Time for NCE’s to review their underwriter announcements?

The Enforcement Bureau has come down hard – very hard – on a low power FM station for broadcasting thousands of prohibited advertisements over the course of some 14 months. Total fine specified in the Notice of Apparent Liability: a cool $20,000. Ouch! And this is an 11-watt (yes, when they say “low power”, they really mean it) station we’re talking about. Double Ouch!

The Bureau’s decision highlights the perennial problem presented by the limits on noncommercial educational (NCE) licensees. (By definition LPFM stations are NCE.) NCE licensees are prohibited from broadcasting any promotional announcements on behalf of for-profit entities at any time in exchange (in whole or in part) for any consideration of any kind. BUT they MAY broadcast announcements which identify and acknowledge non-profit and/or for-profit entities (referred to by the cognoscenti as "underwriters") who contribute to the station’s operations, monetarily or otherwise. 

The trick is telling the prohibited promo from the acceptable acknowledgement.

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.”