FCC invites comments on proposal by coalition of nine radio licensees to shift sponsorship IDs primarily to Internet

In an unusual petition that was filed last November – but took five months to hit the FCC’s public radar screen – a group of radio station owners is asking the Commission to waive the sponsorship identification requirements for a “defined class of qualifying radio broadcasters”. While the prospects for a grant of the requested waiver may be limited (because it may be asking for something the FCC can’t provide), the fact of the request itself raises some interesting questions.

The petitioners, who call themselves the Radio Broadcasters Coalition, consist of nine companies, including several major radio group owners – iHeart Media (née Clear Channel), Emmis, Cox, Entercom, Greater Media, among others. According to the FCC’s summary, they would like the Commission to let “radio broadcasters airing music or sports programming … provide information about sponsored material through a combination of less frequent on air announcements together with enhanced online disclosures.”

Under the proposal, a qualifying radio station would, after a three-week “listener-education” period, have to make on-air sponsorship ID announcements only once each day (sometime between 6:00 a.m. and 7:00 p.m.), notifying listeners generally that (a) some programming on the station had been sponsored by certain identified sponsors and (b) listeners can find more details on the station’s website. At its website, each qualifying station would have a page, specifically accessible through a tab or link identified as “Enhanced Disclosure of Sponsored Programing”, containing “enhanced” sponsorship ID information. Such information would include a list of the names of sponsors, the names of the programs in which the sponsored material had aired, a list of the artists and music (or sports teams) affiliated with particular sponsor entities, and the types (but not amounts) of payments/services exchanged between sponsors and the station.

In order to grant the request, the FCC would have to waive its sponsorship ID rule (Section 73.1212) and Section 317 of the Communications Act, both of which currently require that sponsorship ID announcements be aired “at the time” the sponsored matter is broadcast.

In support of its proposal, the Coalition asserts that the waiver would allow the presentation of “far greater [sponsorship ID] information to consumers in a new, more detailed, and more easily accessible way.” That, in turn, would provide greater “protect[ion for] the public’s right to know the identity of sponsors by allowing enhanced sponsorship identification disclosures for [sponsored] programming through once-daily on-air announcements and online postings that together give listeners more sponsorship information than is currently available.” And listeners would also benefit from a “more satisfying listening experience … with fewer interruptions”.

In effect, the Coalition would like permission to sell time on their stations (at least for music and sports programming), with the sponsors to be identified only once daily, and not necessarily in connection with programming they may have sponsored. Listeners would be directed to the station’s website, where “additional information” would be available. While it’s not entirely clear, it appears that that “additional information” might include, along with basic identification information, promotional information about the sponsors. In other words, the once-a-day broadcast announcements would simply encourage listeners to hop online to access advertising messages.

An initial hurdle facing the proposal is the language of Section 317, which clearly mandates that sponsorship ID’s be aired “at the time of” the sponsored programming. Subsection 317(d) does afford the FCC discretion to waive that requirement “in any case or class of cases” if the public interest warrants. Waivers, of course, provide limited exceptions. In this case, the Coalition defines the supposedly limited “class” as all radio stations that (a) broadcast music and/or sports programming and (b) have a website. Since that “class” encompasses probably 80+% of all radio stations, it’s hard to see the request as anything more than an effort to write the rule out of the books by creating a nearly universal exception. That would be somewhat like waiving speed limits for all vehicles with at least four tires.

Viewed in that light, the request doesn’t really look like the kind of thing contemplated by Subsection 317(d). But you never know. (The only historical 317(d) waivers cited by the Coalition as precedent for their request occurred about 50 years ago; the two cases cited seem a little dusty from non-use.)

Another potential stumbling block: the Coalition’s justifications for the waiver seem less than compelling. The proposal would provide the listener “fewer interruptions”? While that’s undeniably true, Congress must have realized that the sponsorship ID requirement would result in “interruptions”, but it mandated it anyway. So – in a twist on our speed limit analogy – this rationale is somewhat equivalent to a request for the elimination of speed limits because drivers could then go faster. The Coalition also suggests that listeners will appreciate online access to sponsorship information because they might miss broadcast information if they happen to be listening while driving through a tunnel, or next to a honking horn in traffic. It’s a bit difficult to take that particular argument seriously.

Much of the petition is devoted to the fact that the public is increasingly relying on the Internet for many things, as the Commission has repeatedly acknowledged. The sense of the petition is that advertisers and the consuming public alike view Internet advertising as preferable – so allowing broadcasters to shift their sponsorship messages would benefit both advertisers and consumers, while affording listeners a “more satisfying listening experience”. That may indeed be true, but it seems irrelevant to the sponsorship ID rule, which is aimed at insuring that listeners are told who is sponsoring programming they’re listening to while they’re listening to it.

Although not mentioned in the Coalition’s petition, the proposal could conceivably be a response to continued efforts by record companies to make radio stations pay performance royalties for playing recorded music over-the-air. Congress has never provided for such royalties, mainly because it has perceived radio airplay as providing recording artists valuable exposure which compensates for the lack of performance royalties. But record companies and recording artists have persisted in seeking the amendment of the Copyright Act to guarantee them just such royalties.

While stations may, of course, take money for the broadcast of particular records, such payments have to be acknowledged in contemporaneous sponsorship ID announcements – which discourages rampant “pay-for-play” arrangements. But as our colleague Peter Tannenwald proposed here several years ago, making pay-for-play a business strategy might offset the record companies’ proposed performance royalty. As Peter said in 2009: “Fix the sponsorship identification rule so that it becomes practical to comply with it, and then let the fur fly”. One way to do that could be what the Coalition is proposing. Their approach would presumably let stations take money for the playing of particular records as long as those arrangements are disclosed on the Internet. That would certainly facilitate increased pay-for-play deals, thereby affording broadcasters some protection against a performance royalty for sound recordings.

As might be expected, some folks in the independent music and public interest communities haven’t reacted favorably to the Coalition’s petition. One organization called the petition a “big broadcaster bait-and-switch”. Another blogger said “Let’s not let the bastards get away with this” and called for readers to submit comments to the FCC opposing the waiver. It remains to be seen how influential these calls to arms will be. Interested parties have until April 13, 2015 to file comments and until May 12 to file reply comments. Comments and replies may be filed through the FCC’s ECFS online filing system; refer to Proceeding No. 15-52.