Sunday, April 15, 2012

Paid Political Ads on Non-Commerical Radio/TV

Maybe the world really IS ending
in 2012 after all??
UPDATE Nov.23, 2012: the full Ninth Court (all eleven members) have agreed to the FCC's request for a rehearing of the case, scheduled for March of 2013.

On April 12th, 2012, the Ninth Circuit Court of Appeals delivered a verdict on Minority Television Project, Inc v. FCC.   And it's a doozy.   Basically, the court invalidated a long-held rule that non-commercial broadcasters cannot air paid "political ads" or paid "issue ads."  So now they can.

I'll pause a moment to let that sink in.

If upheld, it's potentially a game-changer, on the level of the Citizens United case, for the entire broadcasting industry.   But there's a lot of questions and confusion surrounding the decision, and the consensus is that nobody really knows for sure just yet what the final impacts will be.

This article is an attempt to collate several useful facts, opinions and other tidbits of information into a centralized resource.  I'll update it as we learn more going forward.   Right at the outset, I'll remind everyone that IANAL: I Am Not A Lawyer and that a lot of what I'm writing about here is speculation.  Informed speculation, maybe.  Speculation based on facts, perhaps.  But speculation nevertheless.  I encourage anyone who has hard evidence or solid facts that confirm or refute any of the speculation to leave their notes in the Comments and I'll update as we go along!  :)

Much, much more after the jump...

First: What Exactly Was the Case About?
The original case was brought by Minority Television Project, owner of KMTP-TV in San Francisco, CA.  KMTP is mildly unusual in that they are non-comm TV station but not CPB funded.  The FCC was alerted that KMTP was running paid sponsor messages that were too commercial under the definition of 47 U.S.C. § 399b, which says:
(a)  “Advertisement” defined. For purposes of this section, the term  "advertisement” means any message or other programming material which is broadcast or otherwise transmitted in exchange for any remuneration, and which is intended —
(1) to promote any service, facility, or product offered by any person who is engaged in such offering for profit;
(2) to express the views of any person with respect to any matter of public importance or interest; or
(3) to support or oppose any candidate for political office.
Specifically that KMTP had aired approximately 1,900 ads between 1999 and 2002.   Accordingly, in 2002 FCC found them in violation of the rules and fined Minority $10,000.

Minority paid the fine, but challenged the case in court and sought declamatory relief for the $10,000 fine.  The case wound up before the Ninth Circuit court in November of 2010, and a ruling was issued on April 12, 2012, which is where we are now.

So if the Case was About Commercial Advertising, How'd We Get to Paid Political Ads?
Minority challenged the entire statute of 47 U.S.C. § 399b under First Amendment grounds.  To wit:
(the statute) is an unconstitutional content-based restriction on speech, because it bans  all  paid public issue and political speech while permitting paid promotional messages by nonprofits.
First the Court took the new, but within precedent, step of treating all three aspects of the rule (commercials, issue ads, political ads) as severable, so each could be examined independently.  Then, after examining previous Congressional testimony and past court cases, decided that:
we cannot conclude that § 399b(a)(1) “burden[s] substantially more speech than is necessary to further the government’s legitimate interests.” Turner I, 512 U.S. at 665. 
Which is a fancy way of saying that the Court upheld the FCC's right to regulate (ban) commercial advertisements on non-commercial broadcasting.

However, the Court stated that there is no evidence for the record at all, one way or the other, regarding the prohibition on political or issue ads.  Nor is there any evidence that such ads are inherently harmful to the mission of non-commercial broadcasting (compared to commercial advertising, where substantial evidence has been previously submitted testifying to that effect).   As such:
because § 399b’s content-based ban on public issue and political advertisements bears  “no relationship whatsoever to the particular interests that the [government] has asserted,” Discovery Network, 507 U.S. at 424, the statute is not narrowly tailored. 

And because it's not narrowly tailored, it doesn't meet the criteria under which a:
government must prove a challenged statute is “narrowly tailored to further a substantial governmental interest.”
In order for a restriction on free speech to be allowable under the First Amendment.

Does this Mean that Paid Political Ads Can Immediately Be Aired?
Not nationwide.  The Ninth Court covers the districts/states of Alaska, Hawaii, Washington state, Oregon, Montana, Idaho, Arizona, Nevada and California.  Legally I am not sure if that means that stations licensed to cities in those states can now immediately begin airing such ads or not.

I am more sure, but not positive, that stations in other states are still required to operate under the existing rules because the Ninth Court's power does not apply in other Court's districts.

It's also possible that it would be legal, but unwise, for stations in the Ninth Court's states to start airing those ads, as an appeal to the Supreme Court of the United States could overturn the Ninth Court's decision...possibly retroactively.

UPDATED 5/6/2012: it has been explained to me that until this ruling actually enters the Federal Register, and the comment period ends (60 days, IIRC) it's not official.  That means it'll be a few months, minimum, before anything even could take effect...and an appeal (or re-hearing by the 9th) almost certainly will be filed before the period expires.  That appeal/re-hearing will almost certainly include a stay that keeps the current system in place until the appeal/re-hearing is complete.   So the upshot is that unless Congress acts very quickly, this decision will NOT have any impact on the Nov.2012 elections.

Is the Supreme Court Going to Rule on This?
Unknown.  There has been talk that the FCC will appeal this to the SCOTUS, and given the untenable situation of a federal rule only applying in some states, it seems entirely logical that the FCC eventually will appeal.  But nothing is definite as of yet, and even if the FCC appeals tomorrow, it likely would be years before a ruling happened.  That could be very problematic given the Presidential Election coming up in six months.   Although in theory the Supreme Court could decide to act quicker for precisely that reason.

UPDATED 5/6/2012: the split nature of the 9th Court's decision and some of the ruling's text indicates that they may simply opt to re-hear (or re-examine) the case at the Circuit Court level again.  Remember, one of the central tenet's of the Court's decision was that neither side presented any evidence for or against the continuation of the prohibition on political and issue ads.  A re-hearing would allow for either side to make a more compelling case.

Does this Mean the FCC Cannot Regulate Paid Political Ads?
No, the Court did say that:
Of course, following today’s decision, Congress is free to “try again.” If there truly is evidence that broadcast of public issue and political advertisements would cause substantial harm—that their broadcast would change program content as directly and substantially as would for-profits’ advertising—Congress could compile a record to show as much, and perhaps pass a law restricting such speech.
Basically the Court said: "not good enough, but you can try again."

Is Congress Going to "Try Again"?
Completely unknown at this time.  Theoretically Congress could act a lot faster than the Supreme Court could, given that Congress is more responsive to political realities, and thus could be pressured to make a new law before the Presidential Election in November 2012.

On the other hand, Congress is also more responsive to lobbying, and logically it stands to reason that there are entities with substantial influence in Congress that would very much like to directly market to several non-commercial broadcasters' audiences.

Assuming The Decision Is Upheld, What Does this Mean for Broadcasters?
That if they so chose, they may accept paid ads for candidates for (federal) public office ("political ads").  They may also accept paid ads from organizations about issues of the public interest (aka "issue ads").

It is unclear if non-commercial stations would be held to the same rules that commercial broadcasters are when it comes to such ads.  They include:  (these are rough summaries of the rules)
  • Equal Opportunities (47 CFR 73.1941)  Which means that a station who allows one candidate/group to buy ads, must allow all the others involved in that election/issue buy ads as well.  Also, a station cannot censor, in any way, what the candidate's ad says.
  • Candidate Rates (47 CFR 73.1942) Stations have to offer candidates equal rates for ad time, and they can't give good airtimes for one and bad airtimes for the others.
  • Reasonable Access (47 CFR 73.1944)  Roughly speaking, you can't force a station to sell you airtime, but stations aren't allow to completely refuse ad requests from candidates, either.
That last one is especially relevant as until the 2000 election, non-commercial stations were required to provide free airtime to candidates for federal political office.   Most people didn't know that, but in the 2000 election several "fringe" candidate discovered the rule and exploited it, including at the popular NPR station WAMU, which broadcasts in the Washington DC area.   Outcry over it forced Congress to change the rules so that non-commercial stations were exempt from the "Reasonable Access" rule and could deny all requests if they so chose.  (and remember that under the rules at the time, non-commercial station couldn't accept paid ads for candidates anyways)

The whole rule structure for "Reasonable Access" is based on a different statute in the United States Code (USC) than § 399b, specifically 47 USC § 312(a)(7) which says:
(a) Revocation of station license or construction permit: The Commission may revoke any station license or construction permit --
(7) for willful or repeated failure to allow reasonable access to or to permit purchase of reasonable amounts of time for the use of a broadcasting station, other than a non-commercial educational broadcast station, by a legally qualified candidate for Federal elective office on behalf of his candidacy.  (emphasis added)
Since it's a different statute, and was not addressed in the Court's decision, it presumably still stands.  Therefore non-commercial stations are still free to reject all requests for paid political/issue ads if they want to.  On the other hand, if they do elect to air any such ads, then the "Equal Opportunities" rule would, presumably, kick in.  So stations wander into this realm at their own risk!

What About "SuperPAC" Ads?
Presumably, those would still be prohibited, since by law SuperPAC ads are not for a specific candidate and SuperPACs may not coordinate with candidates.  SuperPACs can raise and spend essentially unlimited funds, whereas there are still rules about campaign financing for candidates (and also for some public issues)  so this decision is not an automatic tap into the vast pools of SuperPAC money that have been oft-discussed in the news.
UPDATED 4/22/2012: SuperPAC ads would presumably be considered "issue ads" and thus allowed.  So yes, the "oceans of SuperPAC money" could now be accessible to noncommercial broadcasters.

On the bright (?) side, I suppose you could see ads from Stephen Colbert's SuperPAC on PBS?

What Do the Non-Commercial Broadcasters Think About This?
Several different entities fall under the aegis of "non commercial" broadcasters, but so far nobody has really come forward in favor of the decision.   On the other hand, it would not be good marketing to come forward in favor of it, so the lack of support doesn't really mean anything.

Two of the biggest non-commercial entities, public radio and religious radio, have generally been negative about the decision. The others haven't released any organized response yet:

Public Broadcasting: the response on the PUBradio listserv (mostly public/NPR radio stations) has been overwhelmingly negative from several different public radio outlets.  The chief concerns are erosion of public trust in NPR's/PBS's perception as providing unbiased journalism, and annoying listeners who specifically turn to public broadcasting to get away from political ads.

However, there is recognition that it could be a much-needed source of revenue (especially for public TV and many smaller public radio stations), and that stations may not have a choice, depending on how the "Reasonable Access" rules are interpreted.

Plus many music-based NPR stations are either facing pretty extreme financial hardships and/or are in positions where there's not really any journalistic integrity issues to worry about.  While many may find political ads on public radio or TV unpalatable, it could be hard to justify a blanket ban on them when underwriting revenue is down (due to the Great Recession of 2008) and government funding is either shaky or actively shrinking.

However, here's another aspect to consider: I do not have direct access to a copy of the NPR Affiliate Station agreement, but I believe there is a clause in there that requires member stations to be non-partisan, so that could also preclude stations from airing political/issue ads.  I don't know about PRI or APM Affiliate agreements.   Conversely, it could also prevent NPR from accepting political/issue ads at the national level unless every member station can guarantee that it can run the ads, a somewhat-unlikely scenario.

Also, many public radio stations are legally owned by a parent college, and colleges are very concerned about their brand image; doubly so when it's about elections and political candidates.  Accordingly, the parent college might want to step in and nix any political/issue ads, which creates all sorts of tensions.

Religious Broadcasting: logically, it would seem that religious broadcasters would be in favor of this decision; it clears the way for them to effectively endorse and support candidates for public office (something many religious broadcasters are known for doing) except now they can get paid for it.  However, Communications Daily quoted Craig Parshall, general counsel of the organization National Religious Broadcasters, as not sounding very favorable towards the Ninth Circuit decision:  (Thanks to Ted Coltman of CPB for alerting me to this!)
The reason for the noncommercial educational category is to create 'a protective harbor for the advancement of high-value public information and entertainment,' Parshall said. Noncommercial broadcasters 'want to do everything possible to retain the noncommercial nature of what they do,' Parshall said. 'They don't want a blending or start merging into programming that looks and sounds like commercial stations.'
Perhaps the NRB is concerned about the Equal Opportunity rules allowing candidates who disagree with common NRB political platforms demanding ad time as well?   Or perhaps the NRB is as concerned as NPR is about maintaining a perception of being apolitical within their audience?   And like how NPR doesn't speak for all public broadcasters, I suppose the NRB doesn't speak for every religious broadcaster, either.

College Radio: I have not seen any formal statements from College Broadcasters Inc or the Intercollegiate Broadcasting System as of yet, but talk on the CBI listserv has not been positive about the decision.  College radio could conceivably stand to benefit the most from this decision given historically meager budgets.  However, the decision would seem to run counter to the typical ethos of college radio student managers (not to mention faculty), and again, parent colleges might want to have something to say about their stations running paid political ads.

Community Radio: I don't have access to the National Federation of Community Broadcasters (NFCB) listserv, and nothing's posted yet to the NFCB website about the decision.  Based on what I know of most NFCB member stations, I would assume their reactions are comparable to public radio.  However, like public and college radio, this could be a significant source of revenue.  Depending on the candidates, the ads could be seen as less of an ethical compromise to many community radio stations' audiences...although with the Equal Opportunity provision, that could easily backfire.

Television: I'm more a radio expert than TV, so take anything I say here with a grain of salt.  But I would expect that the nature of TV advertising makes this whole enterprise more valuable to non-commercial TV than to non-commercial radio.  Also, the concept of objective journalism is more program-specific on TV (as opposed to entire-station-specific for radio) so non-comm TV stations probably have more flexibility on that front.

Nevertheless, I would imagine a lot of public TV's audience still would react negatively to campaign ads.  So management of such a thing would be exceedingly difficult, if not impossible.

(Ed.note - one immediately wonders how KCET in Los Angeles will handle this; the station has faced a significant ratings drop after leaving PBS, but would nevertheless likely be viewed as a highly desirable station to advertise on by political candidates and supporters of any one of California's numerous ballot initiatives.)

What's Next?
I think the Broadcast Law Blog summed it up nicely:
The FCC may seek rehearing by the Ninth Circuit panel or en banc, which is likely given the significance of the decision and the divided panel opinion.  If the circuit court denies rehearing or upholds the panel decision, the FCC may seek review by the Supreme Court.  It would be expected to do so in such circumstances, since the panel decision invalidated sections of a federal statute
As for me personally, I will be heading to the NAB 2012 show in Las Vegas for Tuesday and Wednesday, and I plan to speak with as many people as possible about it.  I imagine we'll start getting more firm information there and see more guidance for broadcasters coming out in the next couple of weeks.

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