Lawyer Article

WASHINGTON, D.C. - “Okay,” you say, “I’ve watched out for absurd claims in advertisements, so I’m clean with the FTC. What do I need to do to keep that pesky FCC off my back?” “Hey,” you think, “I’m just a poor local broadcaster trying to serve my community, bring them interesting information and entertainment and keep the station ink black. Can you please, just stay off my back?”

 

If you want the FCC and its Enforcement Bureau to stay off your back for advertising, one cardinal rule is: always tell the audience who is speaking to them. Section 317 of the Communications Act of 1934, and its counterpart, 47 C.F.R. 73.1212, require that whenever a station broadcasts anything for which it is receiving compensation it must be accompanied by an announcement that it has been paid for and by whom or on whose behalf such consideration was supplied. 

 

Really important is that the law also requires that the announcement “…fully and fairly disclose the true identity…” of the advertiser. In other words, who is the real party paying for the ad.

 

This comes up most frequently in the period prior to an election, when there is a lot of issue advertising on the ballot or when candidates are closely associated with particular issues. We should see even more of this advertising in these last couple of weeks before the general election, now that the Supreme Court has opened the way for issue group advertising right before election periods.

 

In the landmark campaign finance decision Federal Election Commission v. Wisconsin Right to Life, the U.S. Supreme Court removed barriers on ads financed by corporations that mention a federal candidate and are run in the days before an election. This decision freed corporations, advocacy groups, trade associations, and for-profit businesses to pursue more robust communications strategies, many of which involve radio and television advertising. 

 

Commonly, opposing issue groups or candidates’ campaign committees will lodge a claim that an advertisement did not run with the proper sponsorship identification and demand that the ad be pulled from the station. These groups may also claim that the ad constitutes an illegal campaign contribution, making it a liability for the broadcaster. I’ve been on the receiving end of some of those demands, and believe me, they can be pretty outrageous. 

 

Under Section 317 of the Communications Act of 1934 and Section 73.1212 of the Commission's Rules, a broadcast licensee is required to identify the sponsors of paid political advertising at the time those advertisements are broadcast and is under a duty to make a reasonably diligent inquiry to learn, in order to identify, the true sponsor of the advertisements when the licensee has reason to think that it is someone other than the apparent sponsor. The Commission will determine liability by looking at the particular facts and circumstances surrounding the licensee's effort to make a reasonably diligent inquiry. 

 

If the sponsor concealed its identity from the broadcasters, then there is a good chance the FCC will not find them liable. The licensee's duty to investigate is merely reasonable diligence - even when the broadcaster is presented with conflicting information. The question turns on whether broadcasters should be required to verify the full name of the sponsor with campaign reports filed with the secretary of state. If the sponsor failed to identify itself fully and the licensee had no reason to discount the representation, the licensee would probably not be held liable as the duty does not require a licensee to become an investigative reporter or a private detective.

 

Broadcaster responsibility was defined by the 1983 DC Court of Appeals case of Loveday v. FCC, which also involved a question about who was really behind a pro-tobacco advertising campaign associated with a ballot proposition. The FCC had ruled that its function is merely to determine if the broadcaster exercised reasonable diligence to identify and ascertain the sponsor. The court agreed that a licensee confronted with undocumented allegations and an undocumented rebuttal may safely accept an apparent sponsor's representations that they are the real party in interest. The FCC has never indicated it would require a station to conduct an investigation or to look behind the plausible representations of a sponsor that it is the true party in interest. Therefore, unless presented with a specific and fact-based demand, the station’s judgment about the real party in interest, advertiser identity should be supported by the FCC. 

 

 

Gregg Skall actively represents telecommunications companies in domestic and international telecommunications enterprises in their regulatory matters and business dealings, including dealings with the Federal Communications Commission. He organized the coalition of radio broadcasters to obtain major policy changes before the FCC concerning the main studio rule and has represented FM subcarrier users for non-broadcast applications such as paging, since the industry began with Commission rule changes more than a decade ago. He frequently represents parties before the Commission and the Congress to obtain desired policy objectives.

Mr. Skall serves on the Advisory Committee on International Communications & Information Policy, a committee that serves the U.S. Department of State in an advisory capacity concerning major economic, social and legal issues and problems in international communications and information policy.http://www.state.gov/e/eb/adcom/acicip/index.htm.

 

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