The Rules of the Road - Garvey Schubert Barer

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FCC Underwriting
Requirements:
The Rules of the Road
John Crigler
Garvey Schubert Barer
NFCB Conference
May 30, 2014
Introduction
Ads are bad on public radio & TV.
 True
 False
True, but you’ll never get many underwriters with
that attitude.
Use this game to test your knowledge of what an ad is
and when you cross the line from identifying to
promoting an underwriter.
An ad is any promotional
announcement?
 True
 False
False that would violate broadcasting’s
First Commandment: Promote thyself!
An ad consists of two critical parts: (1) a verbal or visual
promotion of a third party (2) that is broadcast in exchange for
consideration.
Consideration
Consideration must be something
of real value? It couldn’t be, say,
a slice of cold pizza?
 True
 False
False. An FCC ruling held that pizza
donated to a station during its pledge drive
was consideration for on-air huzzas for the
pizza store.
Consideration must be cash or
an in-kind payment?
 True
 False
False. In one case, a free underwriting
announcement was found to be “consideration” because it
was an attempt to persuade a lapsed underwriter to renew.
Potential “value” of any kind is enough to constitute
consideration.
Who’s the Underwriter?
A station may run a paid public
service announcement?
 True
 False
 Call an Attorney
Call an attorney. There’s no simple answer
to this one. The answer depends on whether the PSA is for
an event or a cause, and whether the message really is a
public service or a covert promotion. (“Drink responsibly, as
long as it’s Bud Lite”). Most of all, the answer depends on
whether the underwriter is a for-profit or non-profit.
You mean I can charge another
non-profit out the wazoo?
 True
 False
True. Charity does not have to begin at home.
FCC rules permit you to receive consideration for an
announcement that promotes the goods, services or
facilities of a nonprofit, unless you go overboard. If the
announcement is long enough to interrupt regular
programs, or if it turns into an on-air fundraiser for another
non-profit you run afoul of FCC rules.
So I could run Marine recruitment
ads, state lottery ads or paid
announcements about a KKK rally?
 True
 False
True. The revenues may be taxable, since they have
nothing to do with your educational purpose, but they would
not subject you to an FCC fine.
Your audience may return eventually.
Hey, I don’t want to pander to
racists or start a war, I just want to
survive by making simple, factually
true statements. Is that ok?
 True
 False
False. Factually true statements may be
promotional. The FCC recently fined a station for saying a
band was “voted Canada’s #1 Bluegrass Band.” The
statement may have been true, but like most awards,
honors and ratings, it was considered promotional (the
station did not argue that the group might be Canada’s only
blue grass band!).
Political parties’ campaign
committees and public interest
groups are non-profits. I’ll make
a fortune in the next election.
 True
 False
False. In addition to prohibiting paid promotions of
for-profits, the Communications Act prohibits political ads
(announcements that support or oppose a political
candidate) and “issue” ads (announcements that express a
“view” on an issue of public importance or interest). It may
be possible to craft underwriting announcements for
political or advocacy groups, but “Beware,” as B. B. King
says, “There’s a world full of danger out there.”
What’s Promotional?
Material is not “promotional” if it
describes the underwriter?
 True
 False
True, if the announcement is value-neutral and brief.
The FCC has identified 4 categories of “promotional” material:
1. Calls to action
2. Price information
3. Inducements to buy, sell, lease or rent
4. Qualitative or comparative description
The categories are overlapping, not mutually exclusive.
That makes underwriting hard to sell.
 True
 False
True. An underwriting announcement must clearly
identify the underwriter and indicate that consideration (or
some clear synonym for consideration, such as “support,”
“contribution,” “assistance,” etc.) has been provided. The
announcement may also include brand or trade names, a
“value-neutral” description of product lines or services, and
location information. Location information may include a
street address, phone number and website address.
Development directors wear skinny jeans.
Let’s talk specifics. Would “gluten-free”
be ok, but “toll-free” not?
 True
 False
True. The FCC has not ruled on “gluten free,” but
there’s a good argument that, in most contexts, glutenfree would be descriptive; whereas announcements
containing the phrases “toll-free,” “free checking” and
“free consultation” have been found to contain price
terms or inducements to buy. FCC rulings can’t be
reduced to a list of “bad” words.
If there are no inherently “bad” words,
there isn’t a difference between “fine art”
and “fine BBQ,” or between “fast food,”
“fast service” and “fast women.”
 True
 False
Really false. “Fine art” and “fast food” have
been considered descriptive of a category of goods and
services. In most contexts, however, “fine BBQ” and “fast
service” would be viewed as qualitative or comparative.
You’re on your own with “fast women.”
An announcement is ok if it doesn’t
contain explicitly promotional terms?
 True
 False
False. Calling a sale a “special event” or a discount a
“customer appreciation recognition” won’t cut it. In one
ruling, the FCC found that a Korean grocery store’s claim to
offer “the wisdom of thrift” was a price term –
even when the claim was made in the Korean language.
So no logos or jingles on
public stations?
Where there’s
fear, there’s law
 True
 False
Where there’s
fear, there’s law
False. It may seem counterintuitive, but the FCC
gives “logograms” a wide berth, if they are “well
established.” The rationale is that logos may become so
familiar as to become part of the underwriter’s identity.
Based on this rationale, the FCC allowed DuPont’s “Better
things for better living,” A.G. Edwards “Exceptional
Service,” and an image of Amoco bobbing puppets singing
“Can’t get enough of that funky stuff.” On the other hand, it
rejected arguments that the statement “We love selling real
estate” qualified as a logo.
So highfalutin statements of
corporate philosophy are ok?
 True
 False
True. The FCC has generally permitted “aspirational”
statements about the goals to which a company is
“committed” or “dedicated.”
An announcement that is nothing
more than a boring list of products
and services is ok?
 True
 False
 Not necessarily
Not necessarily.
Even boring lists can be
promotional if they are “excessively detailed.”
The FCC fined a station for an announcement stating that a
building supply store offered “custom metal roofing, siding,
hardware, trim, insulation, trusses and perma felt paper.”
I can promote underwriters to my
heart’s content on the Internet.
 True, but…
 False
True, but. The FCC regulates only on-air
announcements, but the IRS expects you to pay taxes on
revenues from ads (as the IRS defines “ads”). You may
also find that Internet visitors are put off by hard sales
pitches on your web site.
Tough Calls
I can identify more than one
underwriter in one announcement,
can’t I?
 True
 False
True, if everyone identified is an underwriter.
The complications arise when you identify someone who
has not provided consideration for an acknowledgement.
Underwriters often want to benefit
nonprofits other than the station.
Can an underwriter pay me for airing
an announcement for a museum or
church event?
 True
 False
False. An underwriting announcement must identify
the party that provides the consideration.
Ok then, I can identify the
underwriter, but indicate that it is
sponsoring an exhibit at the
museum.
 True
 False
 Probably
Probably. There are no FCC rulings on this point.
While such piggyback announcements may not promote
the underwriter’s goods or services, they often do not
contain the sort of identifying information the FCC permits
(brand names, street addresses, etc.). A ruling would
probably turn on the question of whether the
announcement clearly identifies the underwriter or whether
the underwriter’s identity is obscured by information about
the piggybacker.
The FCC’s underwriting policy encourages
noncommercial stations to be enterprising.
So would the FCC allow me to conduct a
station fundraiser with a for-profit if the
station is the primary beneficiary?
 True
 False
 It’s complicated
It’s complicated. The answer depends on
the relationship between the station and the for-profit.
If the activity they undertake is a “joint venture,” the FCC
would regard a promotional announcement as an ad,
because it “directly benefits” a for-profit. The FCC has
taken that position even when the station gets more than
50% of the revenues.
These rules are so complicated.
There must be room for error?
 True
 Grow up
True, if your judgment call is an “informed” judgment,
not a gut feeling. Errors based on a reasonable
interpretation of FCC rulings or consultation with a
communications attorney may be a “good faith judgment.”
FCC rulings are posted at:
http://transition.fcc.gov/eb/broadcast/enhund.html.
The FCC’s rules make creative
underwriting impossible?
 Boo hoo
The FCC rules drastically limit the possibilities for what can
be said in an underwriting announcement, but do not snuff
creativity. Music beds, humor, zany logos (“Just do it!”)
may all be permissible, as long as they are not
“promotional.”
Only one of your hands is tied. The other can clap.
Now, forget everything you’ve learned, and for a
limited time only, lock in great rates for award-winning
legal advice by contacting John Crigler at the address
below. Initial consultation free. All proceeds will be held
in trust for a deserving non-profit:
John Crigler
Garvey Schubert Barer
Flour Mill Building
1000 Potomac Street NW
5th Floor
Washington, D.C. 20007
[email protected]
202.965.7880 Tel
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