The Impact of the Proposed DISCLOSE Campaign Reform Act on Broadcasters and Cable Operators – Lowest Unit Rates and Reasonable Access for Political Parties, On Line Political File, FCC Audits and More
In reaction to the Citizens United Supreme Court decision invalidating restrictions on corporate spending on advertising and other messages explicitly endorsing or attacking political candidates (about which we wrote here), new legislation, called the DISCLOSE Act, has just been introduced in both houses of Congress seeking to mitigate the perceived impact of the Court's decision. While the announced goal of the legislation is aimed at disclosure of the individuals and companies who are trying to impact the political process, the draft legislation, if adopted would have significant impact on broadcasters and cable companies, including potentially extending lowest unit rates and reasonable access to Federal political party's campaign committees (and not just the candidates themselves). The draft legislation also proposes lower Lowest Unit Rates in political races where there are significant independent expenditures, more disclosure by broadcasters through an on-line political file, and even mandates for audits by the FCC of the rates charged by television stations to political candidates. The language could also be read as an expansion of the current applicability of the political rules to cable television - applying reasonable access to cable systems and lowest unit rates and equal opportunities to cable networks. As Congressional leaders are proposing to move this legislation quickly (with votes before July 4) so that it can be in place for the coming Congressional elections, broadcasters and cable companies need to carefully consider the proposals so that they can be discussed with their Congressional representatives before the bills are voted on by Congress.
While much of the bill is intended to force disclosure of those sponsoring ads and otherwise trying to influence the political process, the portions of the bill that amend provisions of the Communications Act include the following:
- An extension of Reasonable Access to require that broadcasters give reasonable access not just to Federal political candidates, but also to Federal political parties and their campaign committees. In recent years where the Democratic and Republican Congressional Campaign Committees have been big buyers of broadcast time. The extension of reasonable access to these groups could put even greater demands on broadcast advertising time on stations in markets with hot races, as stations could not refuse to provide access to "all classes of time and all dayparts", as required by the reasonable access rules. This could crowd out other advertisers, and even make it harder for ads for state elections (as state and local candidates have no reasonable access rights) in states where there are hotly contested races.
- Extends the Reasonable Access requirements to require reasonable access to "reasonable amounts of time purchased at lowest unit rates." The purpose of this change is not clear, as all political time must be sold to candidates at lowest unit rates in the 60 days before a general election and the 45 days before a primary.
- Extends the requirement for Lowest Unit Rates to Federal political parties and their campaign committees. Currently, the lowest unit charges apply only to the candidate's campaign committees, not to political parties. Under the proposed language, LUC rates would also apply to the parties, and to groups like the Republican and Democratic National Campaign Committees
- Extends the "no censorship" provisions to Federal political parties and their campaign committees. This change may be a positive for broadcasters. As we have written before, a broadcast station cannot censor a candidate's ad. But, as they have no power to reject a candidate's ad based on its contents, they have no liability should that ad contain material that could potentially be defamatory or otherwise subject the station to liability. This proposed language would extend the no censorship rule to cover ads from Federal political parties, so that stations would not have liability for those ads either. As many of the hardest hitting attack ads often come from these committees, if this legislation were to pass, stations would not have to worry about evaluating the truth or falsity of the committee's ads, as they would have no liability for the contents of the ads as they would be forbidden by law from rejecting the ads based on their contents.
- Provides for a lower Lowest Unit Rate in races where there are independent expenditures by any group of more than $50,000. If a corporation or other group spends $50,000 in any political race, then all stations would be required to charge all candidates in the race the lowest charge made for "the same amount of time in the last 180 days" - not just the lowest charge for the same class of time as is then currently running on the station. First, this would force stations to look back 6 months to determine their lowest unit rates. For a primary election in June or July, rates in the doldrums of January or February could set the June political rates. Moreover, the legislation does not state that it would look at the lowest rate for the same "class" of time over the previous 180 days, but instead it talks only about the same "amount" of time. It is unclear if this is an intentional attempt to make stations sell prime time spots at overnight rates, but the current language of the bill seems to avoid the traditional distinctions on spots being sold based on their class.
- Forbids the preemption of advertising by a legally qualified candidate or national committee except for unforeseen circumstances. This provision may well be intended to force stations to sell candidates advertising at their lowest nonpreemptible rates, and then treat the spots as they would much more expensive non-preemptible fixed position spots
- Requires the FCC to conduct random audits during the 45 days before a primary and the 60 days before a general election. Audits would have to be conducted as follows:
- 6 of the Top 50 TV markets
- 3 of the markets 51-100
- 3 of the markets rates 101-150
- 3 markets below 150
- Audits would be required of the 3 largest networks, 1 independent TV network, 1 cable network, 1 provider of satellite services, and 1 radio network. The language here, too, seems odd, as the requirements for audits are for "networks" of broadcast, cable and radio stations, not for local operators, and for an "independent television network" which would seem to be an inherently contradictory term - if a station is truly an independent, it is not affiliated with a network, so how can the FCC audit an "independent television network"? It is unclear of whether this provision is requiring audits of the networks themselves, or of affiliates of the networks in the markets in which audits must be conducted.
- Requirements that stations keep on their website information about all requests for the purchase of broadcast time by candidates, political parties or other independent political groups. Right now, the rules specifically do not require that political files be kept online.
There is also a provision changing the definition section of the Section 315 of the Communications Act which sets out the lowest unit charge provisions of the Act, along with no censorship and equal opportunities, which currently apply to broadcasters and the operators of cable television systems. The proposed changes would add to the definition of a broadcast stations the phrase "and a provider of cable or satellite television service", making clear that all such services are included in the lowest unit rate provisions of the rules - which might be read as an attempt to include cable television networks within the scope of the rules. In fact, as provided above, the law requires an audit of a cable network, implying that they will be subject to the rules if this law is adopted. The law also adds a reasonable access provision to Section 315, which would seem to extend the concept of reasonable access to cable as well as to broadcast. The clear intent is unstated, but given the definitional language used in the language of the bill, and the fact that this new provision dealing with reasonable access is added to Section 315 which applies to cable (as contrasted to the Section 312 reasonable access provisions which do not), the extension of reasonable access to cable is seemingly the impact of this language.
The bill also extends the "stand by your ad" provisions of the Federal Election law to ads by third party groups, so a spokesman for any third party group buying ad time in connection with a political campaign will be forced to appear on the ad and take "credit" for that ad. Disclosure of the Top 5 contributors to non-candidate political committees would also be required by this bill.
It is clear that the DISCLOSE Act could fundamentally change the way that broadcasters and cable companies deal with political advertising during election periods. With the push to decrease rates and increase access to the airwaves, there could well be a a significant reaction by those being regulated. Given the more expansive reading of First Amendment rights from the Supreme Court in the Citizens United case which spurred this proposed legislation, it would be quite possible that some broadcast or cable group could choose to challenge the mandatory access rights given to political parties under these rules, or the very cheap rates for political ads that could be read into the provisions of this bill. There will be much to debate on this legislation, and the language of the bill could very well change as it makes its way through the Congressional processes. But there are many important issues to consider - and broadcasters need to be aware of their possible impact.