KENTUCKY BROADCASTERS ASSOCIATION 2014

2014 Midterm Elections

Kentucky Senate race could top $100 million Washington Post

A Refresher Course

Political Windows Apply to Lowest Unit Charge Indiana Opens Sat 3/22 Primary Tues 5/6 OHIO OPENS Sat 3/22 Primary Tues 5/6 Kentucky Opens sat 4/5 Primary Tues 5/20 Tennessee Opens Mon 6/23 Primary Thrs 8/7 GENERAL ELECTION WINDOW OPENS FRIDAY SEPTEMBER 5 ELECTION IS TUESDAY NOV 4

The Prime Commandment Thou Shall Call Bobby Baker (202)

Who Gets The Benefits of the political broadcasting rules?

Legally Qualified Candidates Has publicly announced his or her intention to run for office Is qualified under applicable law to hold the office (e.g., is 25 years old if running for the U.S. House), and Has qualified for a place on the ballot or is actively running as a write-in candidate

A Candidate “Use” A “use” is a candidate appearance by an identifiable voice or picture – the FCC accepts stations’ reasonable judgment whether an appearance is identifiable Only “positive” appearances by candidates are “uses” The appearance does not have to be controlled or approved by the candidate

If a spot is a “use” It triggers equal opportunities It is entitled to political rates if it is sponsored by a candidate or an authorized committee (unless a federal candidate fails to certify) Station has no liability for libel or defamation It cannot be censored by the station

Candidate Access Federal candidates (President, Vice President, U.S. Senate, U.S. House) are entitled to “reasonable access” State and local candidates have no rights of access to broadcast stations

Reasonable Access Stations must sell time to federal candidates Applies during the entire campaign Stations cannot set up front limits on the amounts or type of time that candidates can buy But, stations may reject unreasonable requests and negotiate with candidates

Carter-Mondale Factors Reasonable access requests must be evaluated using 4 factors: How much time the candidate has already bought The amount of disruption the buy would create The potential for equal opportunities demands from other candidates The timing of the request

Access to Programs Federal candidates can be excluded from news Stations can exclude candidates from some or all news programs, or parts of news programs (and the SuperBowl!) They may not be excluded from any other category of programs But, they do not have a right of access to any particular program, day or daypart

Non-Spot Length Programs Federal candidates are entitled to program-length time, even during prime time FCC in 1999 reversed its earlier ruling – stations cannot categorically deny federal candidates the right to odd-length spots Requests for odd-length time periods must be evaluated under the Carter-Mondale factors

State & Local Candidates State and local candidates have no right of access Stations may exclude some or all state and local candidate ads

State & Local Candidates Stations can take ads from some races and not others Stations can limit the number of ads Stations can restrict the dayparts for state and local ads But, stations must make “discount classes” available and equal opportunities and lowest unit charge rules apply

Equal Opportunities Does not require equal time, just equal right (i.e., pay for pay & free for free) Triggered by any non-exempt use Applies only to candidates in the same race Candidates must request equal opportunities within 7 days

What type of programs are exempt? Bona fide newscasts Bona fide news interview programs Bona fide documentaries On-the-spot coverage of bona fide news events includes station-sponsored debates and some free time offers

Employee Candidates Equal opportunities obligation is only for the amount of time the employee is actually on the air Make sure all on-air talent inform station before filing for office Stations can seek waivers or agreements from opposing candidates

Political Rates Apply to all races – federal, state & local Issue ads do not receive political rates Party ads are only entitled to political rates if the party is one of the candidate’s authorized committees if a party or other ad supporting a candidate is an “independent expenditure,” political rates are not required

Political Rates Lowest unit charge (LUC) applies during the political “window” 45 days before a primary 60 days before a general election Comparable rates must be offered outside of the “window”

Lowest Unit Charge Since 1991, the most important requirement is disclosure A station’s political rates are determined by the rates it offers commercial advertisers Stations must tell candidates about all relevant information and rates offered to commercial advertisers

Disclosure Statement Stations should have a written disclosure statement It should be given to every candidate or agency requesting political time Don’t just copy the disclosure statement you used last election – check to see if it still accurately describes your sales practices

Disclosure Statement You don’t have to make candidates read it You must update your disclosure statement as conditions change make sure your rep firm has the latest version

What to Include in Calculating the LUC All paid spots All contracts in effect during the political window or available to commercial advertisers Paid PSAs which are aired for commercial advertisers The value of “bonus” spots must be included in the LUC this includes bonus spots that air outside the window

What to Exclude from the LUC: Spots for which no payment is received Pure barter spots Per-inquiry spots Bonuses for non-profit organizations and the government De minimis value-added incentives or incentives that would imply a station endorsement

Packages Candidates do not have to buy a package to benefit from the package rate Every spot in every package must be valued Package prices may be allocated on the contract or in a signed and dated internal memo If a station does not allocate, FCC will assume all spots have an equal value

Credit and Internet Policies Stations should extend to candidates the same credit policies they afford commercial advertisers The FCC’s rules do not apply to the Internet

Calculating the LUC – Incentives Non-cash merchandise and promotional incentives do not have to be factored into the LUC They must be offered to candidates on the same basis as to commercial advertisers Incentives of de minimis value or which imply endorsement do not have to be offered to candidates

Preemptible Time Stations which offer commercial advertisers separate levels of preemptible time may treat each level as a separate class Stations may offer candidates “fixed time” so long as that class is offered to commercial advertisers Stations which sell time on an auction basis have only one class of preemptible time

Candidate-Only Discount Class Stations may create a non-preemptible class of time for candidates only This class must give candidates a meaningful discount not available to commercial advertisers – usually, this means a rate below the effective selling level If occasional spots clear below the candidate discount rate, no rebate is required

Agencies and Reps Stations which price time on a commissionable basis must offer time on a “net” basis to candidates without agencies Reps’ commissions are paid by the station and do not affect the LUC So: candidates pay agency commissions and stations pay reps

Changes in Rates If a contract with a commercial advertiser expires during the window, the LUC may change Rate changes which are part of a station’s “ordinary business practices” will affect the LUC Rates may vary due to changed ratings, seasonal demand, etc.

Issue Ads Do not qualify for political rates Stations are liable for defamation and may censor Must have sponsor ID No requirement to offer or give time to opponents

Issue Ads Public file must show that station aired ads may have to show date and times aired and rates if the ad includes a “message relating to any political matter of national importance” must include a list of officers, directors, or committee members of sponsoring organization Stations should be careful about misleading sponsor identifications

What is “a message relating to any political matter of national importance?” it includes at least spots relating to: a legally qualified candidate any election to federal office a national legislative issue of public importance Stations should review ad copy to determine whether additional public file rules apply Ensure your PB-18 is correctly filled out

Sponsor Identification All spots must have a sponsor ID The ID must state that the ad is “paid for” or “sponsored by” the entity actually paying for the time Candidate spots paid for by someone other than the candidate must state whether they are authorized by the candidate Ads for federal candidates that refer to opponents have BCRA ID requirements

Sponsor Identification If a spot comes in without an FCC-required ID, the station must add it to the spot A station-added ID may obliterate part of the ad A spot that arrives without an ID may be aired once without penalty – the ID must be inserted for all subsequent airings

Sponsor Identification – TV TV political spots must have a visual sponsor ID It must air for at least 4 seconds The ID must be in letters equal to 4% of the screen height or 20 scan lines BCRA added additional requirements, particularly for ads that refer to opponents

Speaking of BCRA … Bipartisan Campaign Reform Act All significant provisions upheld by Supreme Court in December 2003 – Except with respect to advertisements by corporations and unions under Citizen’s United Many provisions apply to candidates & stations are not obliged to enforce them FCC will not adopt new rules; will not punish broadcasters who exercise good faith discretion

Stand by Your Ad” To obtain the LUC, federal candidates or their authorized committees must certify in writing to stations that: the political programming they will air does not contain a reference to an opposing candidate, or if there is a reference to an opposing candidate, the spots will contain additional disclosures

Sounds Simple?

“Stand by Your Ad” Does it have to be a negative reference? How often should candidates certify? BCRA says “at the time of purchase” NAB suggests obtaining a certification for each buy Do stations have to check the accuracy of candidate certifications?

What Happens if … … a Candidate Doesn’t Certify? Loses LUC for the remainder of the campaign FCC staff says that if a candidate loses the LUC for the primary, he/she can get it back for the election FEC Deadlock BCRA suggests that candidates would lose the LUC on all stations, but no way to enforce that how about stations in a local group

Political File Important because this is the only source of information for candidates about their opposition’s appearances Stations may not respond to “blind” requests for avails or time FCC excludes political file from telephone access rule for public file information

Political File Must Include: All requests for time (but not simple rate inquiries) The nature and disposition of the request (i.e., how did the station respond?) The rates charged The dates and times spots aired Any other non-exempt uses

Political File Information must be placed in the file “as soon as possible” Stations may provide exact times when spots aired upon request Stations must keep information in the political file for 2 years

Online Political File – TV Beginning July 1, All TV Stations will be required to post their political material in their FCC’s online public file (absent FCC action) This applies to new material, all political material prior to July 1 (e.g. primary) should be retained at the station’s public file for the 2 year period Stations should start to familiarize themselves with the FCC’s folder/naming practices

Questions?

LEGAL HOTLINES Dawn Sciarrino Sciarrino & SHubert, PLLC (202) ANN BOBECk NAB (202)