What is the Impact on Broadcasters of Supreme Court Decision that Corporations Can Buy Political Ads? More Money, More Ad Challenges and the Return of the Zapple Doctrine
The Supreme Court Decision in Citizens United v. Federal Election Commission, freeing corporations to use their corporate funds to take explicit positions on political campaigns, has been mostly analyzed by broadcast trade publications as a good thing - creating one more class of potential buyers for broadcaster's advertising time during the political season - which seems to almost be nonstop in these days of intense partisan battles in Washington and in the statehouses throughout the country. What has not been addressed are the potential legal issues that this "third party" money may pose for broadcasters during the course of political campaigns. Not only will an influx of money from non-candidate groups require that broadcasters review the contents of more commercials to determine if the claims that they make are true, but it may also give rise to the return of the Zapple doctrine, one of the few remnants of the Fairness Doctrine never specifically repudiated by the FCC, but one which has not been actually applied in over a quarter of a century. Public file obligations triggered by these ads also can not be overlooked.
First, the need for broadcasters to vet the truth of allegations made in political ads sponsored by non-candidate advertisers. As we have written before(see our post here), the political broadcasting rules enforced by the FCC allow broadcasters to run ads sponsored by the candidates themselves without fear of any liability for the claims made in those ads. In fact, the Communications Act forbids a station from censoring a candidate ad. Because the station cannot censor the candidate ad (except in the exceptionally rare situation where the airing of the ad might violate a Federal felony statute), the broadcaster has no liability for the contents of the ad. So candidates can say whatever they want about each other - they can even lie through their teeth - and the broadcaster need not fear any liability for defamation based on the contents of those ads. This is not so for ads run by third parties - like PACs, Right to Life groups, labor unions, unincorporated associations like MoveOn.org and, after the Citizens United case, corporations.
Stations are not required to accept third party ads and, even where these ads address a candidate, the station has full rights to accept or reject the ads based on the ad's content (perhaps subject to Zapple discussed below). However, because the station can choose whether or not to run the ad, the station can also be held liable for the content of those ads. While the standard for liability under the rules of defamation are very high for public figures such as a political candidate, there still can be liability if the station runs an ad with "malice", meaning that they either know that the content of the ad is false, or run it with reckless disregard of the truth of the claims made (where those claims later prove to be false). That malice standard is what forces stations to become political researchers - tasked with determining if there is a reasonable basis for a claim made in an ad so that the candidate being attacked cannot later come back against the station and accuse the station of recklessly running a false ad. We've written before (here and here) about the typical scenario that arises - a third party group buys an attack ad against a political candidate, the candidate or his or her lawyer sends the station a letter saying that claims made in the attack ad are false and the station will be liable if the station continues to run the ad. At that point, the station has an obligation to investigate the truth of the statements made in the ad. If the station just continues to run the ad with no investigation, and the ad proves to be false and the candidate that is attacked can prove injury, the station can be held liable. How much investigation is necessary? That is a question that cannot be answered in a few paragraphs on this blog. But suffice it to say that stations need to be prepared to call their attorneys and discuss the issue with their owners in making these assessments - as each station may have a different tolerance for risk, and a different willingness to allow questionable third party ads to run.
The other potential issue that this decision may bring to the fore is the status of the Zapple Doctrine. Section 315 of the Communications Act imposes the Equal Opportunities doctrine (otherwise known as "Equal Time") on stations, which the FCC has interpreted to mean that stations need to treat all candidates running for the same office in the same way - allowing them to buy equal amounts of advertising time on a station, and giving them equal amounts of free time on a station if the candidate appears outside of an exempt program (e.g. news or news interview programs, or on-the-spot coverage of a news event, including most debates). But the Equal Opportunities Doctrine applies only to candidates and their appearances on stations (or "uses", in the language of the FCC). What about the purchase of time by third party groups, which are technically not subject to the Equal Time rule? Well, more than 30 years ago, the FCC adopted the Zapple Doctrine, or "quasi-equal opportunities" as an outgrowth of the Fairness Doctrine. The Zapple case, as we wrote here and here, held that where supporters of a candidate are allowed to buy time on a station, supporters of the opposing candidate should also be allowed to buy roughly equivalent amounts of time. While the remainder of the Fairness Doctrine has been declared by the FCC or by the Courts to be unconstitutional over the last 25 years, Zapple has never been officially overturned. When the Swift Boat documentary was about to be run on some television stations during the Kerry-Bush campaign, the Kerry campaign invoked Zapple in claiming that all stations that ran that documentary would need to air equal amounts of time from pro-Kerry groups. While that matter was settled before the FCC ruled, some FCC officials have from time to time implied that they would have invoked Zapple had it gone to a decision. With an influx of corporate money into political campaigns, Zapple issues are more likely to find their way to the FCC in coming elections.
Finally, the Citizens United case did not upset the record-keeping and disclosure requirements of the Bipartisan Campaign Reform Act ("BCRA"). BCRA imposed many such obligations on broadcasters. Thus, the sale of time to corporate groups, just like the sale of time to any other third-party group, requires a full public file disclose when such purchases are made to address a Federal issue or election. We wrote about those obligations here and here. Essentially, all the same information about the purchase that would be kept for a candidate buy must be kept for a third-party buy - including the class of spots purchased, the schedule run, the price paid, and the identity of the purchaser. Even advertising buys dealing with state and local elections require an identification of the buyer and its principal officers or directors.
Thus, while more money may flow into broadcast stations as a result of the Citizens United decision, that money may come with some additional headaches for broadcasters. All of these issues and more are addressed in the Davis Wright Tremaine Political Broadcasting Guide, available here.
FCC Initiates Inquiry Into the Future of Media, Seeks Comments by March 8
The FCC today launched a proceeding on the Future of Media in the digital age and put out a call for comments on a variety of issues. The goal of the Future of Media project, in the Commission's own words, is to produce a report to provide "a clear, precise assessment of the current media landscape, analyze policy options and, as appropriate, make policy recommendations to the FCC, other government entities, and other parties." The effort is being spearheaded by Steven Waldman, a former journalist and Internet entrepreneur, who is serving as a senior advisor to FCC Chairman Genachowski, as we wrote earlier. According to the Public Notice issued today, the FCC's initiative seeks to respond to the rapid technological changes in the media marketplace, financial turmoil in the traditional media, and questions about the role that traditional media will play in the future. While the FCC intends to draw from its ongoing proceedings regarding media ownership, universal broadband, children's issues, etc., to gather info for its report, it also intends to draw on studies, comments, workshops and hearings, interviews, and outside research.
To that end, the Public Notice seeks comment on a wide variety of issues in order to build a record for its final report, which will be issued later this year. The current state and future of traditional journalism is one of the issues the FCC has raised, but is not the sole focus of the project. Among the topics the FCC has identified for discussion and comment are: the state of TV, radio, newspaper, and Internet news and information services; the effectiveness and nature of public interest obligations in a digital era; the role of public media and private sector foundations; and many others. Not unlike the Broadband project that has consummed the Commission in recent months, by this Future of Media project, the FCC is seeking to tackle many big picture items. In doing so, it is starting at the very beginning by asking questions as broad as: "What are the information needs of citizens and communities and are those needs being met?" In all, today's Public Notice contains 42 detailed questions covering six pages, which inquire about business models and financial trends; the information needs of communities and citizens; commercial media (broadcast TV, Radio, Cable, and Satellite); noncommercial and public media; Internet and mobile platforms and applications; and print media.
Given the enormous scope of the project, its nascent stage, and the continually evolving nature of the media and technology landscape it is impossible to know what recommendations the Commission might ultimately make. But any parties interested in informing the Commission's conclusions and future recommendations should consider participating in the proceeding. The deadline for comments is March 8th, and interested parties can submit comments electronically through ECFS, or via the new Web site established for the project, which the FCC hopes will serve as an arena for public discussion on the future of media and any public policy recommendations. The Future of Media web site also contains a blog to provide additional information about the project on an ongoing basis.
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Tower Lights Out for Even One Day? – Pay A Fine, Says the FCC
In a recent decision, the FCC's Enforcement Bureau ruled that a tower owner should pay a fine for a single day where the required tower lights were not operational, and where no required monitoring of the tower to discover such outage was taking place. On top of the penalty for the non-working lights, the FCC also fined the owner for the failure to report a change in ownership of the tower. The total fine in the case was $4000 (reduced from an initial fine of $13,000 because of the tower owner's past record of compliance).
As with any FCC fine, while the fine was for one day of tower light outage, there was more to the story. The FCC inspected the tower after receiving a complaint stating that the lights were out on a day that was almost a month before the inspection - indicating that the outage may have been in place for far longer than the one day revealed by the FCC inspection. The tower owner admitted that the person who was supposed to conduct the required daily inspection of the tower lights had moved from the area in which the tower was located, and the owner did not know exactly when that occurred. The owner did not get someone new to do the inspection until after the FCC inspection. And the tower had no automatic monitoring system to determine if the lights were in fact operational. With these admissions, it seemed clear that there was the potential that there had been a problem for a long time, so perhaps the fine was not unexpected, even though the lights were fixed within hours of the FCC report of the problem, as the issue was a simple one that the tower owner blamed on a careless repair person who had recently visited the site.
In addition, the original complaint indicated that the complainant could not reach the owner listed on the tower registration to notify them of the outage. After the FCC inspection, it became clear that this was because the ownership had changed, and the FCC had not been notified. Had the FCC tower registration information been timely updated when the ownership change occurred, the fine for the unreported change in ownership would not have been issued, and the fine for the light outage might also have been avoided if the owner had been able to respond to the private party's notification instead of having to wait for the FCC to get involved.
As we have written before, the FCC takes tower issues very seriously, because of the potential threat to safety posed by improperly lit towers. Tower owners need to take this issue very seriously themselves, not only because of the threat of FCC fines, but because of the potential exposure to civil liability should there be an aeronautical accident when the lights are out. If there are lighting problems, they need to be fixed immediately. If they cannot, the FAA needs to be notified so that it can alert airmen to the potential hazard. So inspect those towers regularly, and make sure that issues are promptly reported and corrected when they arise.
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You Know Those Interim ASCAP and BMI Royalties? – They May Be More Interim Than You Think
At the end of 2009, we wrote about the interim royalties agreed to by both ASCAP and BMI, agreeing to reduce the amount of royalties paid by commercial radio stations by 7% until final royalties were agreed to by these Performing Rights Organizations and broadcast groups (principally the Radio Music Licensing Committee), either through negotiations or by litigation. While many had assumed that these reduced rates would stay in place until the final royalties were set, we have now learned that, in fact, these are but "provisional rates" to be in place only until interim royalties are set by the Courts which supervise the royalty-setting process. Recently, the PROs and the RMLC filed motions with the courts that oversee the ASCAP and BMI antitrust decrees under which these organizations have operated for half a century, stating that they have not been able to agree to either final or interim royalties, and thus need the Court to set interim royalties until a final royalty is determined.
The interim royalty process does allow the presentation of evidence and argument by the parties to the Court as to what the appropriate royalty should be until the final royalty-setting process runs its course. There is a legal presumption that, in the absence of some compelling evidence otherwise, the rates that were previously in place would continue while final royalties are litigated. Whether the Courts will look back to the royalties paid by radio owners in 2009, or whether the provisional royalties that were set in these end-of-the-year agreements will have any effect on the interim royalties remains to be seen. But don't count on the interim 7% reductions being in place for long, as the Court should set the interim royalties relatively quickly, probably later this year. And once these interim royalties are set, the more difficult issue will face the PROs and RMLC - reaching a deal or litigating over the final royalties that will be paid by radio broadcasters for the public performance of musical compositions. Given the inability of the parties to reach any agreement on interim royalties after a year of discussions, it may well be quite some time before final royalties are set - at which time there will be a "true up" back to January 1 of this year. So broadcasters need to watch these developments carefully, and to not count any discounts as final until the final royalties are established.
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