Political Programming Obligations for Cable Systems
As you are probably aware, the general election date is Tuesday, November 7, 2006, which means that the FCC’s lowest unit charge (“LUC”) obligations for the general election begin Friday, September 8, 2006 (or earlier, if there are primaries—see below). Accordingly, cable operators should review all of the FCC's political programming and LUC requirements, as amended by the Bipartisan Campaign Reform Act of 2002 (“BCRA”), which was upheld by the U.S. Supreme Court in 2003.
The Communications Act and FCC rules contain detailed provisions governing requests for time by political candidates. The FCC's political programming obligations fall within four basic categories: (1) providing equal opportunities to opposing candidates; (2) charging candidates no more than the LUC for political advertising; (3) requiring sponsorship identification; and (4) maintaining a political file. Ensuring compliance with these obligations ultimately is the responsibility of the cable operator. Therefore, the activities of a cable operator's representatives, including ad agencies and sales reps, should be carefully monitored.
II. Specific Requirements
1. Equal Opportunities
Unlike broadcasters who must provide reasonable access to federal candidates, cable operators are not required to sell time to any political candidates. However, once a cable operator allows any candidate to "use" its facilities, the Communications Act provides that all other legally qualified candidates for the same office may request an equal opportunity to appear on the system, unless the use occurred during certain types of exempt news programming. To be “legally qualified,” a candidate must: (1) have publicly declared his or her candidacy; (2) be legally qualified to hold office under applicable state or federal regulations; and (3) have qualified for a place on the ballot, or have publicly committed to seek election by the write-in method.
The "equal opportunities" request by the opposing candidate must be made within one week of when the first candidate's spot ran. The term "equal opportunities" does not necessarily mean equal time. The rule requires that opposing candidates be afforded an opportunity to buy the same amount of time at the same rate (or be given free time, if the first candidate's use was free), at similar times of the day. Essentially, the opposing candidate must be given the opportunity to reach a comparable audience, even if it is on a different cable channel than the first candidate’s spot. The Commission has not yet looked at audience make-up to determine whether equal opportunities have been met, but it would be wise to run equal time spots on comparable channels (e.g. news channels, sports channels, etc.).
The Commission's definition of a "use" does not require that a political advertisement be controlled, approved, or sponsored by a candidate. A "use" is any "positive" cablecast of a candidate's voice or picture that is not "fleeting," even if the use is paid for by an unaffiliated person or citizens group, or occurs in a film or TV appearance unrelated to the election. Any such "positive" political advertisement in which a candidate's voice or picture is present will entitle that candidate's opponents to equal opportunities, even if the first candidate personally considers the spot or appearance objectionable. However, candidate appearances on bona fide news programs (such as on-the-spot news coverage, newscasts, documentaries, news interviews and debates) are excluded from the definition of use, and therefore, candidate appearances during such exempt programming do not trigger equal opportunities obligations. If the candidate is the newscaster, however, the candidate’s opponents are entitled to equal time because that is considered a “positive” appearance and the candidate is not the subject of the news story. Significantly, the FCC has informally opined that equal time obligations apply to VOD channels.
2. Lowest Unit Charge (LUC)
Section 315(b) of the Communications Act provides that cable operators shall not discriminate in the rates charged to candidates seeking to purchase advertising time. In addition, the Communications Act and FCC rules provide that cable operators can only charge candidates LUC rates for political advertising as primaries and elections approach. As explained below, however, candidate entitlement to LUC rates is an area that has been affected by BCRA.
During the 45 days preceding a primary election and the 60-day period preceding a general or special election (the "LUC periods"), cable operators must comply with the LUC requirements of the Act. During the LUC periods, a candidate may not be charged more than the lowest unit charge paid by any other commercial advertiser that cleared a spot for the same class of time, amount of time and in the same time period. "Class of time" generally means the degree of preemptibility assigned to the spot. For example, cable operators may have "fixed" time, meaning the spot will definitely be aired. Alternatively, the spot may be "immediately preemptible,” meaning it could be pulled at the last minute in favor of a higher priority (and presumably, more expensive) spot. Additionally, a spot may be classified as "preemptible with notice", meaning that while it may not have the same priority as a fixed spot, it may not be preempted without appropriate notice. If a cable operator offers various classes of preemptible time, there must be meaningful distinctions between the preemption classes, and those distinctions must be uniformly and consistently disclosed and applied to all advertisers. Obviously, a cable operator should not mislead a candidate about the lack of availability of preemptible time, in order to force the candidate to purchase higher priced, non-preemptible spots.
"Amount of time" refers to the duration of the spot (30 seconds, 60 seconds, etc.). "Period of time" refers to the time of day during which the spot is designated to run (e.g., only during a specific program, from 7 to 9 am weekdays, run-of-schedule, etc.).
The test most frequently used to determine compliance with the LUC requirements is whether the political candidate was given the same price and treatment during an LUC period as the cable operator’s most-favored commercial advertiser. For example, a candidate running a single spot would be entitled to the same rate (for the same class, amount and time period) as a major advertiser that purchased hundreds of commercial spots at a bulk discount. Non-cash promotional incentives generally need not be included in LUC calculations. Bonus spots (i.e., buy five spots, get one free) are factored into LUC calculations, however, since their value is readily ascertainable (i.e., determine an average cost per spot by dividing the total number of spots by the total cost). Make-goods are also required to be figured into an LUC calculation. On the other hand, agency commissions should not be included in the LUC calculation.
Cable operators are required to disclose to candidates all rates and discount privileges that are available to commercial advertisers. The LUC for every class of time should be reviewed on a weekly basis. Rebate checks or "make-good" offers (offers for additional time due to candidate overpayment) should be provided as soon as possible, and even more expeditiously as Election Day approaches.
Cable operators should prepare a written Disclosure Statement for candidates, which describes the system’s political time sales policies and rates. The following practices must be clearly explained: (1) Each class of time sold must be described and defined. All differences in classes must be identifiable and understandable; (2) A lowest unit charge estimate should be prepared for each class of time; (3) The method of time sales should be described (i.e., whether time is sold by a grid, demand driven, fluctuating levels, etc.); (4) For preemptible classes of time, percentage chance of preemption should be estimated; (5) The system's make-good policy should be stated; (6) Any and all discount or value-added packages must be explained; and (7) Any type of rotation sales should be included.
As previously noted, BCRA imposes additional requirements on federal candidates to be entitled to LUC rates. Specifically, within the LUC periods, candidates for federal office must provide written certification that their spot makes no direct reference to another candidate for the same office. Alternatively (for example, if the spot does make a reference to an opposing candidate), the candidate can certify that a TV spot ends with a photograph or similar image of the candidate and a printed statement to the effect that the candidate approves of the spot and that his or her authorized campaign committee paid for the spot. The photograph and statement must be shown for at least four seconds. Inclusion of the specified identification (“ID”) material at the end of the spot allows the candidate to run a negative campaign ad against an opposing candidate without jeopardizing LUC rates.
3. Sponsorship Identification
Section 317 of the Communications Act and Section 76.1615 of the Commission's rules require that the identity of the party paying for a political spot be disclosed at the time the spot runs. Aural identification is not required for televised political spots, so long as the spots contain a visual identification of the sponsor in letters equal to or greater than four percent of the vertical picture height. As with BCRA, this visual identification must run for at least four seconds, although the FCC’s sponsorship ID requirements apply to all candidates—federal, state and local. Since precise compliance with these size and time requirements may be difficult, the FCC generally will not penalize a cable operator for making a reasonable attempt to comply. A cable operator may not reject a political spot simply because the sponsorship rules may be violated. It is the cable operator’s obligation to insert the necessary sponsorship identification, if it is not already included in the spot. If a cable operator does not have an opportunity to pre-screen a spot, the FCC will not find a violation the first time it runs without sponsorship identification. Once the spot has run, however, the cable operator will be required to insert the proper sponsorship identification for all subsequent showings.
Reviewing a candidate's spot for sponsorship identification is the only type of editorial control that a cable operator can exercise over a candidate's political spot. Even if the spot contains libelous material, the system must run it as submitted. The cable operator is exempt from civil liability for libel if the spot qualifies as a candidate's "use."
BCRA contains additional sponsorship ID requirements applicable to third party or issue ads that advocate the election or defeat of any federal candidate or solicit political contributions. Such ads should contain a statement that the programming is not authorized by any federal candidate and that “[name/address/telephone no.] is responsible for the content of this advertising.” This statement is required to be made on-screen (or in a voice-over) by a representative of the sponsoring organization (or other person making the statement) and in clearly readable writing for four seconds. Unlike candidate ads, however, this requirement will be enforced by the Federal Election Commission against sponsors and not by the FCC against cable operators.
4. Political File
The FCC's political file requirements for broadcasters and cable operators are fairly concise, but often overlooked, and the Commission has expressed concern regarding the industry's lack of compliance. Because the FCC has fined broadcast stations for having incomplete political files in the past, this rule warrants special attention.
The rule requires that cable operators track each request for time made by a political candidate, even if the candidate does not place an order. The FCC’s political file requirements were expanded by BCRA and now apply to all requests to purchase time made (1) by or on behalf of a legally qualified candidate for public office; or (2) by anyone who “communicates a message relating to any political matter of national importance,” including (a) a legally qualified candidate, (b) any election to federal office; or (c) a “national legislative issue of public importance.” The records kept must include the following information:
1) Whether the request to purchase time is accepted or rejected.
2) The rate charged.
3) Date(s) and time(s) on which the spot airs.
4) Class of time purchased.
5) Name of candidate to which the spot refers and office sought; the election to which the spot refers; or the issue to which the spot refers (as applicable).
6) If the request is made by or on behalf of a candidate, that candidate’s name, the name of his/her authorized campaign committee and its treasurer.
7) If the spot is not placed by a candidate, the name of the person purchasing time, the name, address and phone number of a contact person and a list of the chief executive officers, members of executive committee or board of directors, as appropriate.
The foregoing information must be placed in the system’s political file "immediately", although the FCC has not specifically defined that term. A good rule of thumb is to attempt to place the required materials in the political file by the end of the business day, if possible. During hotly contested elections, it may be necessary to update the file several times a day, depending on candidate demand. This material must be maintained in the political file for two years. It is also advisable to place in the file copies of the system’s political and commercial rate cards, if available.
The key element in determining whether a political file complies with the FCC's rules is whether a member of the general public would be able to review the file without assistance and determine the time the system sold, or otherwise provided, to each and every candidate.
III. Electioneering Communications
BCRA also prohibits certain entities, such as corporations and labor organizations, from making any “electioneering communications” within 60 days of an election or 30 days of a primary. Electioneering communications include any programming that refers to a candidate for federal office and reaches 50,000 or more persons. The FCC maintains an online database at http://gullfoss2.fcc.gov/ecd/ that allows one to determine if a particular cable network reaches that number of persons with regard to a particular election. Because electioneering communications include any non-exempt programming, even PSAs may fall within the scope of prohibited programming. Thus, cable operators should take measures to prevent any corporate-sponsored PSAs featuring or attacking federal candidates from running during the applicable period.
We recognize the complexity of these political programming requirements and encourage you to let us know of any specific questions you may have regarding compliance.