along the same lines, the Commission’s efforts to plug a loophole have advanced to OMB. You may recall our post from last November, addressing the question of whether or not digital LPTV, Class A TV and TV translator stations were expected to file Form 317 in December. (Form 317 is the annual “Digital Ancillary/Supplementary Services” report in which digital TV stations tell the Commission whether they’ve aired any subscription-like services on any of their digital streams.) While there were ample indications that the Commission might have intended LPTV, Class A and translator licensees to file – and while some such licensees may already have been filing the reports out of excess of caution – the Commission hadn’t bothered to amend Form 317 to include such stations within its reach. And without a properly revised form, LPTV’s, Class A’s and translators were off the hook.

The Commission figured that out last Fall and started to amend its form, but it was too late to do any good before the December 1 deadline for this year. But next year is a different story. The revised form has now been shipped over to OMB for its once-over. Interested parties have until January 26, 2011 to submit comments to OMB. Given the 11-month headstart, we fully expect that the revised Form 317 will be awaiting all LPTV, Class A and translator licensees come the next deadline in December, 2011.

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FCC Takes Wraps Off Revised Broadcast Renewal Form

Posted on October 13, 2010 by Harry Cole

With the first batch of the next round of broadcast renewals due by June 1, 2011 – less than eight months from now – the FCC has announced plans to tweak the renewal application form (FCC Form 303-S) in five discrete ways. (It was just a month ago that we told you all to be on the lookout for such an announcement.) A copy of the form with the proposed revisions is attached here. 

The five proposed changes include the following:

  • The revised form’s instructions will include a new definition of “eligible entity” designed to reflect the Commission’s “Equity Debt Plus” standard for determining the attributability of certain interests. The version of that standard currently in effect was announced in the Commission’s Diversity Order adopted back in 2007. Presumably the language in the new renewal form will track corresponding language in Forms 301, 314, 315 and 345, all of which were revised about 18 months ago to address the same issue from the 2007 Diversity Order. (Why Form 303-S wasn’t taken care of at the same time as those other forms is not clear – perhaps the Commission felt no need to revise the renewal form at that point because no renewal applications would be due before 2011.)
  • Section II of Form 303-S will contain a required certification that the licensee’s “advertising sales agreements do not discriminate on the basis of race or ethnicity and that all such agreements held by the licensee contain nondiscrimination clauses.” (The form’s instructions will also be revised to address that certification.) This, too, is a response to the 2007 Diversity Order, which for the first time imposed the explicit obligation that advertising contracts contain nondiscrimination clauses. As we observed back in 2008, the Diversity Order technically became effective in 2008, but the certification requirement reaches back to the beginning of the license term, i.e., considerably before then. That could create some practical difficulties (although Steve Lovelady’s post from October, 2008, might provide some guidance around those difficulties).
  • Section III of the form will include a new question (Item 4, with accompanying instructions) requiring the licensee to certify that, during the preceding license term, its station was neither silent, nor operating on less than the required minimum schedule, for any period of more than 30 days. If the licensee can’t so certify, it will have to provide an exhibit specifying “the exact dates ... on which the station was silent or operating for less than its prescribed minimum hours.” If you don’t know what this is about, check out our post on the topic from last month. Note also that the proposed revisions to Form 303-S make clear that, for purposes of this certification, the “transmission of ‘test signals’ does not count toward a station’s minimum operating hours.”
  • The proposed revision of the form would eliminate the longstanding requirement that full power AM and FM licensees submit an exhibit to demonstrate compliance with RF limits. Historically, such an exhibit has been required if the renewal applicant wasn’t eligible to use the RF worksheets in the old Form 303-S. Under the revised form, all applicants would still have to certify that their facilities comply with the Commission’s maximum permissible RF limits – but no additional exhibit would be expected from full power AM and FM folks.
  • Finally, Section V (Item 4) of the form would be changed to clarify that LPTV stations still need to file Form 396 with their renewal application, even though they might not have to file an EEO-related public file report and post that report to their website. Previously, the form required a certification that the licensee had created the public file report and posted it to the station’s website “as” required by the rules. The new form would substitute the word “if” for the word “as” because not all LPTV licensees are subject to public file report requirement.

The good news in all this is clearly the lifting of the RF exhibit requirement from the shoulders of full power AM and FM stations. This should relieve one and all – both private sector applicants and FCC application processors – of an irksome chore, which is all to the good.

Interestingly, while the Commission did publish a notice about its proposed changes in the Federal Register, the Commission stopped short of also publishing a copy of the revised form. You’d think that the FCC would have made the new form available in the Federal Register in order to give everybody the maximum opportunity to look it over as soon as possible. Apparently the Commission doesn’t think like that. While this approach harkens back to the unfortunate situation we all encountered with the FCC’s effort to revise the Broadcast Ownership Report form (FCC Form 323), we need not worry about a re-play of that here. After reading the Federal Register notice, we wrote to the FCC asking for a copy of the form (which we have linked above and here), and the Commission kindly sent one over within a couple of hours.

At this point we can’t say for 100% certain that there aren’t any additional changes lurking in the 39-page form. The ones described above are the ones the FCC has identified in its Federal Register notice. The publication of that notice kicks off a 60-day comment period. Anyone wishing to chip in his/her two cents’ worth relative to the proposed changes has until December 13, 2010 to let the FCC know. After that, the Commission will forward the proposed form over to the Office of Management and Budget, which should give one and all another 30 days in which to comment. Given that timeframe, we can probably expect to see the new and improved Form 303-S online and ready for filing early in 2011, in plenty of time for the first round of renewals.
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Something Erratum In The State Of . . .

Posted on April 10, 2010 by Steve Lovelady

Commission replaces “gender” with “ethnicity” in policy against discrimination in advertising contracts.

It’s really never too late to admit to a mistake. And so it is that, more than two years after the fact, the FCC has issued an Erratum making a seemingly major change to language originally announced in the Commission’s Diversity Order. (That Order was adopted by the Commission in late 2007, but was not released until March, 2008.) The mistake? When the Commission said “gender” in the original order, it didn’t really mean “gender”; it meant “ethnicity”.

Gender – ethnicity . . . ethnicity – gender . . . you say “tomato”, I say “tomahto”. That’s the kind of mistake that just about anybody could make, right?

The changed language appears in the policy designed to discourage the advertising business practice of including “No Urban/No Spanish” clauses when placing commercials on stations. (For a refresher course on the no-discrimination policy, click here.) The policy, as originally articulated in the Diversity Order, required broadcasters to certify, in their next license renewal applications, that their advertising contracts don’t discriminate on the basis of race or gender. Now the FCC says that it really meant that the certification should specify nondiscrimination on the basis of ethnicity rather than gender.

We confess that, when the Diversity Order was first issued, we were a bit perplexed as to why the FCC was insisting that broadcasters’ certifications refer to “race or gender”. After all, the new policy was based on concern about alleged “No Urban/No Spanish” advertising orders, not “No Urban/No Female” orders. So when the Erratum explains that the change is necessary to “more accurately reflect the Commission’s clear intent”, it’s hard to argue – even if it makes you wonder (a) how, exactly, the mistake got through in the first place and (b) why it’s taken more than two years to acknowledge and correct it.

The Erratum offers no explanation about why the change is being made now (as opposed to, say, April, 2008) – but we can speculate. The required certification is to be included in Form 303-S, the broadcast renewal application form. Since the most recent broadcast renewal cycle had just wrapped up in early 2007 – less than a year before the Diversity Order was adopted – and the next wasn’t going to start until 2011, the Commission probably didn’t feel any pressure to revise the form to include the certification back then. But now, with the first renewal applications of the next cycle due in little more than a year, the Commission may be starting to focus on nitty-gritty details like how, exactly, the certification should be worded.

The precise wording of the certification is not unimportant. Of course, we know from the Diversity Order that, come renewal time, each broadcaster will be expected to certify that: (a) the broadcaster’s advertising contracts do not discriminate on the basis of race or gender (oops, make that race and ethnicity); and (b) such contracts contain nondiscrimination clauses. But the Commission still hasn’t bothered to explain exactly what it expects such “nondiscrimination clauses” to say. 

In the wake of the Diversity Order, we took at stab at crafting a nondiscrimination clause to address the problems targeted by the Commission. The trouble is, we really don’t know for sure whether that good faith effort will be satisfactory to the Commission come renewal time. In fact, we know for sure that our original suggested language will definitely not be satisfactory, since our language – which was based on the FCC’s own language in the Diversity Order – referred to “race and gender”, rather than “race and ethnicity”. We know now that that was wrong – but how was anybody to know that before the recent Erratum, since the Commission had been very clear up to that point that it was targeting discrimination against “race and gender”?

In any event, anyone who has been trying to assure their ability to certify accurately that they have complied with the FCC’s nondiscrimination policy – whether by sticking our suggested contract language or somebody else’s into their advertising contracts – would do well to take the time, now, to substitute “ethnicity” for “gender” where appropriate. And if you previously sent out letters to all your advertisers indicating that the nondiscrimination language should be deemed to be a part of all agreements previously entered into, you might want to send out another batch of similar letters, this time substituting (you guessed it) “ethnicity” for “gender”.

And now that the Erratum has re-focused everybody’s attention on the nondiscrimination certification requirement, we offer a couple of questions to ponder.

First, when the renewal application certification language is finally adopted by the Commission, how will it deal with the fact that, from 2008-2010, the agency’s direction had been to avoid discrimination based on “race and gender”, not “race and ethnicity”? 

Second, how are we to interpret the fact that the Commission has removed “gender” from the mix, rather than simply inserting “ethnicity” along with “race” and “gender”. Doesn’t that seem to send the somewhat distasteful message that advertising contracts that discriminate based on gender are OK?

Third, while we may all agree that ethnic discrimination can be a bad thing, is it really advisable to impose a blanket prohibition which seems to bar, or at least discourage, all ethnicity-based advertising? For example, if an advertiser wants to target a particular ethnic community with spots in that community’s native tongue, wouldn’t it be perfectly reasonable to limit the run of those spots to stations broadcasting in that language? So if you have an ad in Chinese, directed (obviously) to a Chinese-speaking audience, wouldn’t you want to be able to specify “Chinese language radio, no English or Spanish or Arabic”? But wouldn’t such a limitation run afoul of the nondiscrimination policy as it currently stands? Is this really what the Commission wants?

Fourth, where do noncommercial stations fit in here? The Diversity Order (at Paragraphs 49-50, if you’re inclined to check) referred only to “advertising” contracts. As we all know, NCE stations air “enhanced underwriting announcements”, not ads. But many might argue that it’s all pretty much the same thing. Plus, NCE stations use the same Form 303-S as commercial licensees for their renewals. Our guess is that NCE licensees are subject to the nondiscrimination policy, But the Commission hasn’t said so expressly.

And finally, exactly how does imposing the new certification requirement on all broadcasters (including broadcasters who may themselves happen to be the victims of the “No Urban/No Spanish” practices) have any effect at all? Isn’t it the advertiser (and its ad-buying agency) – and not­ the broadcaster – who is the real source of this practice? If an advertiser (or its agency) is willing to discriminate, what is to prevent it from lying to the broadcast station? In other words, irrespective of a licensee’s certification, the underlying discriminatory practices may still be going on outside the Commission’s reach.
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