Deciphering Political Broadcasting Requirements What You Need to Know

Political Disclosure Statement Mandatory that each station has a disclosure statement Describes classes of time sold and sales practices Must provide when candidates/representatives initially contact Station and each time there are changes in info disclosed Page 2

Lowest Unit Charge What is it? When Does it Apply? Rate charged to LEGALLY QUALIFIED CANDIDATES for a USE may not exceed the lowest unit charge (LUC) of the Station for the SAME CLASS OF TIME and SAME AMOUNT OF TIME for the SAME PERIOD Only applies 45 days before the primary and 60 days before the general election. Page 3

Lowest Unit Charge To Whom Does it Apply? Legally Qualified Candidate – (i) publicly announced, (ii) met qualifications for office (age/residency), and (iii) qualified for place on ballot or announced intention to be write-in candidate and made a “substantial showing” that write-in candidacy is bona fide “Use” is a non-exempt, positive appearance by a candidate where the candidate’s voice or picture is readily identifiable. Candidates receive “comparable rates” at all other times Page 4

Lowest Unit Charge *Key Concepts Stations will have many Different Lowest Unit Charges Different classes of time, different dayparts and programs, and different clusters of Stations will have separate LUCs Lowest unit charge for a particular class of time or program can change during the LUC window Page 5

Lowest Unit Charge Different Classes of Time Non-Preemptible time is different from (and usually more expensive than) Preemptible Time Non-Preemptible spots cannot be preempted (except for technical reasons or schedule changes) even if another advertiser is willing to pay a higher rate To offer Non-Preemptible spots to political candidates, you MUST sell them to commercial advertisers and they must be coded as Non-Preemptible LUC will be based on lowest rate a commercial advertiser (including an issue advertiser) has paid for Non-Preemptible spots in a particular daypart or program Page 6

Preemptible Time – There can be different classes of preemptible time Differences between classes of Preemptible Time must be based on more than price or the identity of an advertiser Providing Notice prior to preemption is a legitimate distinction Political Advertisers that buy preemptible time should run the same risk of preemption as commercial advertisers and should be preempted Lowest Unit Charge Different Classes of Time - Continued Page 7

ROS is a separate class of time Station Cluster Rates – a combination of stations can have a different LUC for a daypart than an individual station has Lowest Unit Charge Different Classes of Time - continued Page 8

Standard dayparts or specific programming offered by radio Questions arise about narrower dayparts-e.g. 7 to 9 AM vs. 6 to 10 AM or PM Drive Monday/Tuesday vs. Monday-Friday According to the FCC, “distinctly different” rotations constitute separate periods of time. Distinctly different rotations are rotations that have meaningful differences in value to an advertiser FCC defers to station’s judgments if they correspond to a station’s normal commercial sales practices and are based on objective criteria such as varying audience size or demographics which warrant differences in prices Lowest Unit Charge Same Period of Time? Page 9

Lowest Unit Charge – How to Calculate Station may calculate LUC on a weekly basis by looking at the “best rate” any advertiser actually paid for a spot in a particular class running during a specific daypart that week Frequently, LUC is based on a rate contained in long-term contracts or package deals. Candidates can “cherry pick” packages (i.e. they are not required to buy a complete package to receive package-rates) Trades, promotional merchandise, any noncash incentives, spots sold by wired or unwired networks and remnant services DO NOT need to be considered in the calculation, although generally promotions and incentives a station offers should be available to candidates If a candidate buys direct, candidate get the benefit of the agency discount Page 10

Lowest Unit Charge – How to Calculate - continued LUC calculation must include all discounts that are offered to a station’s most favored advertisers. Any bonus or “no-charge” spots must also be factored in the LUC calculation This means that for internal purposes, all bonus spots must be assigned a value. If a package includes no-charge overnight spots, the spots should be valued, even if the value is $1 The value assigned to the bonus spots becomes the LUC for that period and class of time and the total value of the bonus spots needs to be deducted from the value of the other spots in the package on a pro rata basis, meaning those spots may have a different rate than the rate on an order and invoice. Page 11

Lowest Unit Charge – How to Calculate - continued As an example, a station sells a package that includes 5 morning drive spots for $100 each, 5 mid-day spots for $50 each and 10 free overnight spots. If the overnight spots are assigned a value of $1, $10 will need to be deducted from the ten paid spots. Thus, the value for the morning drive spots would be $99 each and the mid-day spots would be $49 each In general, this needs to be done for any advertising packages that run during the political windows, even if the bonus spots do not run during the window Keep copies of reallocations of values in packages in your internal files Page 12

Lowest Unit Charge – How to Calculate - continued Remember that your LUC can change during windows  Contract expires  Make-good runs that lowers LUC Page 13

How to Be Sure You Are Complying With the LUC Rule Audit your Time Sales during the LUC windows This should be done frequently – weekly if possible If you rely on traffic system reports to audit, it is critical to monitor carefully how different classes of time are coded Page 14

How to Be Sure You Are Complying With the LUC Rule - Continued Remember to keep track of when specific contracts that set the LUC for a specific class of time or daypart expire If audit reveals overcharges, you can provide a credit or make good to candidate (if during campaign). Otherwise, you must provide a rebate Page 15

Reasonable Access for Federal Candidates Federal candidates only (e.g., candidates for President, U.S. Senate or the House of Representatives) State and local candidates (e.g., candidates for governor, mayor, or state representative) do not have right to access and Station can choose state and local races it wants to accept – BUT REMEMBER if your station chooses to sell time to a particular state or local candidate, all candidates in the race for that particular office must be treated equally and generally should be permitted to purchase time from your station Page 16

Reasonable Access for Federal Candidates continued Must work with federal candidates to accommodate requests – even if you are sold out, you may not reject a request by a federal candidate to purchase any type or class of time that your station normally sells to commercial advertisers, including drive time Remember to balance requests with potential equal opportunity demands. Placement of ads during specific high-profile programming is not guaranteed. Page 17

Equal Opportunities If a candidate makes a timely equal opportunities request, a station must provide equivalent time at equal rates. Remember that if you chose to take ads from non-federal candidates you should factor in potential equal opportunity requests from numerous opposing candidates in a highly contested race Request for equal opportunities must be made within 7 days of first use Stations are not obligated to notify an opponent of a candidate’s purchase of time. However, if you do so for any candidate, you must notify all other candidates for the same office Page 18

No Censorship of “Uses” Stations cannot censor/edit “Uses” Station receives protection from liability No - Censorship does not apply to issue ads or political commercials purchased by non-candidates or organizations, such as PACs and political parties Page 19

Third Party/PAC Ads Take-Down Requests Due to changes in campaign finance laws, there has been a HUGE increase in the amount of political advertising paid for by corporations and other third party interest groups. These advertisements are not subject to the lowest unit charge requirements meaning stations can charge rate card rates. They are also not subject to the “no censorship” provisions meaning these ads can result in liability on the part of broadcasters if the advertising contains false or misleading claims. Take-down requests based on these ads are very common. These ads must be evaluated – if content is questionable, ask for substantiation of claims. Page 20

Sponsorship Identification Requirements All spots, including issue spots and PAC ads, must have sponsorship ID Use the words “paid for” or “sponsored by” Page 21

Maintaining a Political File A political file must be maintained for both candidate and issue ads Information must be placed in the file immediately Use NAB PB-18 Form, which can be purchased on the NAB website Check to ensure required information for Sponsors – especially PACs – is included Page 22

Maintaining a Political File Any communications requesting time for political issues of national importance not made by or for political candidates (e.g., regarding proposed legislation) must also be included in the political file with additional information such as contact information, a list of directors of the sponsoring entity, the name of any candidate (and office sought) to which a communication refers, and a description of any issue to which a communication refers All information required for the political file should be placed in the file as quickly as possible. Page 23

Special Internet Issues LUC doesn’t apply to Internet-only advertising Packages including internet elements generally need to be made available to candidates Stations are NOT required to provide candidates with value added internet elements that would imply a relationship with the station (i.e. framing, banner ads) Not protected by “no censorship” provisions — ask for substantiation Page 24