Bureau tosses two complaints alleging inadequate sponsorship IDs – but that may not be good news in the long run.

Several months ago we reported on complaints filed against a dozen or so TV stations with respect to the stations’ alleged failure to include in their online political files all of the various detailed information required by applicable political advertising laws. We expected that that was just an opening salvo.

Turns out we were right.

The same two complainants (this time joined by a third compadre) have since filed a couple more, based not on the political rules, but rather on the more general sponsorship identification requirements of Section 317 of the Communications Act.

The Media Bureau has already turned away those two complaints. BUT it left the door wide open for more. And, unfortunately, in so doing the Bureau provided little if any useful guidance for broadcasters, but considerable encouragement for complainants. As a result, we can expect to see more such complaints rolling in.

The recently-tossed complaints were filed by the Campaign Legal Center and the Sunshine Foundation (the folks who had filed the complaints we reported on last May), along with Common Cause. One was directed to Station KGW(TV), Portland, Oregon, the other to WJLA-TV, Washington, D.C. In each case the station had run a flight of spots paid for by a “Super PAC”. (In KGW’s case, the PAC was the American Principles Fund; in WJLA’s it was the NextGen Climate Action Committee.) The spots all included sponsorship ID’s identifying the respective PAC.

But, according to the complainants, that wasn’t enough.

Based on various publicly available sources, the complainants concluded that each of the PACs was, in effect, the alter ego of a particular individual who was solely (or predominantly) responsible for the PAC’s funding. (According to the complaints, the American Principles Fund and Next Gen Climate Action Committee are “the political advertising arm[s]” of, respectively, Sean Fieler, a hedge fund manager, and Tom Steyer, a former hedge fund manager.)

Section 317 requires that sponsorship ID’s identify the “person” paying for any commercial. Section 73.1212 of the Commission’s rules requires that stations “fully and fairly disclose the true identity of the person or persons, or corporation, committee, association or other unincorporated group, or other entity” paying for any ad broadcast. From these provisions the complainants concluded that stations cannot simply ID spots with the name of the organization (in these cases, the super PACs) that in fact pays for the spots. Rather, the complainants urged, stations are under an obligation to ferret out the “true identity” of the sponsor, the “true identity” being determined (according to the complainants) by the “true source” of the sponsor’s funds. That obligation supposedly includes some form of independent investigation, like Googling the PAC, or even asking around the office, to track down that “true source”.

The complainants’ theory – based on the time-honored notion of “following the money” – is understandable. Whether it is legally correct is another story.

While Section 317 does indeed refer to “persons”, that term is plainly not limited to individuals, but must include also legal entities. If that weren’t the case, then corporate sponsors – say, f’rinstance, McDonalds or GM – would somehow have to include their individual owners in their sponsorship ID’s. Can we all agree that that has never been required? So as long as the PACs themselves were properly identified, that arguably satisfied Section 317.

And while Section 73.1212 does use the regrettably vague term “true identity” when referring to sponsorship ID requirements, it stops well short of specifying that the term “true identity” is synonymous with “true source of funds”, as the complainants seem to believe. Au contraire, the rule seems on its face to indicate otherwise. It imposes additional burdens when it comes to ads relating to political or controversial matters. In those cases stations must not only provide on-air sponsorship ID’s, but they must also place in their public files “a list of the chief executive officers or members of the executive committee or of the board of directors of the corporation, committee, association or other unincorporated group, or other entity.” That suggests that, when it comes to identifying an organization – including, presumably, a PAC – in the context of political advertising, the Commission looks to the entity’s officers and directors, not its contributors.

If the Commission were to adopt the complainants’ view, it would mean considerably more effort on the part of stations – and a station’s efforts would be subject to second-guessing on a number of fronts. How extensive would a station’s investigation into the “true source” of a sponsor’s funds have to go? And what level of funding would count as a “true source”? If the investigation disclosed that an organization had two contributors, rather than one, would they both have to be identified? How about three contributors? Four? Ten? What if the sponsoring entity were funded by another entity?

Such questions would presumably have to be answered for every political/controversial spot purchased by an organization. Since the market for such spots runs hot and heavy throughout the political season, such investigative requirements would pose serious practical problems.

Unfortunately, in tossing the KGW and WJLA complaints, the Bureau stopped well short of addressing any of these concerns. Instead, the terse ruling concluded that the complainants hadn’t presented enough “credible evidence casting into doubt that the identified sponsors of the advertisement were the true sponsors.” Unless a station has “credible, unrefuted evidence that a sponsor is acting at the direction of a third party”, the station is entitled to “rely on the plausible assurances of the person(s) paying for the time that they are the true sponsor.”

That may be comforting to broadcasters, until they think about it for a couple of seconds.

While it’s all well and good to accord broadcasters such deference, note that the ruling still leaves wide open the essential question, i.e., who is a “true sponsor” if it’s not the entity signing the check? Further, the order suggests that WJLA employees “may have come across facts” during their political coverage that “could have raised questions in their minds” about the relationship between NextGen and Steyer. Which employees? The order doesn’t say. Since the order refers to the employees’ “news reporting”, they were presumably on the station’s news side – but there’s no indication that the station’s sales staff (i.e., the folks who were selling the time) would necessarily have been aware of information the news staff may have developed, or that sales folks would necessarily have assumed that it was necessary or appropriate to dig around on the news side for further information.

In any event, in view of the “sensitive First Amendment interests present here” the Bureau declined to bring the hammer down on WJLA.

Such sensitivity to First Amendment interests is welcome, but in the very next sentence the Bureau’s order cautions that things might have been different had the complainants presented WJLA with “evidence calling into question that the identified sponsors were the true sponsors.”

That certainly sounds like an invitation to the complainants (and other similarly unhappy folks) to bring their sponsorship ID concerns to stations everywhere. But, again, the order still leaves open important questions about how stations will be expected to react when that happens. What, after all, is “credible, unrefuted” evidence? The complainants presumably believe that the information they presented to the FCC – based, apparently, on various news reports and Internet searches – constitutes such a showing. But what if the station doesn’t share the complainants’ faith in the credibility of the supposed evidence? Or what if a responsible official from the PAC denies that anybody but the PAC is the “true sponsor”? Such a response would appear to “refute” the allegation, perhaps plausibly, but we doubt that that would satisfy the complainants.

In other words, the Commission has hung out the welcome sign to complainants, so we can expect to see a boatload more cases of this kind flowing in, possibly in the near future.

The upshot, then, is that this particular legal can has been kicked down the street a ways, but it hasn’t been disposed of. While KGW and WJLA have avoided any penalty for the time being, it’s far from clear that they – or other similarly-situated stations – will skate the next time around.

Stay tuned.