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September 2010
The next Quarterly Issues/Programs List (“Quarterly List”) must be placed in stations’ local public inspection files by October 10, 2010, reflecting information for the months of July, August and September, 2010.

Content of the Quarterly List

The FCC requires each broadcast station to air a reasonable amount of programming responsive to significant community needs, issues, and problems as determined by the station. The FCC gives each station the discretion to determine which issues facing the community served by the station are the most significant and how best to respond to them in the station’s overall programming.

To demonstrate a station’s compliance with this public interest obligation, the FCC requires a station to maintain, and place in the public inspection file, a Quarterly List reflecting the “station’s most significant programming treatment of community issues during the preceding three month period.” By its use of the term “most significant,” the FCC has noted that stations are not required to list all responsive programming, but only that programming which provided the most significant treatment of the issues identified.

Given the fact that program logs are no longer mandated by the FCC, the Quarterly Lists may be the most important evidence of a station’s compliance with its public service obligations. The lists also provide important support for the certification of Class A station compliance discussed below.

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The staggered deadlines for filing Biennial Ownership Reports by noncommercial educational radio and television stations remain in effect and are tied to their respective anniversary renewal filing deadlines.

Noncommercial educational radio stations licensed to communities in Iowa and Missouri, and noncommercial educational television stations licensed to communities in Alaska, American Samoa, Florida, Guam, Hawaii, Mariana Islands, Oregon, Puerto Rico, Virgin Islands and Washington, must file their Biennial Ownership Reports by October 1, 2010.

Last year, the FCC issued a Further Notice of Proposed Rulemaking seeking comments on, among other things, whether the Commission should adopt a single national filing deadline for all noncommercial educational radio and television broadcast stations like the one that the FCC has established for all commercial radio and television stations. That proceeding remains pending without decision. As a result, noncommercial educational radio and television stations continue to be required to file their biennial ownership reports every two years by the anniversary date of the station’s license renewal filing.

A PDF version of this article can be found at Biennial Ownership Reports Are Due by October 1, 2010 for Noncommercial Educational Radio Stations in Iowa and Missouri, and for Noncommercial Educational Television Stations in Alaska, American Samoa, Florida, Guam, Hawaii, Mariana Islands, Oregon, Puerto Rico, Virgin Islands and Washington

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One of the great things about being a communications lawyer is the wide array of issues you deal with over the course of a day. Contract lawyers negotiate contracts, and litigators litigate, but communications lawyers negotiate contracts, litigate, argue government policy, and generally are thrown into the breach whenever a problem emerges affecting their clients. As a very senior communications practitioner said when I was a young lawyer, “if you want to be a communications lawyer, you better be very good at your trade or have a damn good smile!”
Because of the diversity of communications issues out there, you never know when you answer the phone what the issue will be. One question I have received on multiple occasions over the years is whether it’s true that radio stations are prohibited from airing the sound of a police siren. I have had broadcasters swear there is a flat prohibition on this and that they were taught about it early in their career. While there is no outright prohibition, this “old broadcaster’s tale” stems from a 1970 FCC proceeding where several complainants sought such a ban. The FCC declined to prohibit these sound effects, but basically told broadcasters to use common sense when airing them. Not coincidentally, 1970 was the year that R. Dean Taylor’s song Indiana Wants Me made it to Number 5 on the Billboard charts, complete with siren. A siren-free version of the song was also produced to appease nervous radio stations (take a listen to the “with sirens version“; go ahead, I’ll wait till you get back).

I was reminded of all this today when I received a client call asking about a radio ad from the oil company ARCO that includes the Emergency Alert System tone at the beginning of the spot. The Society of Broadcast Engineers has posted an MP3 of the ad here.

The EAS tone differs from police sirens in two important ways. First, the airing of the EAS tone or a simulation of the tone where no emergency or authorized EAS test exists is flatly prohibited by Section §11.45 of the FCC’s Rules (“No person may transmit or cause to transmit the EAS codes or Attention Signal, or a recording or simulation thereof, in any circumstance other than in an actual National, State or Local Area emergency or authorized test of the EAS.”). It could also potentially violate Section 73.1217, the FCC’s prohibition on broadcast hoaxes.

Second, unlike members of the public who usually can discern from context whether a siren or other emergency sound is a cause for concern (does Indiana really want them?), the electronics that monitor radio signals do not have this capability. As a result, the airing of the commercial has accidentally activated EAS receivers around the country, which hear the alert tone and activate the local emergency alert system as though an actual emergency is occurring. It appears the tone in the spot was tweaked to speed it up a bit, but apparently not enough to avoid fooling at least some EAS receivers.

Stations airing the spot, particularly where EAS activations have occurred, should get in touch with their communications counsel immediately. The FCC’s words from 1970 are still relevant here: “The selection and presentation of advertising and other promotional material are, of course, the responsibility of licensees. However, in this selection process, licensees should take into account, under the public interest standard, possible hazards to the public. Accordingly, in making decisions as to acceptability of commercial and other announcements, licensees should be aware of possible adverse consequences of the use of sirens and other alarming sound effects.” It may take 40 years, but what goes around, comes around.

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Having spent a good portion of last week on the road and on conference calls talking about the latest Performance Tax developments, I heard a lot from broadcasters on the subject. For those blissfully unaware of this legislative battle, the recording industry has been seeking a financial parachute from broadcasters to help slow the rate of its descent into an economic abyss. The irony of course is that if illegal music downloads on the Internet are what has caused the recording industry’s plunge, reaching out to drag broadcasters into the abyss with them merely weakens an ally in the battle to protect content from illegal distribution over the Internet.

Famously dubbed a performance “tax” by broadcasters, the legislation sought by the recording industry would require broadcasters to pay royalties to the recording industry for playing music on-air. Beyond the obvious short term benefit of royalty checks from broadcasters that choose to retain a music-based format, the recording industry hopes the passage of a U.S. law requiring such royalties for broadcasts in the U.S. will cause foreign countries to release royalties already being collected for airplay of U.S. artists in those countries. Unfortunately, because most of the record companies are now foreign-owned, much of that money, along with royalties paid by U.S. broadcasters, would wind up in foreign hands, undercutting any argument for this “found money” being an economic benefit in the U.S. All of the royalty funds would come from the U.S., but only a portion of those funds would stay in the U.S. However, one would hope that at least some of those royalties, if they do come to pass, would actually reach the U.S. artists responsible for creating the music that the recording industry has been selling and reselling to us over the years.

Broadcasters have been successful in blocking Performance Tax legislation because of good grass roots efforts to remind Congress that radio promotes the sale of music at no charge to the record labels or to the artists that have ridden radio airplay to fame (and whose records and concert tickets continue to sell because of radio airplay). The long, sordid history of payola — the record labels’ efforts to curry airplay via cash and other payments to radio station programmers — supports broadcasters’ proposition that the “value” of radio airplay exceeds any “costs” it imposes on the recording industry.

It was therefore with great surprise that many radio broadcasters heard last week that negotiating teams for the two industries were floating a multi-part proposal to resolve the legislative impasse — a compromise that would require, for the first time, that artist (as opposed to songwriter) royalties be collected on broadcast airplay of music. While the proposal has some attractive features for broadcasters (most importantly the inclusion of FM receiving chips in cellphones), I got an earful from broadcasters absolutely incensed at the notion of promoting music and concert sales, and then being charged for doing it.

If any member of Congress thinks that “radio promotes music sales” is just a broadcaster talking point for meetings, encountering a broadcaster last week would have decisively corrected that impression. Some broadcasters I talked to had such a visceral reaction to the very concept of such payments that it didn’t matter to them what the beneficial points of the proposal were. For them, it was as if someone had told them to “pay the ransom to the kidnappers and hope for the best.” Some appreciated that it could be the pragmatic thing to do to put the issue behind them, but still found the very concept reprehensible. To be sure, there is money involved and that can sway a person’s thinking. However, a number of the broadcasters I spoke with were so fundamentally opposed to the concept that they would reject the idea even if other parts of the proposal actually resulted in more money coming in from the proposal than going out.

I understand that perspective, but lawyers are trained to assess the options, and to assist their clients in choosing the best option for that client. Often, but not always, the “best” option is the one most economically beneficial to the client. Here, some broadcasters are not interested in the economics, but in the unfairness of being forced to pay a performance royalty as any part of the package. Despite that, all broadcasters should give the compromise proposal a careful look, if only to sharpen their understanding of the numerous issues in play and how they might affect the future of radio broadcasting. There are any number of reasons why the proposal might not gain momentum, or even be possible given the dynamics of Washington, and I hope to address those in a future post. For now, radio broadcasters should suppress the instinct to reflexively ignore it, and instead talk to their colleagues and counsel about the issues this proposal raises for their future, and for the future of their industry.

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The FCC has announced that full payment of all applicable Regulatory Fees for Fiscal Year 2010 must be received no later than August 31, 2010.

As mentioned in a July 9, 2010 Report and Order, the Commission will mail assessment notices to licensees/permittees reflecting payment obligations for FY 2010, but intends to discontinue such notifications beginning in 2011. Be aware that the notices sent may not include all of the authorizations subject to regulatory fees, and do not take into account any auxiliary licenses for which fees are also due. Accordingly, you should not assume that the notice is correct or complete. Similarly, if you do not receive a notice letter, that does not mean your authorizations are exempt from regulatory fees. It is the responsibility of each licensee/permittee to determine what fees are due and to pay them in full by the deadline.

Annual regulatory fees are owed for most FCC authorizations held as of October 1, 2009 by any licensee or permittee which is not otherwise exempt from the payment of such fees. Licensees and permittees may review assessed fees using the FCC’s Media Look-Up website – www.fccfees.com. Certain entities are exempt from payment of regulatory fees, including, for example, governmental and non-profit entities. Section 1.1162 of the FCC’s Rules provides guidance on annual regulatory fee exemptions. Broadcast licensees that believe they qualify for an exemption may refer to the FCC’s Media Look-Up website for instructions on submitting a Fee-Exempt Status Claim.

For more information on annual regulatory fees, including assistance in preparing and filing them with the FCC, please contact any of the lawyers in the Communications Practice Section.

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In my recent commentary on the Senate version of the DISCLOSE Act (Senate Disclose Act Bill Raises Serious Concerns For Broadcasters), I highlighted provisions related to the Lowest Unit Charge which had the potential to cause a very significant adverse impact on broadcast station revenues from federal election advertising.

Senator Schumer introduced today a revised version of the DISCLOSE Act. While retaining other campaign finance reform provisions, the new version thankfully eliminates the LUC provisions that were the focus of my concern.

The Act has not yet been passed, and could still be modified either in the Senate or in a Conference Committee with the House. We will continue to monitor the bill and let you know if further attempts are made to reinstate the troublesome LUC concepts.

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At a recent presentation on legislative matters affecting the communications industry, I noted that broadcasters, while lately feeling much under siege, should not underestimate their part in the digital future. It is true that the government wants broadcasters’ spectrum (the National Broadband Plan), cable operators want broadcasters’ programming, ideally for free (the retransmission battles in Congress and at the FCC), politicians want broadcasters’ airtime (the DISCLOSE Act), musicians want broadcasters’ money (the Performance Tax), and the Internet would love to have broadcasters’ audiences. However, the conclusion to be drawn from those facts is that broadcasters have what everyone else wants, and need to themselves capitalize on those important assets.

Let there be no doubt that broadcasters are in for some challenging times fending off those who covet their riches, but that is a far better position than having no riches to covet in the first place. As the possibilities for television and radio multicasting become better developed through experimentation and innovation, mobile video gains the prominence in the U.S. that it is experiencing overseas, and broadcasters continue to refine how best to leverage their content on multiple platforms, broadcasters have as good an opportunity as anyone to make their mark in a digital future, while others fall by the wayside as “one-idea wonders.”

Unfortunately, government has begun to place its thumb on the scale, discouraging broadcasting while encouraging other wireless uses. The latest example is this week’s introduction of the Spectrum Measurement and Policy Reform Act (S. 3610) by Senate Communications Subcommittee Chairman John Kerry (D-Mass.) and Senator Olympia Snowe (R-Maine). The legislation would encourage broadcasters to abandon spectrum for a share of the government’s auction proceeds for that spectrum, and authorize the government to impose spectrum fees on broadcasters. In other words, the FCC can use spectrum fees to “encourage” broadcasters to relinquish their spectrum.

This government push is propelled by one of the oldest myths regarding broadcasting, and one of the newest myths. The first myth is that broadcasters are the only licensees who have not paid for their spectrum, and therefore merit less leeway in how they use it, or whether they get to use it at all. Of the thousands of broadcasters I have worked with over the years, however, only a handful actually received their spectrum for free. The vast majority bought their stations (and FCC licenses) from another party, paying full market price, and therefore being really no different than the wireless telephone licensee that also bought its FCC authorization from a prior licensee. Whether some earlier, long-gone broadcast licensee that built the station enjoyed some financial windfall doesn’t bring any benefit to the current licensee. The current licensee inherited the dense regulatory restrictions of broadcasting, but not the “free spectrum.”

In addition, new broadcast licensees have generally purchased their spectrum at FCC auction since Congress changed the law in 1997, just like wireless licensees. Despite that, no one has suggested that even these more recent licensees should be released from FCC broadcast regulations because they paid the government for their spectrum.

The second and newer myth, propogated by advocates of the National Broadband Plan, is that broadcasting is a less valuable use of spectrum than wireless broadband since spectrum sold for wireless uses goes for more money at auction than broadcast spectrum. That is, however, a distorted view of value. Everyone, including the FCC and the wireless industry, has denoted broadcast spectrum as “beachfront property” from a desirability standpoint, meaning that it is not the spectrum, but the regulatory limits placed on it, that is creating the difference in cash value at auction. An alternate way of viewing it is that the public receives that difference in auction value every day from broadcasters in the form of free programming and news, rather than in the form of a one-time cash payment to the government. That the public receives more value for their spectrum from continuing broadcast service than from a one-time auction payment (that is swallowed by the national deficit in a matter of seconds) becomes more obvious when you realize that the public will then spend the rest of their lives leasing “their” spectrum back from the auction winner in the form of bills for cellular and broadband service.

An apt analogy is national parks. Would selling them outright for industrial use bring in more cash than keeping them and allowing them to be enjoyed by the public? Certainly. Is selling them for industrial use therefore the most valued use of parkland? Hardly.

Broadcasters have been good tenants of the government’s spectrum, paying the public every day for the right to remain there. If they stop those public service payments, they lose their license, making way for a new tenant. This new legislation aims to entice these paying tenants from their spectrum so that the spectrum can be sold outright to the bidder who perceives the greatest opportunity to extract a greater sum than the auction payment from the public. That may be poor public policy, but it is at least voluntary for the broadcaster, though not for the public. Threatening to tax broadcasters with spectrum fees until they surrender their spectrum is not marketplace forces at work, but the government forcing the marketplace to a desired result. Proponents of wireless broadband must have little confidence in their value proposition if they feel they can come out ahead only if they first devalue broadcast facilities by imposing yet more legal and financial burdens on broadcasters.

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Last month, the House of Representatives passed the DISCLOSE Act (“Democracy is Strengthened by Casting Light on Spending in Elections Act”), H.R. 5175. The bill responds to the decision of the U.S. Supreme Court in Citizens United v. Federal Election Commission which held that corporations (and presumably unions and other associations) have a constitutional right to make independent expenditures in election campaigns. The bill would, if it becomes law, impose significant new disclosure requirements related to political expenditures, prohibit government contractors from making campaign expenditures, and ban such expenditures by U.S. corporations owned 20% or more by foreign nationals or which have certain other foreign ties.

The Senate’s companion DISCLOSE Act bill, S. 3295, was introduced on April 29 by Senators Schumer, Feingold, Wyden, Bayh and Franken, and remains pending at this time. The focus of this commentary is on a provision in the Senate bill, but not the House version, that we believe has the potential to have a very significant adverse impact on broadcast station revenues from federal election advertising.

In our previous discussions of the DISCLOSE Act here and here, we pointed out that the Senate bill would allow national committees of any political party (including a national congressional campaign committee of a party) to take advantage of Lowest Unit Charge (LUC) rights previously only available to legally qualified candidates or their official committees. Similarly, it would extend Reasonable Access rights to national party committees which are now only available to federal candidates. In addition, it would effectively make all federal candidate and party committee advertising non-preemptible, regardless of the class of advertising purchased. Stations would also be required to promptly list all requests of candidates and party committees to purchase time on the stations’ web sites.

While troublesome, these and other provisions in the DISCLOSE Act pale in significance, in our view, to the proposed amendment to the LUC provisions of Section 315 of the Communications Act. Under Section 315, as currently in effect, legally qualified candidates for elective office are entitled to receive during specified pre-election periods “the lowest unit charge of the station for the same class and amount of time for the same period” that is then clearing on a station. Under the Senate version of the DISCLOSE Act, federal candidates and party committees (but not state or local candidates) would be entitled to receive the “lowest charge of the station for the same amount of time that was offered at any time during the 180 days preceding the date of use.”

This is troublesome for two reasons. First, the bill eliminates the “same class” and “same period” provisions in current law. Because “class” refers to the level of preemption protection which the advertiser has purchased, federal candidates and committees would be entitled to obtain non-preemptible status while paying rates that commercial advertisers would pay for immediately preemptible spots. Similarly, because “period” refers to the day part or rotation involved, stations could not charge more to federal candidates and committees for the most desirable spot placement – fixed position in prime or drive time – than they charge commercial advertisers for the same length spot that runs in the least desirable time period or rotation – late night or run of schedule (ROS).

Second, the new 180 day look-back provision means that stations will be required to give federal candidates and committees the lowest rate that has run on the station in the past half year, rather than which is currently running on the station. Therefore, if the LUC period occurs during a period of strong advertising demand, or a station has increased its rates due to extrinsic factors, such as improved programming or a format change, the station will still be required to give federal candidates and committees preferential rates that no other advertiser can currently obtain.

We view these provisions, if adopted, as creating a perfect storm for broadcasters. The number of entities entitled to reasonable access and lowest unit charge rights will be greatly expanded. Stations will be required to give non-preemptible access to federal candidates and national party committees in their most desirable time periods at their lowest rates for any advertising. Rather than election years being seen as a period of enhanced revenues for broadcasters, this provision might well cause election years to be viewed as a major drag on station revenues.

For some reason, this proposal to dramatically change the prevailing law has received little publicity in the press or in releases from proponents or opponents of the bill. A little sunshine on this part of the bill appears appropriate.

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In light of today’s decision by the US Court of Appeals for the Second Circuit invalidating the FCC’s indecency policy, it would be hard to justify writing about anything else. From my first days as a young lawyer screening programs before they were aired (I still remember assessing the legalities of airing a live satellite feed of “Carnaval” from Rio) to defending stations accused of airing indecent programming in FCC enforcement actions, the FCC’s indecency policy has been an ever-present, ever-broadening part of the practice. While the definition of indecency has remained largely constant (“language or material that, in context, depicts or describes, in terms patently offensive as measured by contemporary community standards for the broadcast medium, sexual or excretory organs or activities”), its interpretation has always been a moving target.

When the Supreme Court originally found that requiring indecent content to be channeled into late-night hours was constitutional, it did so based upon a narrow view of what qualified as indecent content (basically George Carlin’s “Seven Dirty Words” routine) and the assurance of the FCC that restrained enforcement would protect First Amendment concerns. Over the next twenty years or so, broadcasters programmed accordingly, and with a few exceptions, broadcasters and the FCC learned to coexist on the issue of indecency.

However, the rise of cable television placed immense pressure on both television and radio broadcasters to more precisely map the boundary between “decent” and “indecent” content. While most broadcasters remained determined to stay on the “decent” side of that line, they could no longer afford to remain at such a safe distance from that line as to be deemed “fogey programming” by a generation of consumers that did not distinguish between broadcast programming and cable programming. To these viewers, all channels are equal, and whether programming arrives by cable, satellite, or antenna is beside the point. To reach this audience, many programmers struggled mightily to make their programming more edgy and relevant to young adults. This programming stayed clear of Carlin’s seven dirty words, and focused more on situation and entendre to engage its audience.

In response, the FCC stepped onto a slippery slope, seeking to broaden its interpretation of indecency by expanding its view of what constitutes “patently offensive” material. The FCC was not prepared for the mission it undertook. What at first appeared to be a slippery slope of line drawing quickly became a well-greased plunge into the abyss of eternal peril. Those filing complaints at the FCC often urged the agency, as a practical matter, to forget that indecency must be patently offensive and instead sought action against content that was merely offensive to the complainant. The result has been a gut-wrenching high speed slalom down the slippery slope, resulting in the FCC’s headfirst encounter today with the large oak doors of the Second Circuit’s courtroom.

Although the court based today’s ruling on a finding that the FCC’s interpretation of indecency is impermissibly vague, and therefore chilling of protected speech, the problem actually goes far deeper than that. Some of the greatest damage to free speech has resulted from complaints where just about everyone, including the FCC, would agree that indecency is not present. While baseless complaints were once met with a prompt and pleasant FCC letter notifying the complainant that the subject of their complaint was categorically not indecent, the FCC in later years treated every complaint even mentioning the word “indecency” as a reason to put a hold on that station’s license renewal or sale application for literally years until the FCC could investigate the complaint. In the meantime, these stations struggled, as a delayed license renewal made obtaining financing difficult, and a delayed sale often meant that the contract to sell the station expired before the FCC could resolve the indecency complaint and approve the sale. Under these circumstances, it is pretty easy to see how a station would be hesitant to say anything offensive to anyone, even without the potential for a $325,000 indecency fine.

Among the “indecency” complaints I have encountered that were holding up a station’s applications at the FCC was a complaint from a politician who didn’t like what a station said about him (apparently using the word “indecent” in his complaint got it put into the indecency pile), and a complaint that a Spanish word yelled at soccer matches when a goal is scored sounds too much like a bad word in English. When such complaints are allowed to languish or become the basis of a pointless inquiry, they interfere with the operations of a station, serve to chill future speech, and create a “bunker mentality” among broadcasters that anything they say will be held against them.

So where does this leave us? Well, as a pragmatic matter, the court’s ruling will not become effective until it issues its mandate, and the FCC may ask that the court delay taking that action while the FCC seeks a rehearing en banc or review by the Supreme Court. If the court’s ruling does become effective, it will apply only within the jurisdiction of the Second Circuit (which includes Connecticut, New York and Vermont). Both legally and politically, the FCC will feel compelled to pursue an appeal, and the result of that effort will determine the future of its indecency enforcement efforts across the US.

That places the FCC in a very high stakes game of poker. Does it place an ever larger bet on trying to defend its existing policy? If it does, it runs the risk that the Supreme Court will rule that the very notion of indecency enforcement is unconstitutional in light of a changing media landscape and the FCC’s seeming inability to apply a narrow and restrained enforcement policy. Or, does it fold this hand and return to the table later with a “back to basics” indecency policy similar to what was once found constitutional by the Supreme Court? One thing’s for certain–for the first time in a long time, broadcasters are holding all the right cards in this game.

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We are frequently asked by broadcasters during the political season whether they are required to provide political candidates with free spot availabilities because they are running “free” or “no charge” spots for commercial advertisers. These spots, of course, are really not free at all. They have a cost, but it is hidden in the cost of the other spots in the package.
The FCC has said that bonus spots to churches, charities, non-profit organizations and governmental entities do not need to be considered for purposes of computing a station’s lowest unit charge (LUC). Thus, the bonus spots (or PSAs) given an organization such as the Office of National Drug Control Policy — which required one free spot for every paid spot — do not affect stations’ LUC.
Much more common are the bonus spots that are given to a for-profit commercial advertiser as an inducement to enter into a package deal. For example, a radio station may offer an additional 20 Run-of-Schedule (ROS) spots for no additional charge to commercial advertisers who enter into a package deal to buy 20 drive time spots at full rate card price.
Sometimes these are listed simply as “bonus spots,” and no price is allocated to the spot at all. In such cases, the station is required to divide the total number of spots of all types in the package into the total consideration paid to compute the price for each spot in the package, including the “no charge” spots. So, if a radio station charges $1,000 for a package consisting of 20 drive time spots (shown on the invoice as $50 each) and 20 ROS spots (shown on the invoice as “bonus”), the FCC would divide the total number of spots (20+20=40) into the total package price ($1000) and say that the rate for LUC purposes of both the drive time and ROS spots is $25 each. This may well be lower than any drive time spot running on the station, and higher than any ROS spot. Because candidates may “cherry pick” spots in a package, and buy only one at the package rate, this leads to a very harsh result, because a candidate would be able to buy one or many drive time spots at the low $25 rate without having to buy any ROS spots.
In other cases, the advertising contracts for such package deals list price for the bonus spots as “no charge,” “free” or “$0.00.” While the FCC has said that it would not rule out the possibility that a station could assign a value of “zero” to a bonus spot, it said that such assignment would have to be based on the station’s normal commercial sales practices. Moreover, listing a bonus spot as free would trigger a requirement that the station make the spots available to candidates at no cost. In our experience, few, if any stations are in the business of giving away free advertising — at least unless tied to the purchase of full priced spots.
To avoid these traps, the station should put a price on each spot in the package, without changing the total package price. For example, if the station were to assign a price of $48 to each drive time spot, and $2 to each ROS spot, the charge to the customer stays the same, and the station has preserved the rates of its most valuable time. And, because most candidates want their ads to appear in better time periods, we believe it is unlikely that candidates would purchase ROS even at these low rates.
It is best that these rates be shown on the station’s contracts and invoices. However, the FCC recognizes that advertisers and agencies want to believe they are receiving “something for nothing” even though we all know there is no such thing as a free lunch. Therefore, stations are permitted to create a contract and invoice showing the “no charge” rate in a package, so long as there is a contemporaneous memo attached to the contract in the station’s records (but not sent to the advertiser or agency) that allocates the rates properly (in this case, $48 and $2), is signed and dated and can be produced upon request by the FCC. By doing so the station can send a contract and subsequent invoice to a commercial advertiser showing a “no charge” rate, while preserving the maximum value for the station’s best spots. These memos should be created, signed and dated at the time the contract is executed.
Stations should consult counsel as to how to deal with outstanding advertising packages that list spots as “free” or “no charge.”

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Posted in: Political Advertising
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