Family Broadcasters, Would You Read This Column If It Were Paid For By Citizens For Pirate Broadcasting?

Sponsorship ID ... Is It Really A Big Deal?

"Okay," you say. "I've watched out for absurd claims in advertisements, so I'm clean with the FTC. What do I need to do to keep that pesky FCC off my back? Hey, I'm just a poor local broadcaster trying to serve my community, bring them interesting information and entertainment and keep the station ink black. Can you please just stay off my back?"

Well, yes, if you want the FCC and its Enforcement Bureau to stay off your back for advertising, one cardinal rule is: Always tell the audience who is speaking to them. Section 317 of the Communications Act of 1934, and its counterpart, 47 C.F.R. 73.1212, require that whenever a station broadcasts anything for which its is receiving compensation, it must be accompanied by an announcement that it has been paid for and by whom or on whose behalf such consideration was supplied.

Really important is that the law also requires that the announcement "...fully and fairly disclose the true identity..." of the advertiser. In other words, who is the real party paying for the ad.

This comes up most frequently in the period prior to an election, when there is a lot of issue advertising on the ballot, or when candidates are closely associated with particular issues. We should see even more of this advertising in the 30-day pre-election period, now that the Supreme Court has opened the way for issue group advertising right before election periods. Last year, in the landmark campaign finance decision Federal Election Commission v. Wisconsin Right to Life, the U.S. Supreme Court removed barriers on ads financed by corporations that mention a federal candidate and are run in the days before an election. This decision freed corporations --advocacy groups, trade associations and for-profit businesses -- to pursue more robust communications strategies, and many of them involve radio and television advertising.

Opposing issue groups or candidate' campaign committees have lodged claims that the advertisement did not run with the proper sponsorship identification, and made demands that the ad be pulled from the station or that they will claim that it an illegal campaign contribution, with the liability to the broadcaster that comes with that charge. I've been on the receiving end of some of those demands, and believe me, they can be pretty outrageous.

For example, The Coalition for a Healthy California ("CHC") has complained to the FCC alleging that an advertisement sponsored by a pro-smoking group supporting a California proposition failed to disclose the full identity of the group, the tag line at the end of the commercial because was smaller than the FCC requires, and the tag was not shown for the minimum four seconds and that it did not disclose the full name of the committee, which would have shown that tobacco companies were funding the ads.

According to current FCC policy, the broadcasters are probably not liable although the answer is highly fact-dependant. Under Section 317 of the Communications Act of 1934 and Section 73.1212 of the Commission's Rules, a broadcast licensee is required to identify the sponsors of paid political advertising at the time those advertisements are broadcast and is under a duty to make a reasonably diligent inquiry to learn, in order to identify, the true sponsor of the advertisements when the licensee has reason to think that it is someone other than the apparent sponsor. The Commission will determine liability by looking at the particular facts and circumstances surrounding the licensee's effort to make a reasonably diligent inquiry.

If the sponsor concealed its identity to the broadcasters, then there is a good chance the FCC will not find them liable. The licensee's duty to investigate is minimal at best -- even when the broadcaster is presented with conflicting information. The question turns on whether broadcasters should be required to verify the full name of the sponsor with campaign reports filed with the secretary of state. If the sponsor failed to identify itself fully and the licensee had no reason to discount the representation, the licensee would probably not be held liable as the duty does not require a licensee to become an investigative reporter or a private detective.

Broadcaster responsibility was defined by the 1983 DC Court of Appeals case of Loveday v. FCC, which also involved a question about who was really behind a pro-tobacco advertising campaign associated with a ballot proposition. The FCC had ruled that its function is merely to determine if the broadcaster exercised reasonable diligence to identify and ascertain the sponsor. The court agreed that a licensee confronted with undocumented allegations and an undocumented rebuttal may safely accept an apparent sponsor's representations that they are the real party in interest. The FCC has never indicated it would require a station to conduct an investigation or to look behind the plausible representations of a sponsor that it is the true party in interest. Therefore, unless you are presented with a specific and fact-based demand, the station's judgment about the real party in interest advertiser identity is going to be supported by the FCC.

This column is provided for general information purposes only and should not be relied upon as legal advice pertaining to any specific factual situation. Legal decisions should be made only after proper consultation with a legal professional of your choosing.