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Broadcasting and Cable Political Window Begins September 7 For November Elections – A Refresher on the FCC’s Lowest Unit Charge Rules

Delivered... David Oxenford | Scene | Thu 6 Sep 2018 5:03 pm

With the lowest unit charge window for the November elections going into effect tomorrow (September 7), we thought that it was a good idea to review the basics FCC rules and policies affecting those charges. With this election, where control of Congress may well be hotly contested and may result in competitive elections across the country, your station needs to be ready to comply with all of the FCC’s political advertising rules. Lowest unit charges (or “Lowest Unit Rates”) guarantee that, in the 45 days before a primary and the 60 days before a general election, legally qualified candidates get the lowest rate for a spot that is then running on the station within any class of advertising time and particular daypart. Candidates get the benefit of all volume discounts without having to buy in volume – i.e., the candidate gets the same rate for buying one spot as your most favored advertiser gets for buying hundreds of spots of the same class. But there are many other aspects to the lowest unit rates, and stations need to be sure that they get these rules right.

It is a common misperception that a station has one lowest unit rate, when in fact almost every station will have several – if not dozens of lowest unit rates – one lowest unit rate for each class of time in each daypart. Even at the smallest radio station, there are probably several different classes of advertising spots. For instance, there will be different rates for spots running in morning drive than for those spots that run in the middle of the night. Each time period for which the station charges a differing rate is a class of time that has its own lowest unit rate. On television stations, there are often classes based not only on daypart, but on the individual program. Similarly, if a station sells different rotations, each rotation on the station is its own class, with its own lowest unit rates (e.g. a 6 AM to Noon rotation is a different class than a 6 AM to 6 PM rotation, and both are a different class from a 24 hour rotator – and each can have its own lowest unit rate). Even in the same time period, there can be preemptible and non-preemptible time, each with its own set of charges resulting in different classes of time, each with its own lowest unit rate. Any class of spots that run in a unique time period, with a unique rotation or unique rights attached to it (e.g., different levels of preemptibility, different make-good rights, etc.), will have a different lowest unit rate. Stations need to review each class of time sold on their station, find the lowest rate charged to a commercial advertiser for a spot of the same class that is running at the same time that the candidate wants to buy a spot, and that lowest rate will be what the candidate is charged.

One question that still comes up with surprising regularity is whether these rates apply to state and local candidates, as well as Federal candidates. Indeed they do – so if your station is running advertising for candidates for mayor or city council; or for governor or the state senate; or even for the board of education, municipal court judge, or state attorney general – they and any other candidate in any public election for which your station chooses to accept advertising gets lowest unit rates. See our past articles on this topic here and here.

In modern political elections, where PACs, Super PACs and other non-candidate interest groups are buying much political advertising time, broadcasters need to remember that these spots don’t require lowest unit rates. Even if the picture or recognizable voice of the candidate that the PAC is supporting appears in the ad, spots that are sponsored by an independent organization not authorized by the candidate do not get lowest unit rates (note, however, that spots purchased by independent groups featuring the voice or picture of the candidate may trigger public file and equal opportunities obligations for the station if the station decides to run those spots).  Stations can charge these advertisers anything that the station wants for non-candidate ads – no need to stick to lowest unit rates.

From time to time stations may face the one exception to the above paragraph, where political parties are requesting lowest unit charges. In some cases, parties may in fact be entitled to these rates – but only where the spot features the recognizable voice or picture of the candidate and the party is using specific types of donations to pay for the ad.  These donations are ones that are subject to political campaign donation limitations (known as “hard money”).  To get lowest unit rates, the advertising purchases must be authorized and “coordinated” with a candidate (and, in Federal races (and in several states that have adopted laws on the subject), the spots should make that coordination clear with the “I approved this message tag” or, under some state laws, some variant of the tag that discloses the coordination. Not all party spots are entitled to this treatment – only this special class of coordinated expenditures – and stations are entitled to get written confirmation from the party or the candidate that the expenditures are coordinated under the election laws. If not coordinated, the parties get charged the same as any other third-party organization.

Various advertising sales packages, and how they are factored into lowest unit rate calculations, also seem to lead to many questions by broadcasters. Candidates cannot be forced to buy single-station packages to get low unit rates. Instead, the package must be broken down by the station into a price per spot for each class of spot that is contained in the package. That is done by allocating the package price to the various spots of each class that are contained in the package. Then the allocated rates, on a unit basis, are compared to other spots of the same class that have been sold on the station either on their own or in other packages to determine if the spots from this package have any impact on the station’s lowest unit rates. This allocation is done in an internal station record, which does not need to go into the public file, and does not need to be revealed to the candidate. Other than the station, only the FCC will see this allocation if they decide to conduct some sort of audit. We wrote more about this process of allocating spots in a package here.

And these are just some of the myriad issues that arise in computing lowest unit rates. Stations need to be familiar with these rules, and apply them accurately through the lowest unit rate window. Check with your own legal advisor to discuss the specifics of these issues as they arise as they are often very difficult to apply in the real world.  Some of the other situations that arise with lowest unit rates, and with other political issues that come up in any election season, are covered in our Political Broadcasting Guide, available here.  This article in an update of an article from a series that we did several years ago on Political Broadcasting Basics, which we may update from time to time over the next few weeks.  But until we post the updates, you can find the original articles on our blog by clicking on these links:  equal opportunities, reasonable access, the no-censorship provision that governs candidate ads, and the potential for station liability for untruthful statements made in third party ads.

More September Regulatory Dates – Effective Date of New Application Fees, Filing Deadline for TV Shared Services Agreements, Lowest Unit Rate For September Election and Reminder on Repacking Requirements

Delivered... David Oxenford | Scene | Tue 28 Aug 2018 1:48 pm

Yesterday, we wrote about the regulatory dates coming up for broadcasters in September.  Even though that was an extensive list, we realized later that we left a few off.  So here are a few more issues to consider in September.  Plus, the FCC yesterday reminded repacked TV stations of all of the requirements for TV stations involved in the repacking of the TV band following the Incentive Auction which, as we noted in our post yesterday, formally begins this month.

One date that we overlooked was the effective date for a general increase in FCC application fees – those fees that commercial broadcasters pay every time they file an application for a construction permit, approval of a purchase or sale of a station, a license renewal, an STA or many other requests for FCC action.  As we wrote here, the FCC recently announced that the fees were going up to reflect inflation.  Last week, the FCC issued a Public Notice announcing that those new fees are effective on September 4.  So commercial stations filing applications on September 4 or afterward need to remember to pay the new fees, or risk having their applications returned.

Another obvious date that we omitted from the long list of September regulatory dates is the first day of the Lowest Unit Rate window for the November election.  45 days before a primary or 60 days before a general election, political candidates (whether Federal, state or local – see our post here) can only be charged the lowest unit rate that any commercial advertiser is paying for advertising spots of the same class that are running during the same time period.  See our articles here and here for more information about the lowest unit charge window which, for the November election, starts on September 7.  For more information about political broadcasting rules generally, see our Political Broadcasting Guide.

A somewhat less obvious date is the deadline for filing TV shared services agreements.  In its 2017 order reconsidering the FCC’s decision in its last Quadrennial Review of the ownership rules, the FCC decided to retain the previously announced requirement that TV stations file shared services agreements with the FCC.  We wrote about that obligation here, addressing the broad definition that the FCC gave to a shared services agreement.  The FCC gave stations 180 days to comply for any agreements that were already in effect at the time the new rule became effective (new agreements being required to be filed “in a timely fashion” once entered into).  Time flies, and that 180-day deadline is now upon us, on September 19.

Finally, the FCC on Monday released a Public Notice setting out all the deadlines that must be met by TV stations that are being repacked following the Incentive Auction.  With September 14 starting the testing period for TV stations assigned to move to their new channels in Phase 1 of the repacking, this notice is very timely.  The notice talks about the deadlines in the transition and the various notices and public education requirements that stations early in the repacking schedule should be contemplating right now.  The Public Notice also notes that any Phase 1 station that is unlikely to meet the required November 30 deadline for completion of their transition to their new channel must file an extension by September 4.

So add these to the list of September dates that we gave you yesterday, as well as any other specific deadline that may apply to your own station, and you can see that the academic year will begin with a bang.  Get ready for a busy month ahead!

Dealing with a Local Political Candidate Who Appears in a Spot Advertisement for a Commercial Business

Delivered... David Oxenford | Scene | Thu 31 May 2018 5:28 pm

With election season upon us again, I’ve had one question that has come up repeatedly in the last few weeks about local candidates – usually running for state or municipal offices – who appear in advertisements for local businesses that they own or manage. Often times, these individuals will routinely appear in a business’ ads outside of election season, and the candidate simply wants to continue to appear on their business’ ads during the election as well. We wrote about this question in an article published two years ago, and since the question has been coming up again, it is worth revisiting the subject. What is a station to do when a local advertiser decides to run for office?

While we have many times written about what happens when a broadcast station’s on-air employee runs for office (see, for instance, our articles here, here and here), we have addressed the question less often about the advertiser who is also a candidate. If a candidate’s recognizable voice or, for TV, image appears on a broadcast station in a way that is not negative (e.g. it is not in an ad attacking that candidate), outside of an exempt program (in other words outside of a news or news interview program which, as we wrote here, is a very broad category of programming exempt from the equal time rules) that appearance is a “use” by the political candidate. “Uses” can arise well outside the political sphere, so Arnold Schwarzenegger movies were pulled from TV when he was running for office, as were any re-runs of The Apprentice and The Celebrity Apprentice featuring Donald Trump. An appearance by a candidate in a commercial for his or her local business is a “use” which needs to be included in a station’s political file (providing all the information about the sponsor, schedule and price of the ad that you would for any pure political buy). But that does not necessarily mean that a station needs to pull the ad from the air.

As a commercial for a business is usually a paid spot, where the station is receiving money to air the ad (and not an unpaid one like the appearance in an entertainment program where the station does not get paid to air its comedy program or movie in which a candidate appears), a “use” arising in a paid commercial gives rise to equal opportunities for other opposing candidates to buy time on the station. The station will not usually be required to provide free time to opposing candidates (but watch for candidate appearances in PSAs, as that might give rise to free time for opposing candidates). If the station has plenty of commercial inventory and does not mind selling spots to the opposing candidate for the lowest unit rates that apply during the political windows (45 days before a primary and 60 days before a general election) to spots purchased by a candidate’s authorized campaign committee (the opposing candidate gets lowest unit rate for a spot run in connection with his or her campaign, even if the commercial business bought the spot featuring their employee-candidate at regular commercial rates), a station may decide to continue to air the business spots with the candidate’s appearance. But if inventory is tight, or the station is not selling political ads to candidates in a particular state or local race, the station may want to tell the business that the candidate can’t appear in the business’ spots once the candidate becomes legally qualified, as the running of those spots with the candidates would require the station to provide equal time to the opposing candidates.

Note that the “no censorship” provision of the Communications Act and the lowest unit rate provisions likely do not apply to the business spots even though they contain the voice or image of a candidate. That is because these spots are not uses by the candidate or the candidate’s authorized campaign committee which are covered by the rules providing for lowest unit rates and the “no censorship” provisions of the law. As the commercial spots are not by the candidate or his or her political committee, but instead they are commercials by a business that happen to be “uses,” normal commercial rates can be applied.

Note, also, that business spots that advertise a business in which the candidate’s name appears, but where the candidate him or herself do not appear by voice or picture, do not trigger any equal opportunity issues. It is the recognizable voice or picture of the candidate that triggers the equal opportunity and public file issues. For those of us here in the DC area, we are accustomed to seeing ads for the local Volvo dealer even during election season, even though that dealership is named after a politician currently serving in Congress.

As in all areas of political broadcasting, any analysis of the implications of any on-air appearance of a candidate can be a very nuanced matter, and small changes in the facts can result in big changes in the legal conclusions that apply. So if these situations arise, consult with the station’s legal counsel before making any decision as to how to treat these kinds of ads. This article is just meant to note that there may be options for dealing with the candidate-advertiser if he or she wants to stay on their business’ spots during an election period, depending on the station’s circumstances. For more general information about the rules that apply to political broadcasting, see our Guide to Political Broadcasting, here.

Dealing with a Local Political Candidate Who Appears in a Spot Advertisement for a Commercial Business

Delivered... David Oxenford | Scene | Thu 31 May 2018 5:28 pm

With election season upon us again, I’ve had one question that has come up repeatedly in the last few weeks about local candidates – usually running for state or municipal offices – who appear in advertisements for local businesses that they own or manage. Often times, these individuals will routinely appear in a business’ ads outside of election season, and the candidate simply wants to continue to appear on their business’ ads during the election as well. We wrote about this question in an article published two years ago, and since the question has been coming up again, it is worth revisiting the subject. What is a station to do when a local advertiser decides to run for office?

While we have many times written about what happens when a broadcast station’s on-air employee runs for office (see, for instance, our articles here, here and here), we have addressed the question less often about the advertiser who is also a candidate. If a candidate’s recognizable voice or, for TV, image appears on a broadcast station in a way that is not negative (e.g. it is not in an ad attacking that candidate), outside of an exempt program (in other words outside of a news or news interview program which, as we wrote here, is a very broad category of programming exempt from the equal time rules) that appearance is a “use” by the political candidate. “Uses” can arise well outside the political sphere, so Arnold Schwarzenegger movies were pulled from TV when he was running for office, as were any re-runs of The Apprentice and The Celebrity Apprentice featuring Donald Trump. An appearance by a candidate in a commercial for his or her local business is a “use” which needs to be included in a station’s political file (providing all the information about the sponsor, schedule and price of the ad that you would for any pure political buy). But that does not necessarily mean that a station needs to pull the ad from the air.

As a commercial for a business is usually a paid spot, where the station is receiving money to air the ad (and not an unpaid one like the appearance in an entertainment program where the station does not get paid to air its comedy program or movie in which a candidate appears), a “use” arising in a paid commercial gives rise to equal opportunities for other opposing candidates to buy time on the station. The station will not usually be required to provide free time to opposing candidates (but watch for candidate appearances in PSAs, as that might give rise to free time for opposing candidates). If the station has plenty of commercial inventory and does not mind selling spots to the opposing candidate for the lowest unit rates that apply during the political windows (45 days before a primary and 60 days before a general election) to spots purchased by a candidate’s authorized campaign committee (the opposing candidate gets lowest unit rate for a spot run in connection with his or her campaign, even if the commercial business bought the spot featuring their employee-candidate at regular commercial rates), a station may decide to continue to air the business spots with the candidate’s appearance. But if inventory is tight, or the station is not selling political ads to candidates in a particular state or local race, the station may want to tell the business that the candidate can’t appear in the business’ spots once the candidate becomes legally qualified, as the running of those spots with the candidates would require the station to provide equal time to the opposing candidates.

Note that the “no censorship” provision of the Communications Act and the lowest unit rate provisions likely do not apply to the business spots even though they contain the voice or image of a candidate. That is because these spots are not uses by the candidate or the candidate’s authorized campaign committee which are covered by the rules providing for lowest unit rates and the “no censorship” provisions of the law. As the commercial spots are not by the candidate or his or her political committee, but instead they are commercials by a business that happen to be “uses,” normal commercial rates can be applied.

Note, also, that business spots that advertise a business in which the candidate’s name appears, but where the candidate him or herself do not appear by voice or picture, do not trigger any equal opportunity issues. It is the recognizable voice or picture of the candidate that triggers the equal opportunity and public file issues. For those of us here in the DC area, we are accustomed to seeing ads for the local Volvo dealer even during election season, even though that dealership is named after a politician currently serving in Congress.

As in all areas of political broadcasting, any analysis of the implications of any on-air appearance of a candidate can be a very nuanced matter, and small changes in the facts can result in big changes in the legal conclusions that apply. So if these situations arise, consult with the station’s legal counsel before making any decision as to how to treat these kinds of ads. This article is just meant to note that there may be options for dealing with the candidate-advertiser if he or she wants to stay on their business’ spots during an election period, depending on the station’s circumstances. For more general information about the rules that apply to political broadcasting, see our Guide to Political Broadcasting, here.

It’s Political Broadcasting Season Again – What Broadcast Stations Should Be Thinking About Now, Before the Lowest Unit Rate Windows Open

Delivered... David Oxenford | Scene | Thu 8 Mar 2018 6:09 pm

This week’s political primaries in Texas are but the first of many more election contests that will occur between now and November. Already, we are receiving client calls about the political rules, how they should be applied, and what stations should be considering in anticipation of the upcoming elections. I’ve discussed the general FCC issues to be considered by broadcasters in many different ways. In January, I conducted a webinar for two state broadcast associations on these issues, following a similar webinar that I conducted with the head of the FCC’s office of political programming back in November for about 20 additional state associations. The slides from the most recent webinar are available here. Our firm also has available a Guide to Political Broadcasting, here, that provides information about many topics that come up in this area every year. But, with the election still months away, and in many states primaries that don’t occur until the summer, are there issues that broadcasters should be considering today?

Yes – there are many such issues that broadcasters should be considering immediately. As we wrote here prior to the last Presidential election, it is important to start planning early for an election. As that article details, and as set out in our Political Broadcasting guide, there is much planning for lowest unit rates that needs to take place now – before the actual windows (45 days before the primary and 60 days before the general election) in which those rates apply. Stations are likely selling advertising schedules that will run during the windows later this year, and they are putting together advertising packages that will be offered to commercial advertisers during the window. Consideration needs to be given now as to how that advertising will be treated to avoid unwanted lowest unit rate implications during the window.

As that article and another that we wrote here make clear, there are many other issues that stations need to be considering outside the windows, as once a candidate is legally qualified, virtually all of the other political rules apply. A candidate becomes legally qualified once they have filed the necessary paperwork to qualify for a place on the ballot (and, in some cases, to write-in candidates as well – see our article here). Once they are legally qualified, the reasonable access, equal opportunities, sponsorship and disclosure rules, including all public file rules, apply.

So, for candidates for Federal offices, reasonable access requirements apply as soon as a candidate is legally qualified. That means that the candidate is entitled to have access for advertising in all classes and dayparts on all commercial stations. While there may be a bit more flexibility in providing that access early in a campaign than there is closer to Election Day as there are more opportunities to provide that access, nevertheless stations need to pay attention to candidate requests. See our article here for more information about reasonable access.

Equal opportunities also apply as soon as a candidate is legally qualified. So if you sell advertising time to one candidate in a political race (local, state or Federal as equal opportunities apply to all candidates for public office – see our article here), you have to provide equal access to all opposing candidates. Free time must also be provided to one candidate if given to another outside of an exempt program (exempt programs including bona fide news and news interview programs – see our article about these consideration, written before the last Presidential election here).

Other equal time issues arise in connection with employees of the station who decide to become candidates – even for local office. See our article here.   Equal opportunities issues can also arise in connection with a local advertiser who appears in his or her own commercials, and decides to become a candidate for political office. See our article here for some issues to consider if this situation arises in your market.

In addition to these matters, political file issues arise well before the opening of the political window. For candidates, once they have become legally qualified, any “use” by that candidate needs to be noted in the public file (a “use” being an appearance on the station of the candidate’s recognizable voice or likeness outside of an exempt program). Issue advertising – both state and Federal – also has political file disclosure obligations that arise outside of political windows (with Federal issues advertising having much greater disclosure obligations almost identical to those of candidates). With all new political documents now needing to be uploaded to the online public files of both radio and TV stations, these political files are subject to much more public (and FCC) scrutiny.

These are but some of the issues broadcasters should be thinking about in what is likely to be a very active political year. You should be talking with your station’s attorney and sales staff now to make sure that everyone is ready to take care of the potential tidal wave of political advertising that may be arriving in the coming months, without running afoul of FCC rules.

Political Broadcasting and Programmatic Buying – Issues to Consider

Delivered... David Oxenford | Scene | Mon 11 Dec 2017 5:22 pm

The week before last, Bobby Baker, the head of the FCC’s Office of Political Programming and the acknowledged guru on political broadcasting issues, and I conducted a webinar for 20 state broadcast associations discussing the FCC rules regarding political advertising and related issues. We have done this seminar every other year for quite some time to help broadcasters prepare for an upcoming election year. Every time we conduct the session, we are faced with some new questions, usually not because the FCC rules have changed, but instead because new advertising practices have arisen in the industry. This year, one of the issues that prompted a question from the audience dealt with “programmatic advertising” – the question being how advertising bought through various programmatic platforms would play into the political broadcasting analysis that each station must conduct to prepare for the political season (including questions of political rates and access rights that might be affected by programmatic sales).

While most of the principles governing the FCC rules on political broadcasting are relatively established (and many are summarized in our Political Broadcasting Guide available here), new advertising practices and opportunities always raise questions as to how those established rules are to be applied. Programmatic buying of advertising time is one of those areas where these questions have arisen in recent years. In the last few years, programmatic buying has become the buzzword in broadcast advertising circles for both radio and TV. It is intended to make ad buying easier and more akin to the experience that ad buyers have when they place online advertising, allowing most of the buying process to take place from the buyer’s computer, anywhere and at any time, often without directly engaging with a station account rep.

While programmatic buying is becoming more and more common in broadcast circles, it is difficult to easily categorize it and describe how it affects a station’s political broadcasting obligations, as what is called “programmatic buying” comes in so many different flavors. Not only does the concept mean different things on different platforms, it is also being provided by all sorts of different companies, from rep firms, to broadcast technology companies, to companies that specialize in specific types of advertising – like remnant ad sales (i.e. sales of unsold advertising inventory on broadcast stations). And some station owners are signing up with multiple providers – sometimes using these multiple platforms for the sale of advertising at the same station. Depending on how the particular platform works, the effect on the station’s political advertising practices, including the lowest unit rates to be charged by the station for political time in the political windows (45 days before the primary and 60 days before the general election), can vary.

The computerized sale of remnant advertising – where the providers of the programmatic buying give advertisers the opportunity to buy left-over advertising on multiple stations so as to reach a total audience in the market in which the stations operate – is akin to systems developed years ago. We wrote about the FCC’s considerations of such remnant advertising platforms many years ago, here.   The sales of remnant ads packaged with remnant advertising on other stations tend to raise one set of issues. This kind of advertising – sold in packages, where advertisers are offered delivery of a certain number of advertising impressions in a given market, where that delivery comes from placement of ads on multiple stations – may be the least problematic for individual stations in their political broadcasting compliance.

Because the spots are usually packaged with multiple stations to give the advertiser the number of advertising impressions that they seek in a given market or markets, these ads have no impact on the lowest unit rate on any one station (as ads that are sold in a package on multiple stations do not affect the lowest unit rates on any individual station in the package, although such combination packages on multiple stations must be disclosed and made available to candidates by the company making such combination sales). Moreover, as remnant ads can usually run at almost any time in a broadcaster’s schedule (they are usually not run in fixed programs or at specific times), and are usually very preemptible, the ads are usually in advertising classes not very attractive to candidates who want certainty as to when their ads will run, further minimizing their impact on most station’s political broadcasting sales. But sellers of these packages of remnant advertising may themselves be subject to political rules (as the Commission has traditionally applied such rules to “unwired networks”), so the sellers need to be cognizant of their own political broadcasting obligations.

Other forms of programmatic buying can be more significant for political advertising and need to be carefully tracked by broadcasters. Some of the programmatic systems let advertisers use computerized systems to essentially buy any advertising time that is available in a station’s inventory. Advertisers can in effect have access to a station’s traffic system and schedule their own advertising schedules, and can pick and choose among the rates available to advertisers in a station’s traffic systems. It’s this ability to pick and choose what the advertiser wants that could raise political broadcasting issues. If the programmatic deals allow discounts off of a station’s rates for specific classes of time, either simply because they are booked through the programmatic system or because of the volume of spots bought by the advertiser, these discounts could affect the lowest unit rates of the stations in the classes of time bought by the advertiser using the programmatic system.

The ability of any advertiser to get access to the station’s ad schedule to schedule their own ads toward the end of an election season could also affect a station’s ability to squeeze in political ads as necessary to meet reasonable access and equal opportunities obligations. A commercial advertiser using a programmatic platform to place a big advertising buy scheduled to run in the last days before an election could disrupt the ability of a station to make time available to candidates that the station is obligated to provide because of equal opportunity and reasonable access requirements. And, if political advertisers themselves use the programmatic systems to buy and schedule advertising, all sorts of issues could arise, especially to the extent that such ads are bought with higher protection levels where they preempt political ads, or simply because they have other impacts on political schedules that stations need to be tracking.

The contracts and practices of providers of programmatic advertising need to be carefully reviewed to assess the potential for issues to arise in a political broadcasting context. If the programmatic network is used by political and issue advertisers, stations need to be sure that they are getting timely notice of the ad buys, and all the necessary paperwork about the buyer, so that the station can meet its political file obligations. As disclosures of political ad buys often require more information than that is received from the typical ad buyer (especially for third-party political ad buyers from whom information about their principal officer and directors is required, as is the identification of the political issue being addressed), the systems must be able to provide that information.

Generally, programmatic platforms should also be reviewed so that buys made through the system otherwise comply with all other station legal obligations that, once upon a time in the distant past when broadcasters used printed contracts, would have been expressed in the terms and conditions for sales which were often printed on the back of the sales contracts. We have written about the issues that can arise from the demise of the printed advertising contract. See for instance our article, here, where these issues were discussed in the context of the required FCC advertising non-discrimination certification, which also needs to be worked into the programmatic buying process.

We’ve worked with some providers of programmatic systems to help design their systems so that stations that use them can assure that their inventory can be controlled during the election season, and we have looked at agreements from providers for broadcast station clients. These are not simple deals that can be entered into without thought. Any broadcaster using any programmatic buying system needs to carefully review the system that they are using, and determine if there are any potential political broadcasting issues – and to assure that the contracts with the providers give stations the rights that they need to assure compliance with political broadcasting rules (and other FCC obligations).

As these programs and platforms can each pose their own issues, stations should consult with their communications counsel on how any program may impact their political obligations. The FCC’s Office of Political Programming, who gave me their thoughts on these issues as I was writing this article, are also very willing to discuss the issues, and are quite helpful in walking through the implications of any sales platform. Make sure that you understand the implications as you use these programs. This is certainly true for the upcoming busy 2018 election year and, with issue advertising becoming more and more a part of the broadcast landscape even outside of election years, these considerations can arise at any time. So look carefully at the legal issues that can arise from any programmatic ad platform.

FCC Political Broadcasting Rules for Write-In Candidates

Delivered... David Oxenford | Scene | Thu 19 Oct 2017 3:22 pm

In these last few weeks before the many municipal elections that will be occurring in November in states across the country, I have recently received several questions about a broadcaster’s legal obligations toward write-in candidates who want to run advertising on a radio or television station. Under FCC precedent, all legally qualified candidates (including those running for state and local offices, see our article here) must be provided lowest unit rates, equal opportunities to purchase advertising time matching purchases by their opponents and, when they do buy time, the no censorship rules apply to their ads. For Federal candidates, they also have a right of reasonable access. But is a write-in candidate a “legally qualified candidate?” 

In most cases, the question as to whether a candidate is legally qualified is relatively easy.  The station looks at whether the person has the requisite qualifications for the office that they are seeking (age, residency, citizenship, not a felon, etc.), and then looks to see whether they have qualified for a place on the ballot for the upcoming election or primary.  In most cases, qualifying for a place on the ballot is a function of filing certain papers with a state or local election authority, in some places after having received a certain number of signatures on a petition supporting the candidacy.  Once the local election authority receives the papers (and does whatever evaluation may be required to determine if the filer is qualified for a place on the ballot), a person is legally qualified and entitled to all the FCC political broadcasting rights of a candidate: equal opportunities, no censorship, reasonable access if they are Federal candidates, and lowest unit rates during the limited LUC windows (45 days before a primary and 60 days before a general election).  But, for write-in candidates, there are different rules that are applied, as there is no election authority to certify that the requisite papers have been filed for a place on the ballot.  Instead, in these situations, a person claiming to be a candidate must make a “substantial showing” that he or she is a bona fide candidate – that he has been doing all the things that a candidate for election would do. What does that mean?

Section 73.1940(f) of the Commission’s rules sets out what a substantial showing needs to include.  The rule states:

The term substantial showing of a bona fide candidacy as used in paragraphs (b) of this section means evidence that the person claiming to be a candidate has engaged to a substantial degree in activities commonly associated with political campaigning. Such activities normally would include making campaign speeches, distributing campaign literature, issuing press releases, maintaining a campaign committee, and establishing campaign headquarters (even though the headquarters in some instances might be the residence of the candidate or his or her campaign manager). Not all of the listed activities are necessarily required in each case to demonstrate a substantial showing, and there may be activities not listed herein which would contribute to such a showing.

Stations are entitled to ask a purported candidate to make that substantial showing before they accord the candidate all the rights that he or she might be entitled to under the rules.  Stations will looks at factors including whether the candidate has had campaign rallies. Is the candidate making speeches and campaign appearances throughout the area where the election is being held? Is there campaign literature that is being distributed on his or her behalf? Does the candidate have any campaign offices or campaign workers?  Is the campaign more than a website?  A station is entitled to ask for this evidence, and then needs to review the evidence, probably with the aid of counsel and possibly with the informal advice of the FCC (whose Political Broadcasting Office is usually quite helpful in working through issues like this), to determine whether the write-in candidate meets the substantial showing test.

The determination is very fact based. A few years ago, an individual from a fringe group launched a write-in campaign for Congress in a Missouri district where he resided. As he made speeches in the district, had an office there, and put up signs and passed out literature there (and his campaign was covered by the local print publications), many stations deemed him to be a legally qualified candidate and ran his advertising. A few years later, that same individual purportedly launched a campaign for an open US Senate seat in the same state. But that candidate did nothing to show that he was a bona fide state-wide candidate – showing no evidence of a statewide election campaign. Given the different factual circumstance, the Commission informally determined in that case that he was not a bona fide candidate for the Senate as he had not made a substantial showing of his candidacy for the statewide office.

If the candidate does pass the substantial showing test, then all of the political broadcasting rules apply – just as if the candidate had qualified for a place on the ballot. But if the purported candidate has done nothing more than say “I’m a candidate” and then decided to buy advertising time on a broadcast station, it is likely that the station need not sell him or her advertising time. Again, it depends on the facts of the situation, so analyze those facts carefully and discuss these issues with counsel familiar with the precedent in this area. For more information about political broadcasting rules, see our Guide to Political Broadcasting, here.

November Regulatory Dates For Broadcasters – Incentive Auction, EAS, Political and More

Delivered... David Oxenford | Scene | Mon 31 Oct 2016 5:33 pm

November is one of those few months where there is a very light load of routine regulatory filings for broadcasters.  This is a month with no routine FCC ownership or children’s television reports.  There are no routine EEO reports for the public file, and no other FCC regularly-scheduled deadlines.

Of course, there are several other dates that broadcasters need to be aware of.  October 31 is the end of the FM translator window to move translators up to 250 miles to serve AM stations – so November 1 will likely bring lessened demand for any translator that did not find a new AM home during the window that has been open to various groups of AM stations since January. Those looking for translators to operate with FM stations may find opportunities now less expensive, but harder to move, so opportunities will be limited to stations near to areas where the translators already are located.

Once the FCC’s Broadcast Incentive Auction for television has concluded, the FCC will announce two windows for new FM translators.  These windows (the first for Class C and D AM stations only, and the second for Class A and B AM stations) will only be open to AM licensees that did not participate in the 2016 windows.  See our article here for more information. 

November also brings the start of Stage 3 of the Reverse Auction, where TV broadcasters will again be bidding to give up their spectrum to wireless users starting on November 1.  See the FCC Public Notice here.  On Sept. 30, the FCC released a proposed Post-Incentive Auction Repacking plan for TV stations. Comments are due today, Oct. 31, on the FCC’s proposal for conducting the repacking in 10 different transition phases over 39 months. Reply comments on this proposal are due on Nov. 15.

The FCC also released a public notice asking for beta testing of its post-auction system to be used by TV stations applying for reimbursements of expenses they incur after being repacked following the incentive auction. Comments are due on the beta system by Nov. 4. See the Notice here for more details.  November 14, 2016 is the deadline for filing comments on the FCC’s proposed updates to the catalog of expenses that will be reimbursable for eligible TV stations.  (A link to the Public Notice regarding these updates can be found here.)  Reply comments will be due on November 29, 2016.

Also due in November is the Form Three filing reporting on the details of the results that a station had during the nationwide EAS test that was held on Sept. 28. Broadcasters and others have an obligation to file test result data electronically through the FCC’s new Electronic Test Report System (ETRS). EAS Participants were required to complete Form One before the nationwide test, and Form Two immediately after the test. Form Three must be filed within 45 days of the test, by Nov. 14.

Finally, in the week leading up to the election on November 8, broadcasters need to keep charging lowest unit rates to political candidates.  For more ideas on political broadcasting issues that broadcasters need to consider in the last week before the election, see our article here.

As always, there are lots of other dates that may be relevant to your station, so make sure that you consult with your broadcast attorney to stay on top of your regulatory obligations.  And watch at the end of the month for the December preview, as December is one of those months where all the routine regulatory filings return.

What to do When a Local Political Candidate Appears in a Spot Advertisement for a Commercial Business

Delivered... David Oxenford | Scene | Wed 19 Oct 2016 5:07 pm

This has been an unusual political year, as the number of political broadcasting legal issues that have arisen seems far smaller than in past election cycles. Perhaps broadcasters are all on top of the issues this year, or maybe the questions that often arise in connection with attack ads simply pale in comparison to some of the non-advertising attacks that take place every day in the news and on other political-themed broadcast and cable programming. But one question that has come up repeatedly in these last few weeks before the election has been one about local candidates – usually running for state or municipal offices – who appear in advertisements for local businesses that they own or manage. Often times, these individuals will routinely appear in a business’ ads outside of election season, and the candidate simply wants to continue to appear on their business’ ads during the election as well. What is a station to do?

While we have many times written about what happens when a broadcast station’s on-air employee runs for office (see, for instance, our articles here, here and here), we have addressed the question less often about the advertiser who is also a candidate. If a candidate’s recognizable voice or, for TV, image appears on a broadcast station in a way that is not negative (e.g. it is not in an ad attacking that candidate), outside of an exempt program (in other words outside of a news or news interview program which, as we wrote here, is a very broad category of programming) that appearance is a “use” by the political candidate. That includes “uses” even well outside the political sphere, so Arnold Schwarzenegger movies were pulled from TV when he was running for office, as were any re-runs of The Apprentice and The Celebrity Apprentice featuring Donald Trump. So, an appearance by a candidate in a commercial for his or her local business is a “use” which needs to be included in a station’s political file (providing all the information about the sponsor, schedule and price of the ad that you would for any pure political buy). But that does not necessarily mean that a station needs to pull the ad from the air.

As a commercial for a business is usually a paid spot, where the station is receiving money to air the ad (and not an unpaid one like the appearance in an entertainment program where the station does not get paid to air its comedy program or movie in which a candidate appears), the “use” in a paid commercial simply gives rise to equal opportunities for other opposing candidates to buy time on the station. The station will not usually be required to provide free time to opposing candidates (but watch for candidate appearances in PSAs, as that might give rise to free time for opposing candidates). If the station has plenty of commercial inventory and does not mind selling spots to the opposing candidate for the lowest unit rates that apply during this window to spots by a candidate (the opposing candidate gets lowest unit rate for a spot run in connection with his or her campaign, even if the commercial business bought the spot featuring their employee-candidate at regular rates), a station may allow the business spots with the candidate’s appearance to keep running. But if inventory is tight, or the station is not selling political ads to candidates in a particular race, the station may want to tell the business that the candidate can’t appear in the business’ spots once the candidate becomes legally qualified, as the running of those spots with the candidates would require the station to provide equal time to the opposing candidates.

Note that the “no censorship” provision of the rule and the lowest unit rate provision probably do not apply to the commercial business spots even though they contain the voice or image of a candidate. That is because these spots are not uses by the candidate or the candidate’s authorized campaign committee which are covered by these provisions of the law. As the commercial spots are not by the candidate or his or her political committee, but instead they are commercials by a business that happen to be “uses,” normal commercial rates can be applied.

Note that, as in all areas of political broadcasting, any analysis of the implications of any on-air appearance of a candidate can be a very nuanced matter, and small changes in the facts can result in big changes in the legal conclusions that apply. So if these situations arise, consult with the station’s legal counsel before making any decision as to how to treat these kinds of ads. This article is just meant to note that there may be options for dealing with the candidate-advertiser if he or she wants to stay on their business’ spots during an election period, depending on the station’s circumstances. For more general information about the rules that apply to political broadcasting, see our Guide to Political Broadcasting, here.

Reminder: Lowest Unit Rates for the November Election Start Tomorrow

Delivered... David Oxenford | Scene | Thu 8 Sep 2016 5:20 pm

It’s election season, and for the 60 days before any general election, broadcast stations are required to charge broadcasters the “lowest unit rate” for comparable advertising time that runs on their stations. That means that, for each class of advertising time on any particular station, the candidate can only be charged the lowest rate at which any spots was sold to a commercial advertiser for that class of time during the particular period in which the candidate’s spots will run. That 60 day period begins tomorrow, so broadcasters should be ready to provide the candidates with these discounted rates for the next 60 days.

As we have written before, e.g. here and here, these rates apply to both Federal, state and local candidates. While state and local candidates have no right of access to broadcast stations (meaning that stations do not need to sell to these candidates, and that stations can restrict their purchases of advertising time to particular dayparts), once the decision to sell time to a state or local candidate is made, then pretty much all of the other political rules, including those dealing with the Lowest Unit Charges for advertising time, must be observed.

It is also important to remember that only legally qualified candidates have the right to lowest unit rates. PACs and other issue advertisers do not get access to these rates, even if they are buying advertising time to address some issue or candidate who will be appearing on the November 8th ballot.

For candidates, the rates provide a real benefit, as they get the ability to buy advertising spots at significant discounts. For instance, they get the benefit of all volume discounts even without buying in volume. The broadcaster is also supposed to explain to the candidate all of the terms and conditions that could affect the candidate’s buying decisions. Candidates also don’t have to contend with buying spots of different classes in packages, but instead stations must break down the value of different classes of spots that are included in any package, and consider those values in assessing the lowest unit rates for each class of time – and the candidate need only buy those classes of time that he or she wants to buy. For more about how to treat the rates in package plans, see our post here.

In setting the lowest unit rates on a station, it must be remembered that virtually no station will have just one lowest unit rate. Almost every station will have several – if not dozens of lowest unit rates – one lowest unit rate for each class of time. Even on the smallest radio station, there are probably several different classes of spots. For instance, there will be different rates for spots that run in morning drive and spots that run in the middle of the night. Each of these time periods with differing rates is a class of time that has its own lowest unit rate. On television stations, there are often classes based not only on daypart, but on the individual program. Similarly, if a station sells different rotations, each rotation on the station is its own class, with its own lowest unit rates (e.g. a 6 AM to Noon rotation is a different class than a 6 AM to 6 PM rotation, and both are a different class from a 24 hour rotator – and each can have its own lowest unit rate). Even in the same time period, there can be preemptible and non-preemptible time, each forming a different class with its own lowest unit rate. Any class of spots that run in a unique time period, with a unique rotation or having different rights attached to it (e.g. different levels of preemptibility, different make-good rights, etc.), will have a different lowest unit rate.

There are a myriad of other issues involving lowest unit charges that come up each election season. We have written about some of those issues in previous articles, for instance those that can be found here and here. Many of these issues are also covered in our Political Broadcasting Guide, here. With the rates kicking in tomorrow, don’t forget your political broadcasting obligations!

Political Candidate Ads Without the Candidate’s Voice or Image – What is a Station to Do?

Delivered... David Oxenford | Scene | Fri 10 Jun 2016 5:36 pm

From time to time, questions come up as to whether it is acceptable for broadcast stations to air ads from a political candidate which do not feature the voice or, for TV, the image, of the candidate.  Ads from Federal candidates should almost never be missing the recognizable voice or image, as there are Federal Election Commission rules that specifically put the requirement on the candidate to appear on the spots in the “Stand By Your Ad” disclaimer (“I’m John Smith and I approved this message”).  But sometimes ads from state or local candidates, in states where the Federal requirements have not been extended to local elections by the state legislature, may be missing the voice or image of the candidate.  What are the implications for stations in airing such ads?

The most important implication is in the potential liability of the station for the content of the political ad.  When an ad is a “use” by a candidate, the station cannot censor its content.  It must be run as it is delivered to the station.  Because a station cannot censor the ad, the station has no liability for the contents of the ad.  So if the candidate defames his or her opponent, or violates copyright law, the station cannot be held liable for the content of the ad.  We have written many times about this “no censorship” rule. As we wrote here, that rule (and virtually all of the political rules but for reasonable access) applies to state and local candidates just as it does to Federal candidates. 

For the station to be insulated from liability for an ad from a candidate’s committee, the ad must be a “use” by the candidate. If it is not a use, the station can choose to reject the ad.  But, if the station decides to run the spot and something in the spot gives rise to liability, the station itself could in some circumstance have some liability, just as a station can have liability for the content of third-party ads (e.g. ads from PACs, unions or other non-candidate groups that may decide to advertise during an election).  See our article here about the issue for third-party ads.

The FCC requires that, for a spot to be a “use,” the candidate’s recognizable voice or image must be on the ad.  FCC cases have said that the voice can be the candidate simply reading the sponsorship tag at the end of the ad.  But, for a radio spot, the voice must be recognizable.  If the candidate does not identify himself, the FCC adopts a reasonableness test – is the station reasonable in concluding that the normal listener would recognize the voice?  If the candidate is one who has run for office many times, and has a distinctive voice, it is reasonable to conclude that he or she does not need to say who they are.  Local celebrities, like a local broadcaster who decides to run for office, may well fit into that same category of having an inherently recognizable voice.  But if the station employees who listen to an ad have no idea whether or not the voice at the end of the ad is the candidate, then they may want to inquire if the voice is that of the candidate, and think about asking for the ad to be recut to identify the candidate – especially where the ad contains controversial content that could raise liability issues.  If the station is told that the voice is that of the candidate, but the station does not believe that the voice is recognizable, the station may want to consult its FCC counsel about how to approach the candidate about having the spot recut with the candidate identifying him or herself.

If the ad is not a “use,” the station also does not need to extend lowest unit rates to the spot.  Only uses qualify for lowest unit rates.  Thus, if the ad does not have the candidate’s recognizable voice or image, it is possible to charge the candidate normal commercial rates for the spots.  In other contexts, there have been claims raised before the FEC, arguing that in Federal elections giving a candidate lowest unit rates when they were not entitled to such rates is an improper campaign contribution to the candidate.  Stations have countered that they are justified in giving the low rates if they want, as they are not giving the spots away, but selling them at a commercial rate that at least some commercial advertiser is paying.  The FEC deadlocked on this question of whether it was an improper contribution, so the question has never been finally resolved as to Federal candidates.  State laws, which may not be as strict in regulating campaign contributions, would govern state elections, so check with local election officials as to whether this could be an issue in your state.

Most spots from candidates or their authorized campaign committees will have the candidate’s voice or picture on the ad, as the candidate will want to insure that they get lowest unit rates, and that no station can reject the ad for its content (and, as stated above, because the law requires it for Federal candidates). But if you get an ad from a candidate where his voice or picture is not on the ad, carefully consider what you are going to do – and ask counsel for the appropriate way to deal with that ad.

 

For more on the political broadcasting rules, check out our Political Broadcasting Guide, here.

Understanding a Broadcaster’s Political Broadcasting Obligations Under FCC Rules – A Webinar Outlining the Requirements

Delivered... David Oxenford | Scene | Wed 23 Dec 2015 5:32 pm

While many broadcasters’ thoughts are on holiday celebrations, the political process leading to the 2016 elections marches on. Last week, Bobby Baker, the head of the FCC’s Office of Political Programming and I conducted a webinar for broadcasters in 16 states on the legal issues that need to be considered in connection with the upcoming political season. The slides from that presentation are available here.

The week before last, I wrote about some of the issues that broadcasters should already be considering in connection with the 2016 election. With Lowest Unit Charge windows either open or to open this month in Iowa and New Hampshire, and windows opening in South Carolina and Nevada in the first week in January, stations need to be paying attention to their political obligations. Even though political windows are not yet open in other states, stations in these other states nevertheless need to pay attention to their political obligations. As I explained in the webinar, those windows apply only to Lowest Unit Rates. All other political obligations, including reasonable access for Federal candidates, equal opportunities, and the no censorship provisions of the rules apply once you have legally qualified candidates – not just during political windows. See our article here and here on that subject.I’ve already received calls from stations trying to figure out who is legally qualified and who is not. Usually, it is a simple matter of determining if the purported candidate has filed the papers to qualify for a place on the ballot in a particular state. In the Presidential race, there is a special rule that says that a candidate who qualifies in 10 states is deemed qualified in all states. With the primary deadlines coming up very soon, many if not all of the major Presidential candidates will have already met that threshold for the primaries or will do so very soon. In caucus states, which in some cases don’t have requirements that candidates pre-qualify to be considered at the caucus, sometimes it is difficult to ascertain whether a candidate is legally qualified. There, the FCC requires that a candidate make a substantial showing of his or her candidacy by demonstrating that they are actively organizing in a state, that they have had campaign rallies, distributed literature, run ads, or otherwise demonstrated that they are actively campaigning in that state. This substantial showing test is also applied to write-in candidates. See our article here about the “substantial showing” test.

There are many other issues that will be coming up in this election. For more information, check out our Political Broadcasting Guide, here.

Political Broadcasting Issues that Radio and TV Stations Should Be Thinking About Now As We Approach a Very Active Election Season

Delivered... David Oxenford | Scene | Thu 3 Dec 2015 6:05 pm

With the broadcast and cable news (and the monologs of TV talk show hosts) already dominated by discussions of the 2016 elections, broadcasters thoughts may be turning to that election and the expected flood of money that may come into the political process.  We are, after all, only two months away from the first ballots in Iowa and New Hampshire. But dreams of big political spending should not be distracting broadcasters from thinking about their political broadcasting obligations under FCC rules and the Communications Act, and from making plans for compliance with those rules.  I’ve already conducted one seminar on political broadcasting obligations with the head of the FCC’s Office of Political Broadcasting, several months ago, for the Iowa Broadcasters Association, and we will be doing another, a webcast for about 20 state broadcast associations on December 17 (hosted by the Michigan Broadcasters, see their announcement here). Check with your state broadcast association to see if they are participating in the webcast, as we should be covering many of the political broadcasting legal issues of importance to broadcasters.

Stations in Iowa have been receiving buys from Presidential candidates and PACs and other third-party groups since this past summer, and that spending is sure to increase in these last few weeks before the 2016 start of the primaries and caucuses. What should stations in Iowa and in other states be thinking about now to get ready for the 2016 elections?

We have written about some of the issues that broadcasters should already be considering in our Political Broadcasting Guide. Obviously, one of the primary issues is lowest unit rates – as those rates become effective 45 days before the primaries (or before any caucus which is open to members of the general public). Thus, the lowest unit charges for Presidential campaigns will start in the early states later this month, and roll across the country early next year as the other primaries and caucuses draw near. In addition to our Political Broadcasting Guide, we wrote about other issues you should be considering in determining your lowest unit rates here, here.

In addition to the question of rate for political ads, stations should be thinking about access for political candidates. Especially in the early primary and caucus states, with so many candidates for the Republican nomination, spot availability may become tight in the weeks leading up to the actual voting. But, as long as a candidate does not sit on their rights, equal opportunities requires that candidates have a right to respond to their opponents in equal amounts of broadcast time, and reasonable access requires that you make available time to all Federal candidates in reasonable amounts. But reasonable access does not require that you provide a candidate with all the time that they request (see our article here). As well-funded candidates come in to stations now to request big ad buys later in the political season, stations should consider whether they really want to sell those candidates all the time that they ask for – knowing that some of the less financially secure candidates may be delaying their buys until the last days before the primary. You’ll need to fit in those late-arriving candidates, so make sure you have sufficient advertising inventory in reserve to make room for their commercials.

Moreover, there are issues about free time for candidates. As we’ve written before, the FCC has determined that most interview programs where the content is under station control – even those that have little news value on the normal day – are deemed “news interview programs” exempt from equal time rules if they routinely cover issues of public importance.  Bona fide news programming is also exempt from equal time. Thus, equal time is normally only an issue in making sure that all candidates have equal opportunities to buy spot time, and in those rare circumstances where a candidate appears on a purely entertainment program. In these days of media overload, candidates are looking for these nontraditional means of exposure in broadcast programming. So use care if a candidate appears as a character on a scripted TV show, or walks into the announcing booth at a local football game asking to do the play by play for a few minutes, or (especially when dealing with state and local candidates) where the candidate is themselves a host of a broadcast program – as, depending on how they are handled, all could give rise to equal opportunity claims.

Another area where broadcasters need to pay attention is in connection with third party ads dealing with Federal issues.  Sometimes the ads are subtle digs at the positions that a potential candidate is taking (“call Congressman X and tell him that he should stop voting for bills that are bankrupting the country”), and sometimes they are more direct attacks on the potential candidate.  Sometimes they don’t directly address a particular politician at all, but are instead directed at an issue being debated in Congress.  In any case, if the ads are dealing with Federal candidates or other issues being considered by the US House of Representatives or Senate, then they are Federal issue ads on which the station must maintain full public file information, similar to that which is kept for any candidate advertising – the full schedule of advertising that is to be run, the class of time sold, the sponsor of the ad, and even the price that was paid for the spots (see our post here on the public file requirements for Federal issue ads).

We have also written, here, about issues concerning the content of these third-party ads, as stations can potentially have liability for defamatory content in those ads if the stations know or have reason to believe that the ads are in fact false. Candidates who are attacked may be calling stations asking that ads from PACs and other third-parties be pulled from the airwaves, and stations need to have plans in place to be ready to evaluate and deal with such claims. While third-party ads do not get lowest unit rates, these ads can be more problematic than candidate ads as they do potentially force stations to be judges of the truth of the content of those ads. Candidate-sponsored ads, on the other hand, cannot be censored, so stations have no liability for the content of those ads.

Finally, with the election fast approaching, even stations not in early primary states should start planning for the election season.  Some stations are no doubt already selling long-term contracts that will still be in effect during the primary season.  Stations should be considering how to allocate the purchase price of these long-term contracts to reflect their actual seasonal value – rather than simply booking them as having a flat rate throughout the entire year – including the pre-election lowest unit rate periods. As we wrote in our Political Broadcasting Guide, the FCC allows you, in internal station documents, to allocate for lowest unit rate purposes, the purchase price of a long-term contract in a manner different than shown on invoices given to commercial clients, as long as that allocation more accurately reflects the seasonal value of the spots sold, adds up to the total purchase price of the package, and is not done simply to avoid the lowest unit rate periods.  Consult with your attorney to make sure that you properly apply this process, but it could save you money in the long term.

These are but a few of the political issues that broadcasters should be considering. So tune into our December webcast for more information about some of the political issues about which you should be thinking or check out our Political Broadcasting Guide, or those prepared by the NAB and many other organizations representing broadcasters. These rules are complex, so you can never do enough preparation.

Comments Sought by FCC on Political Broadcasting Lowest Unit Rate Implications of Last In First Out Pricing

Delivered... David Oxenford | Scene | Fri 30 Jan 2015 5:39 pm

In a Public Notice issued yesterday, the FCC asked for comments from the public on whether broadcast stations should be able to enforce “Last In, First Out” (“LIFO”) pricing against political candidates in election races.  During the 45 days before a primary election or the 60 days before a general election, for advertising buys by a political candidate’s authorized campaign committee, a station cannot charge more than the lowest price charged to the station’s best commercial advertiser for that same class of advertising time.   What the Commission asks in its Public Notice is whether the practice of stations of deciding that particular classes of advertising time are effectively sold out discriminates against candidates – as candidates routinely buy their advertising time late in an election cycle.  These issues come up often, particularly late in any political window as demands on the advertising inventory of stations can become very tight as an election approaches.

So what does this petition ask?  First, let’s take a step back and look at how lowest unit charges work in broadcast (and cable) political advertising.  An easy example would be where a candidate wants to buy a fixed position advertisement on a radio station during its morning drive program.  For that ad, a candidate can be charged no more than the lowest price that the station charged to any commercial advertiser for a similar fixed-position spot that runs in that same time period.  Different classes of time have different lowest unit rates.  That means that, in that same morning drive program, there might be a lowest rate for these fixed position adverting spots that are guaranteed to run at the time that they are scheduled, but a lower price for spots that can be preempted by higher priced spots.  If there are different make-good rights associated with a class of preemptible time (e.g. one type of spot must be “made-good” by the station within a week if it is preempted, while another might just need to be made-good within the next month), both of those classes could have different lowest rates.  See more about lowest unit rate here and here

In political windows, and at other times when advertising is in short supply, stations establish policies that govern when an advertiser can buy time of a particular class.  If, for instance, a TV station knows that it will have 6 advertising breaks where it can sell local ads in a particular program, and it already has 6 advertisers who have committed to buy time of various classes during that program, it would make no sense to sell an advertising spot at the lowest preemptible rate when it knows that any new spot in that class will be preempted.  And that is where the issue seemingly comes up for the candidates whose representatives filed the complaint that led to the Public Notice.  While the complaint talks about LIFO policies, it seems that it really is asking whether a station can say that it is sold out of a particular class of time when it has sold all of the spots of that class that are likely to clear (actually air) on the station during the specified time period.

Basically, the complaint argues that candidates, who by the very nature of the political process buy advertising time at the last minute when they get funds to do so or as necessary to respond to campaign developments as election day approaches, can’t buy their advertising spots early.  So they rarely are one of the first advertisers to buy advertising time in a particular class of time.  While the complaint does not go into detail, it would seem that they are saying that, if, when a candidate comes to a station to buy spots, they are told that the time is already sold out at a particular level, as only spots that were previously sold to commercial advertisers have any chance of actually clearing, then the candidates routinely will not get the best rates or even access to the station.  Their only alternative to get spots on the air is to buy at higher rates to “bump” the commercial advertisers who bought the preemptible time, or to buy in different time periods or programs.  Based on its analysis, the complaint asks for alternative findings.

First, the complaint suggests that to be treated in the “same manner as the station’s most favored advertiser” (a formulation of the rules that has often been used by the FCC), the candidate needs to be treated as if their spots were bought early, even if they are purchased at the last minute.  Alternatively, the FCC is asked to investigate if a station ever has made an exception to its LIFO policies, and allowed an advertiser to buy in a particular class of time even though it came in later than another advertiser (or if it preserved a preemptible spot of a later buyer, bumping a spot of someone who bought a spot of the same class at an earlier time, when spots of higher classes are purchased and bump some of the preemptible spots).  If stations decide to bump selectively then, argues the complaint, the station needs to extend these preferences to candidates. 

A ruling in favor of the complaint could create all sorts of quandaries for the broadcaster.  If candidates are treated as if they bought first even when they didn’t, the candidate is not being treated in the same way as a station’s most favored advertiser.  Instead, the candidate is being treated better than the most favored advertiser.   Stations will never be able to tell commercial advertisers that their spots will clear as the political candidate would seemingly always be able to come in and purchase sold-out time if the candidate is treated as the first-in even if it buys last.  As these issues usually arise in the last days of the election, stations will be left scrambling to fill candidate orders at the last moment – and bumping their commercial advertisers – and the airwaves will be even more congested with political spots in the last days before an election than they already are.  Seemingly stations will rarely if ever be in a position to say that they are sold out.

This is obviously a very complicated issue that stations and candidates will need to carefully evaluate.  If you operate a station in a state that has high political demand, watch this proceeding carefully, as it could have a big impact especially during next year’s election period when the Presidential race will no doubt put huge demands on station’s advertising inventory as we near Election Day.  Comments are due on this issue on March 2, with replies on March 17.

For more on the FCC’s political rules, see our Political Broadcasting Guide, here

January Regulatory Dates for Broadcasters and Webcasters – Children’s Television Reports, Quarterly Issues Programs List, Webcaster Elections and Minimum Fees, the Return of Lowest Unit Rates and More!

Delivered... David Oxenford | Scene | Thu 9 Jan 2014 5:36 pm

A new month in a new year, and a number of new regulatory dates are upon us for broadcasters – and important dates for webcasters also fall in this month.  So now that the holidays are quickly becoming just a foggy memory, it is time to sharply focus on those regulatory obligations that you have to avoid legal issues as the year moves forward.  January 10 brings one deadline for all broadcast stations – it is a date by which your Quarterly Issues Programs lists, setting out the most important issues that faced your community in the last quarter of 2013 and the programs that you broadcast to address those issues, need to be placed in the physical public inspection file of radio stations, and the online public file of TV broadcasters.

Full power TV and Class A TV stations by January 10 also need to have filed with the FCC their FCC Form 398 Children’s Television Reports, addressing the educational and informational programming directed to children that they broadcast.  Also, by that same date, they need to upload to their online public files records showing compliance with the limits on commercials during programming directed to children.

For webcasters, by the end of this month, under many of the Webcaster Settlement Act agreements, elections need to be filed with SoundExchange determining which rate structure will be claimed by the webcaster in the coming year.  Particularly small webcasters, “pureplay” webcasters, and small broadcasters looking for certain special treatment under these agreements need to review their status to see if they can still claim coverage under these agreements.  The upfront minimum fees which, under most royalty rate structures is $500 per channel, also needs to be submitted to SoundExchange before the end of the month.  Note that under certain Webcasting Settlement Agreements higher minimum fees may be required, and in some instances (particularly for small noncommercial webcasters) additional fees for the waiver of paperwork obligations must also be submitted.  So carefully review your obligations under the agreements under which you are operating.  For summaries of the rates paid under some of the webcaster deals, with links to more detailed summaries of the agreements, see our article here

For radio and TV broadcasters in certain states, post-filing and pre-filing license renewal announcements must be broadcast.  They should have been run on the 1st of the month, and need to again be run on the 16th   - prefiling announcements for radio stations in New Jersey and New York, and TV stations in Kansas, Nebraska and Oklahoma, and post-filing announcements for radio stations in Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont, and TV stations in Colorado, Minnesota, Montana, North Dakota, and South Dakota.

There are important comment dates for broadcasters in several FCC proceedings, including two of which we have recently made note.  AM broadcasters should be looking to file comments on the FCC’s initial set of proposals for the improvement and revitalization of the AM service.  We summarized the issues raised in that proceeding here and here.  Comments are due on January 21.  For TV stations, the FCC has also asked for comments as to whether clips of TV programs that were captioned on the air should also be captioned when they are transmitted on the Internet. Right now, only full programs retransmitted on the Internet need to be captioned.  We summarized that proceeding here, and comments are due on January 27.

Finally, broadcasters should start thinking about their political broadcasting obligations.  The first lowest unit rate window kicks in on January 18 for broadcaster in Texas running advertising for candidates in the March 4 primary.  Watch for political windows to start to open in your state as the year rolls on.  More information about Lowest Unit Rates can be found in our article here.

Plenty for broadcasters to worry about in this first month of the year – and only 11 more to go after this one!

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