Articles Posted in Political Advertising

As I reported last week, the FCC’s new rules requiring television stations to replace the public files they maintain at their studios with electronic files to be hosted online by the FCC are currently set to become effective on August 2, 2012. Since that report, a lot of events have occurred, and the focus of this proceeding has officially shifted from the FCC to the U.S. Court of Appeals for the D.C. Circuit.

To no one’s surprise, the FCC earlier today issued an Order denying the National Association of Broadcaster’s (NAB) Petition for Stay of the FCC’s new online public inspection file rules. In its Order, the FCC states it is denying the NAB’s request because the NAB was unable to satisfy any of the four factors factors supporting grant of a stay. According to the FCC, the NAB failed to show (1) that the new rules would cause irreparable injury; (2) that the NAB is likely to prevail on the merits in its appeal; (3) that other interested parties will not be harmed if a stay is granted; and (4) that a stay would serve the public interest. Essentially, the FCC regurgitated its prior findings in deciding to move full speed ahead with the new rules. However, TV broadcasters have been seeking relief from the new rules, which will, without question, increase compliance burdens on TV stations while needlessly duplicating records already required to be maintained online by the Federal Election Commission.

As a practical matter however, today’s action by the FCC is more of a procedural hurdle that had to be cleared by broadcasters on their way to court rather than a true substantive analysis of the merits of the court appeal. As I reported last month, the NAB has already filed a Petition for Review asking the U.S. Court of Appeals for the D.C. Circuit to vacate the FCC’s action “on the grounds that it is arbitrary, capricious, in excess of the Commission’s statutory authority, inconsistent with the First Amendment, and otherwise not in accordance with law.” Also, earlier this week, in anticipation of today’s denial by the FCC, the NAB filed a separate Emergency Motion with the court asking the court to hold the new rules in abeyance. The NAB is asking the court to stay the August 2 effective date of the rules until the court has had an opportunity to consider the NAB’s Petition for Review.

According to the NAB’s request for a stay, the FCC has “engaged in arbitrary and capricious decisionmaking by disregarding the competitive harm that is likely to result from the Order and departing from the provisions of the Bipartisan Campaign Reform Act (BCRA.)” The NAB also states that its “members will suffer irreparable harm absent a stay because the Order compels television stations to post the prices for specific advertisements to a public website immediately after the sales occur.” The NAB’s request also noted that the new rules “will place NAB’s members at a distinct disadvantage to their non-broadcast competitors, who will not be required to post rate information on the Internet.”

While all of this is going on, the FCC has announced that it will be conducting a public demonstration of its proposed online public inspection file database next Tuesday, July 17, 2012, at 10:00 a.m., only two weeks or so prior to the date the new rules are scheduled to go into effect. Those of you interested in participating online can do so by logging in to www.fcc.gov/live. I will be posting a follow-up piece summarizing next week’s demonstration.

As the levels of activity on multiple fronts indicate, this proceeding is far from over. To be sure, obtaining a court stay is not an easy task. That said, this is the rare case where (despite the FCC’s contrary ruling), the irreparable harm to broadcasters is apparent, and the case on the merits is strong. While the court ponders the stay request, TV broadcasters need to be preparing themselves for the the process of uploading their public inspection files by the August 2 deadline. Whether or not a last-minute stay is granted, the next two weeks will be a white-knuckle ride for TV broadcasters.

Earlier today, the FCC announced in the Federal Register that the Office of Management and Budget (OMB) has approved the FCC’s new rules requiring television stations to replace the public files that they maintain at their studios with electronic files that will be hosted online by the FCC. As a result of today’s announcement, the online file rules become effective on August 2, 2012. Included among the documents that must be made available online are stations’ ad sales records for political ads–a requirement widely speculated to be a response to the Supreme Court’s decision in the Citizens United case.

As I reported recently, what this means is that all full-power and Class A television stations will be required to upload any newly created public file documents to a not-yet-disclosed database managed by the FCC starting August 2. Stations will have until January 3, 2013, to post their current public file documents online, with the exception of letters and emails from the public which are not required to be uploaded.

With respect to political file documents, affiliates of ABC, CBS, NBC or Fox located in the top-50 television markets will have to begin uploading all newly created political file documents to the FCC’s database on August 2, 2012. The political file requirement will be phased in so that all other television stations must comply with the political file uploading requirement by July 1, 2014. Until July 1, 2014, stations not in the top-50 markets and all stations not affiliated with the top-four networks, regardless of the size of the market they serve, are exempt from the requirement. The FCC has stated that it plans to issue a Public Notice no later than July 1, 2013 seeking comments on the impact that the posting requirement has had on television stations to that point and to evaluate the effectiveness of the process. Items placed in a station’s political file prior to August 2 will not have to be posted online.

Whether any of these dates will hold remains to be seen.

First, the National Association of Broadcasters (NAB) has already filed a Petition for Review of the rules in the U.S. Court of Appeals for the District of Columbia Circuit, even though the deadline to do so is not until July 10. The NAB, along with 46 State Broadcasters Associations and others, had opposed the rules when the FCC proposed them, stating that they were riddled with omissions, greatly underestimated the burden on television stations, and were otherwise duplicative of reporting required by the Federal Election Commission (FEC). However, the FCC and the OMB rejected these claims, seemingly turning a blind eye to the voluminous record in the proceeding indicating that the proposed rules will increase burdens on television stations while merely duplicating records already required to be filed with the FEC. As a result, the NAB’s court challenge argues that the FCC’s action in adopting the rules “infringes on . . . First Amendment free-speech rights, exceeds statutory authority, and is arbitrary and capricious.” In addition, the NAB filed a motion for stay with the FCC earlier today asking the Commission to delay implementation of the rules until the court has had an opportunity to review the NAB’s Petition for Review.

Second, and of more practical concern, the FCC will now have to scramble to ready its online filing database and educate the public in its use before the August 2 effective date rolls around. The FCC has not yet announced when the database will be available for stations to “test” the system in advance of the rules going into effect as it claimed it would do when it adopted the new rules. The Commission did announce today that it will soon schedule user testing and educational webinars for the online public file to ensure that the uploading of materials by broadcasters can be done “smoothly and efficiently”.

Many will remember the chaos that occurred in 2009 and 2010 as a result of the FCC’s decision to adopt a new electronic Ownership Report filing requirement that increased both the amount of data to be collected and the number of reports to be submitted, but promised to mitigate the increased burden by making the data easy to copy into multiple filings. Repeatedly, the FCC’s system ground to a halt under the heavy load, precluding filers from working with the data they had painstakingly entered. As a result, the filing deadline had to be repeatedly extended until the bugs were worked out. Glitches such as this are inevitable with an untested system, which makes one wonder how the FCC believes it can make it all work before the August 2 deadline. It would be unfortunate if the combination of the Citizens United ruling and the impending November 6 election drove the FCC to once again implement a filing database that is not ready for prime time, forcing broadcasters to serve as beta testers.

Needless to say, given the NAB’s Petition at the court, the other likely court and FCC challenges to the rules, and the hurdles the FCC faces in implementing the online database, the odds are not high that stations will be fully uploaded by the August 2, 2012 deadline. Unfortunately, though, television stations can’t afford to wager on the speed with which the FCC will move in this case. Stations will therefore need to start moving now to ensure they are ready to post their files by August 2, 2012, and should remain alert to any FCC announcements informing them exactly how the new filing system will work.

At its Open Meeting this morning, the Federal Communications Commission released its latest proposal to require commercial and noncommercial television broadcasters to maintain their public inspection files online. The FCC had taken incremental steps in this direction over the years by first permitting and encouraging stations to maintain their public files online, and then requiring that certain content of the public file, such as annual EEO public file reports and the progress reports that broadcasters filed during the DTV transition, also be posted on stations’ websites.

However, most television broadcasters will recall that in 2007 the FCC suddenly upped the stakes considerably when it undertook a review of the public interest obligations applicable to television broadcasters as they transitioned to digital television. The results of that review, known as “Enhanced Disclosures”, specifically mandated that television broadcasters complete a long and excruciatingly detailed new form, FCC Form 355, reporting on their programming content quarterly, and maintain almost the entirety of their public file in an online format.

While these requirements were adopted by the FCC in 2007, they were never actually implemented. Broadcasters petitioned the FCC to reconsider its order due to the excessive burden the new requirements placed on stations, and advised the government’s Office of Management and Budget, which must approve any new paperwork requirements before they go into effect, of the burden the new rules would impose.

This summer, the FCC released a report entitled “The Information Needs of Communities.” It concluded that the Form 355 was “overly bureaucratic and cumbersome.” Consistent with that conclusion, the FCC today abandoned the Form 355, but stated that it is internally circulating a Notice of Inquiry that will examine what manner of disclosures television broadcasters should instead make.

While eliminating the Form 355, the FCC did not give up on its goal of an online public inspection file. In fact, today’s proposal to implement an online public file suggests the inclusion of documents that the FCC had exempted in its 2007 order, as well as documents that stations have never previously had to place in their public file at all. Those items which are now apparently fair game include shared services agreements and a station’s political file. In addition, the FCC is proposing that stations be required to post information online regarding all of their on-air sponsorship announcements.

Both the political file and sponsorship identification proposals pose a potentially enormous burden for TV stations. How big that burden will be should become clearer when the FCC releases the actual text of the Notice of Proposed Rulemaking. Commissioner McDowell specifically asked for comment on the burden imposed by requiring that stations’ political files be posted online and continuously updated. During today’s Open Meeting, he pointedly noted that the FCC had decided to exempt the political file from online posting in 2007 because the burden outweighed the public interest benefit.

In that regard, the FCC did acknowledge some of the concerns broadcasters had earlier raised regarding the burden of online posting. For example, the FCC is proposing that, rather than requiring broadcasters to maintain their own websites for posting their public file information, the FCC create its own hosting site for that purpose.

We will certainly have more to say about this proceeding once the FCC releases the text of its proposals and inquiries. Commissioner McDowell made an additional point at the Open Meeting which certainly will resonate with broadcasters, and that is whether the burdens these new procedures would involve will result in any true benefit to the local communities the stations serve. Much was said today in support of the item based on a desire to drive additional broadband adoption, and to aid academics and advocacy groups in monitoring media. However, the purpose of the public inspection file has always been to ensure that a station’s local community has easy access to the information necessary to assess the station’s performance, particularly at license renewal time. It will be hard to justify the additional burden on TV stations if the primary “benefit” of an online file goes to academicians and distant advocacy groups rather than to a station’s local audience. Implicit in that approach is a “one size fits all” assumption about what types of programming meet the needs of each and every local community.

This is obviously a very important proceeding for all broadcasters, since the FCC has made clear that once online public files are implemented for TV, radio is likely next. All broadcasters will therefore want to get involved in this issue once the FCC announces the deadlines for filing comments.