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

Who’s who?

One of the first things stations need to do is determine which elections are likely to generate requests for advertising time. On November 6, 2012, the general federal election will include races for the offices of the President, Vice President, all of the House of Representatives and one-third of the Senate. Numerous state and local offices also will be up for election on November 6. Your local board of elections should be able to give you a list.

Once you know which offices are up for election, you will need to decide which of those races will be permitted to buy time on your station. All candidates for federal offices are entitled to “reasonable access” to your station. That is, you must sell time (within certain limits) to the candidates for President, Vice President and the US House and Senate. 

By contrast, candidates for state and local office have no absolute right to reasonable access – stations can refuse to sell time for such races. If, however, a station sells ads to one candidate for a particular office, the FCC’s “equal opportunities” rule requires that station to sell ads to all qualified candidates for that particular office. Stations may pick and choose among the state and local races, however. For example, a station could choose to accept ads from state senate candidates but refuse them from county council candidates. 

Non-candidate advertising – advertising from groups (including “public interest” groups) or individuals other than candidates or their committees – are never entitled to access as a matter of right. Stations are free to accept or reject “issue ads” as they see fit, although certain liabilities and record-keeping requirements may be attached to accepting such ads. 

What’s what?

One of the most important things each station should have done prior to the election season was to prepare its political disclosure statement – a written statement to be provided to candidates that describes the station’s political ad rates, time classes, and sales practices. The disclosure statement is not technically required by the FCC’s rules, but it is vitally important that every station is clear, upfront and consistent about the types of advertising time it will sell, which races will be allowed to buy time and the rates the station will be charging for the time. Obviously, a written statement can be infinitely helpful to station personnel in this regard and can also serve to avoid disputes about what information may or may not have been relayed by station personnel in less formal, oral interactions.

The disclosure statement should be kept up-to-date throughout the campaign, and all personnel involved with the sale of advertising time should be familiar with the disclosure statement and adhere to the policies set forth in the disclosure statement at all times. Sophisticated political campaigns keep a close eye on how much time their opponents buy and how much they pay for the time. 

In addition to information on the classes of time that may be purchased and the rates that will be charged for each class, the disclosure statement should include information on how and when preemptions may be made, payment policies, and any other station policies that could reasonably affect political advertising buys.

Any discrepancies between the rates or access given to different candidates will almost certainly subject a station to complaints. For those stations already subject to the FCC’s new online political file rules – those would be the affiliates of the Big Four Networks affiliates in the top 50 markets – this is all the more true this year. With this information being posted online, it is more readily available than ever. Stations also may now be subject to complaints not only about the rates and access they are granting but also about the sufficiency of the information they are posting to their online political files.  

How much?

As part of preparing the disclosure statement, each station of course needs to determine the “lowest unit charge” (LUC) to which qualified candidates are entitled. Calculating the LUC can be tricky. Simply stated, the LUC is “the lowest rate of the station for the same class and amount of time for the same period.” Put another way, it is the rate for any given class of time granted to the station’s most favored advertisers once all discounts, bonuses and other considerations have been taken into account. Keep in mind that most stations will have several different LUCs because they sell several different classes of time (different day parts, preemptible/non-preemptible, etc.). 

Not all political advertising is entitled to LUC rates. As a threshold matter, LUC rates apply only during the “LUC windows”. For this year’s general election, the LUC window is currently open, and will run through the day of the general election (November 6, 2012). During the LUC rate window, the LUC rates must be offered to all qualified federal candidates and their authorized committees and all qualified state and local candidates and their authorized committees (assuming the station has decided to run ads for that particular state or local office). 

To qualify for the LUC rate, the advertising must include a “use” of the broadcast station by a qualified candidate (a “use” is defined as any “positive appearance of a candidate whose voice or likeness is either identified or is readily identifiable”). In addition, to qualify for LUC rates, federal candidates must meet the “stand by your ad” certification requirements described below. 

Advertising that is not sponsored by a qualified candidate (e.g., issue ads run by political action committees, “Super-PACs,” so-called 527 groups, or other organizations) is not entitled to LUC rates.  

The job’s not over until the paperwork . . .

At this late stage of the game it’s also important for stations to keep up with the paperwork burden involved with political advertising. Stations must keep a political file (which is an essential component of the station’s public inspection file) that includes records of all requests for political time made by or on behalf of any candidate. As noted above, starting this year, Big-4/Top 50 stations must maintain their political files online as part of the FCC’s new on-line public file system (other stations will not need to post the political portions of their files online until 2014). 

The political file records (whether maintained on paper or online) must include:

the name of the candidate and office involved;
whether or not the request was accepted;
the schedule of time provided;
the spot length;the classes of time purchased;
the rates charged;
the date and time the spots actually aired;
the name, address and telephone number of a contact person for the candidate/committee, along with the name of the authorized committee treasurer; and
the rebates paid to the candidate (if any). 

As the station is obligated to keep these records and make them available for public inspection, it must be certain that all relevant staff members are aware of the obligation to collect and keep this information starting when an inquiry for political advertising time is made (although mere rate inquiries do not need to be recorded). Moreover, these records must be continually updated as relevant information develops (e.g., when the spots are run, etc.).

In addition, broadcasters must now keep records of all paid political advertising that “communicates a message relating to any political matter of national importance.” This requirement applies to all political advertising, not just candidate advertising. Thus, even though non-candidate advertisements are not subject to reasonable access, equal opportunities or LUC rate requirements, they are subject to this recordkeeping requirement. 

The records of such ads must include: 

a record of each request to purchase time;
whether or not the request was accepted;
the rate charged;
the date and time the ads aired;
the class of time purchased;
the issue covered by the ad;the name of the candidate and office to which the ad refers (if applicable); and
the name of the purchaser, the name, address and telephone number of a contact person and a list of chief executive officers/board of directors. 

Again, relevant station personnel must be made aware of their responsibility to collect the relevant information when requests for air time are made.

Finally, candidates for federal office must provide to the station a particular written certification at the time the advertising time is purchased. In this “stand by your ad” certification, the federal candidate must certify whether or not the advertising will refer to another candidate for the same office. If the ad will refer to an opposing candidate, the certification must also state that at the end of the ad a statement will be included in which the candidate identifies himself or herself as well as the office being sought and affirmatively states that the candidate has approved the broadcast. Television ads also must include an image of the candidate and a printed statement that the candidate or the candidate’s committee paid for the broadcast, the name of candidate, and that the candidate approved the broadcast. The FCC has advised the stations may (but are not required to) deny LUC rates to federal candidates that do not meet the “stand by your ad” certification requirements.

Recent Developments

As discussed above, the most important recent development in political broadcasting, at least for those stations to which it applies, is the limited implementation of TV online public file requirements. Another issue that appears to raise its head every year is the issue of who is a “legally qualified candidate.” As noted above, stations must accept ads from such candidates and, important, they cannot edit or censor the content of these ads. A number of candidates in recent years have attempted to take advantage of these provisions to force stations to sell them time to air highly controversial advertisements. In a decision earlier this year related to advertising in the Super Bowl®, the FCC reiterated its policy that to qualify for “reasonable access,” a candidate must make a “substantial showing” that they are a legally qualified candidate. 

At this point, many states have their ballots already set, which may presumptively qualify a candidate, but stations should be aware of the requirements for legally qualified candidates, and, most importantly, should keep in mind that regardless of the content of those “legally qualified candidates” advertisements, they cannot censor or edit them (although they can run a disclaimer before and/or after the ad noting the station’s inability to edit it). Stations should also keep in mind that even for candidates who are not entitled to “reasonable access” (i.e., state and local candidates), the “no censorship” requirements apply, although the station in those cases may be free to refuse to run the ad entirely, subject to equal opportunities requirements.

Another recent development that probably will not have a significant impact this year but could in the future is a decision from the Ninth Circuit United States Court of Appeals, released in April, that overturned the longstanding ban on political advertising on non-commercial television stations. That decision, however, has not yet gone into effect, so non-commercial stations should still abide by the prohibition on advertising.  The ultimate resolution is also still up in the air, as the FCC and Justice Department have requested rehearing. Even if advertising is ultimately approved, non-commercial station should remember that they are not required to accept such advertising – the “reasonable access” requirements do not apply to non-commercial stations. If they ultimately do decide to accept political advertising, however, stations will need to familiarize themselves with the other myriad and complex rules governing such advertising. 

There’s more where that came from . . .

As mentioned above, the political advertising rules are notoriously complex and a station’s compliance with the rules typically depends on the specific facts at hand. Many of the areas discussed above give rise to their own subsets of particular questions which can generally be answered only with specific reference to specific factual settings. This summary of the station’s requirements is, necessarily, brief and superficial.   It’s intended to provide a mid-campaign reminder of the various considerations on the table when it comes to political advertising.

As stations’ managements and sales staffs review and implement their political advertising policies, disclosure statements, LUC rates, and political files, they should consult early and often with local election officials, your state broadcasters association, the NAB and, of course, their friendly neighborhood communications lawyers.

The story starts a decade ago. In 2002, the FCC fined a San Francisco public station, KMTP-TV, $10,000 for broadcasting numerous prohibited advertisements. KMTP-TV paid the fine, but then sued in federal District Court in California for reimbursement. Its claim: all of the advertising prohibitions are unconstitutional restrictions on the station’s speech. The District Court upheld the prohibitions on advertising, and KMTP-TV appealed to the Ninth Circuit, which released its decision earlier this month.

The Circuit agreed with the FCC that Congress does have a substantial interest in supporting the types of “high quality educational” programming found on NCE stations. (The Court does not address the obvious question of how the term “high quality” programming is defined or who is defining it.) And the Court was also on board with the government’s claim that Congress had enough evidence supporting its general theory that the goals of noncommercial broadcasting would be undermined if advertising were permitted. (That’s the theory that NCE stations would (a) abandon niche educational programming in favor of more mass-market programming and (b) alter the content of their programming to attract advertisers.) To be sure, the evidence wasn’t particularly empirical and much of it dated back to 1981 and earlier – but the Court reasoned that Congress’s judgment is entitled to substantial deference.

Accordingly, the Court upheld the ban on regular advertising.

Political and issue advertising, however, were another story.

In the Court’s words,

neither logic nor evidence supports the notion that public issue and political advertisers are likely to encourage public broadcast stations to dilute the kind of noncommercial programming whose maintenance is the substantial interest that would support the advertising bans.

To illustrate this, the Court focused on two types of programming – public affairs and children’s/family programming – touted by the government as the types of NCE programming that Congress intended to protect. 

As to children’s programming, the Court concluded that allowing political/issue advertising would have minimal effect. That’s because most viewers of such programming (i.e., children) can’t vote, so (according to the Circuit) NCE stations would have no incentive to alter that programming to suit the preferences of a political candidate or “issue group” and thereby attract their advertising dollars.

As to public affairs programming, the Court acknowledged that stations might change the content of such programming to attract political and issue advertising on various sides of important issues. But the Court could find no evidence – either before Congress when it enacted the ban or before the District Court that initially upheld it – that suggested that Congress was, or should have been, worried about that speculative notion. To the contrary, Congress appeared to be concerned exclusively with “commercialism”. Campaign ads and issue ads don’t promote “commercialism” because, in the Court’s view, they “do not encourage viewers to buy commercial goods and services”.

Additionally, the Court was struck by the fact that the discriminatory effect of the advertising ban. The ban permits announcements that promote the goods and services of non-profit companies, but forbids political/issue announcements. Such governmental line-drawing based on the content of the communications at issue raises serious constitutional questions. The FCC was unable to justify to the Court’s satisfaction the content-based distinction drawn by the statutory prohibition.

So what does this all mean? For openers, it means that NCE stations – at least those in the states within the Ninth Circuit – can now sell advertising time to political candidates and groups seeking to address important public issues. That could alter some candidates’ strategies – since NCE stations may provide more direct access to certain audience demographics. It will certainly alter the operations of many NCE stations, which will now be able to market themselves to at least certain limited classes of advertisers.

By the way, (1) what states are in the Ninth Circuit, and (2) why does that matter? 

Answer to Question 1: Alaska, Arizona, California, Guam, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington. 

Answer to Question 2: Because the Ninth Circuit has jurisdiction over only those cases arising in those states, and its decisions thus affect only those states. It is therefore at least conceivable – but not, in our view, likely – that the Commission could take the position that stations located outside of the Ninth Circuit are still subject to the advertising prohibitions. (We think it unlikely that the Commission will go that route because to do so would create, in effect, two separate sets of rules based purely on the accident of geography. It’s hard to imagine that the FCC would be eager to head down that road.)

Those public stations that elect to jump into the political advertising game will have to familiarize themselves with the complex of political ad rules that routinely beleaguer their commercial counterparts. Equal opportunities, lowest unit rates, political file obligations, etc., will presumably all have to be implemented in some fashion, even though the Court’s decision did not address any of those niceties. 

One thing that NCE stations won’t have to worry about: the “reasonable access” provision of the Communications Act. That provision mandates that candidates for federal office are entitled to “reasonable access” to advertising time. The precise extent of “access” that might be deemed “reasonable” has bedeviled the Commission and the courts for years. But the Act expressly exempts NCE stations from that obligation, and the Ninth Circuit’s decision does not alter that exemption.

Where do we go from here? The Commission could fold up its litigation tent and accept the Circuit’s decision, leaving it to Congress to amend the Communications Act to address the decision if Congress sees fit.

Alternatively, the Commission could ask the Ninth Circuit to reconsider its decision. The three-judge panel did include one dissenter, which might give the Commission some hope.  Or it could ask the full Circuit to rehear it en banc. Or it could go for broke and ask the Supremes to take a look. In the meantime, unless the FCC requests and is granted a stay of the effectiveness of the Circuit’s decision, the ban on political/issue ads on NCE stations (at least in the Ninth Circuit) is gone until further notice.

Check back here for updates on how the Commission chooses to proceed.

In closing, we note that KTMP is probably frustrated. In all likelihood, KTMP launched its appeal not with the goal of trashing the ban on political/issue ads, but rather to get rid of the more general ban on commercial advertising which had gotten it into hot water at the FCC. While it obviously came up short on that score, KTMP’s efforts have nonetheless established an important precedent for all NCE stations.

First, the FCC agreed with WMAQ-TV that Mr. Terry had not made the necessary “substantial showing” that he was a legally qualified candidate.  Under the FCC’s rules, to take advantage of the rules requiring “reasonable access” for legally qualified candidates, the “candidate” looking for access must make a “substantial showing” that he or she is in fact a bona fide candidate. In addition to having satisfied the legal qualifications for the office he/she claims to be seeking, the “candidate” must also demonstrate that he/she has engaged in some campaign activities, such as speeches, distributing literature, etc. 

In its decision, the FCC concluded that Terry failed to make this showing, either in his initial request to WMAQ-TV or in the information he provided to the FCC. According to the Commission, Terry failed to (a) show where he distributed campaign literature or (b) demonstrate that he campaigned in a substantial portion of the state of Illinois. The Commission also acknowledged a letter submitted by the Democratic National Party stating that Terry did not qualify as a bona fide candidate under Democratic Party rules, and therefore could not claim to be a candidate for the Democratic primary. The FCC’s decision does not definitely state that the DNC’s letter in fact prevented Terry from being a legally qualified candidate. However, the decision clearly suggests that WMAQ-TV could reasonably consider the DNC’s letter as a factor undermining Terry’s effort to show that he was, in fact, a bona fide candidate.

The second basis for the Commission’s decision was independent of the first. The FCC concluded that even if Terry were a legally qualified candidate, he would not be entitled to purchase advertising time during a specific program – in this case, the Super Bowl®.  

The Commission has long held that the “reasonable access” requirements do not entitle candidate to request ad placement during specific programs. At least in part, this arises from the interplay of the reasonable access mandate and the “equal opportunity” mandate, which requires that if a station sells time to one candidate, it must sell equivalent time to that candidate’s opponents. 

In Terry’s case, the Commission recognized the obvious: the Super Bowl® occurs only once a year, it enjoys extremely high audience ratings, and there is little or no advertising availability at the last minute. Because of those factors, it would have been virtually impossible for WMAQ-TV to afford to other candidates advertising opportunities equivalent to time during the Big Game. Accordingly, the Commission concluded that WMAQ-TV’s refusal to sell time to Terry was not unreasonable, regardless of his qualifications as a candidate. 

We are sure that the battles over controversial candidate advertising are far from over, but at least for the 2012 2Super Bowl®, the final whistle appears to have blown.

First, you should know that the LUR requirement does not apply to Internet-only advertising time.  However, broadcasters operating websites should be careful to distinguish sales of Internet-only advertising time from sales of over-the-air advertising time. This is especially so if an advertising package includes broadcast spots as well as Internet-only advertising. Example: a candidate buying over-the-air spots receives, as part of a package, a banner ad on the station’s website.  Such packages may impose obligations on a station with respect to political advertising sales and the value of the Internet component may impact the station’s LUR. 

If a station offers a combined package of broadcast and Internet advertising, LUR rules will apply to the broadcast component.  Also, remember that the equal time requirements apply so if the station sells a package with broadcast spot time and Internet spots to one candidate, then the same should be made available to competing candidates for the same office. In short, be careful when selling combined broadcast and Internet advertising packages and be aware of how such bundling may impact the LUR and your bottom-line.

The distinctly anti-Hillary documentary was produced by the not-for-profit organization "Citizens United", which claims it is "[d]edicated to restoring our government to citizen control".   "Hillary: The Movie" was released in January, 2008, in the thick of Senator Clinton's run for the Democratic presidential nomination. Citizens United released the movie in theaters and on DVD.  No problem there.

But Citizens United also wanted to offer the movie for pay-per-view purchase on cable systems nationwide, and it wanted to broadcast ads for the DVD and movie showings.  In order to avoid getting crosswise with BCRA, it first sought a declaratory ruling from the United States District Court for the District of Columbia that the film did not run afoul of McCain-Feingold, as that law was interpreted by the Supreme Court in McConnell v. Federal Election Commission (2003) and FEC v. Wisconsin Right to Life, Inc. (a 2007 decision previously discussed addressed in this blog),

The District Court ruled that the film was an electioneering communication as defined in BCRA because the only reasonable interpretation was that the film was intended as an appeal to vote against Clinton.  Accordingly, under BCRA, Citizens United would not be able to show the movie on broadcast or cable television.

And while ads for the movie (and DVD) would not themselves be “electioneering communications”, broadcast of the ads would subject Citizens United to considerable, detailed disclosure requirements (including disclosure of Citizens United donors) and the airing of a disclaimer containing the identity of those responsible for the content, as well as the name and address of the corporation (in this case a non-profit) that paid for the advertisement. 

By law, Citizens United was able to – and did – appeal directly to the United States Supreme Court. On November 14, 2008, the Supremes agreed to hear the case later this term.

While the overall outlines of BCRA’s “electioneering communications” rules have previously been upheld, the applicability of those outlines to particular cases remains an open question. In 2007 a sharply divided Supreme Court held that certain advocacy ads could not properly be held subject to those rules. Citizens United is presumably hoping for at least such a ruling in its case, if not a broader holding affording appropriate First Amendment protections to a greater range of announcements.

While this case does not directly address the rights and duties of broadcasters, those rights and duties are likely to be affected by whatever the Court does. The Court might narrow the definition of “electioneering communications”, thereby removing a disincentive for some potential advertisers. Or the Court might at least clarify precisely the line between communications which are “electioneering” and those which are not – thus providing all concerned with useful practical guidance.  Of course, if the Court sides with the government, broadcasters will continue having to vet every piece of politically-oriented programming – not just commercials – to determine whether it could trigger BCRA regulations.

This is a case rife with irony.  Another rival for the presidency – John McCain – co-authored the law which is effectively protecting Hillary Clinton's reputation. The current Administration, repeatedly and harshly criticized by Senator Clinton, will be defending the law (and, by extension, protecting her from attack). 

Citizens United's basic argument should be palatable to broadcasters:  regulation of this type of movie could lead to similar regulation of other media which also could influence elections, including books, magazines and even newspaper editorials or op-eds.  Its brief contends that the court must recognize a fundamental difference between an advertisement and a movie that merits different treatment under BCRA.

So, essentially, it appears that the court is being asked to decide whether content is king or the medium is the message...

Hold on; wait a minute. ‘First Amendment rights’? What’s she talking about? As just about any first-year law student understands - and many others as well (and here’s a shout out to the undergraduate students in Comm 475 - Journalism Law at George Mason University – you get no extra credit on the exams being graded this weekend even if you're reading this blog) - the First Amendment is directed against the Government, not the media.

(Quick refresher: The First Amendment provides in relevant part that “CONGRESS shall make no law . . . abridging the freedom of speech, or of the press” (emphasis added). While the First Amendment clearly applies to all government entities and not just Congress, private individuals or entities, including “the media”, still are not limited in any way by the First Amendment.)

So when Governor Palin suggests that her dust-ups with the media might somehow affect our “First Amendment rights” in the future, it’s worth taking a second look here. It’s probably too big a stretch to suggest that, as Vice President, Palin would seek to restrict the rights of freedom of speech and the press in any way. But it does make us wonder whether she might think it either necessary or appropriate to try to prevent, or at least discourage, similar “attacks” by the “mainstream media” in the future.

Short of a repeal of the First Amendment - and we obviously don’t think that that's even conceivable, much less practically likely - there are precious few ways in which the Federal government might attempt to soften the blows delivered by “the media”, particularly during political campaigns. Instituting further changes to the media ownership rules provides no obvious change. It would be virtually impossible to make the necessary amendments to the political broadcasting rules to consider “attacks” in the context of news or editorial broadcasting to be a use which triggers equal time. 

So perhaps the most obvious of those alternatives would be a resurrection of the Fairness Doctrine. But the Fairness Doctrine was mustered out of service more than 20 years ago, and it is hard to imagine why it should be returned to active duty now. Still, in light of Palin’s expressed concerns about the “future of our county . . . in terms of First Amendment rights”, we might all want to keep an eye on this should Palin wake up on November 5 to find herself in a position to influence Federal communications policy.

(We note that any effort by Republicans to bring the Fairness Doctrine back would seem ironic in view of the speculation by a number of conservative commentators that an Obama Administration, with the support of a Democratic-controlled Congress and FCC, might seek to re-impose the Fairness Doctrine, supposedly as an antidote against conservative talk radio.)