It’s Time To Brush Up On Political Ad Rules

Did you know that taking a bad debt write-off for an unpaid political ad could be considered an unlawful campaign contribution?

That tip from C. Robin Szabo, president of Szabo Associates, media collection professionals, was one of the updates contained in a Political Ad Primer appearing in the current issue of MFM’s The Financial Manager magazine. With Kantar Media CMAG placing its initial estimates for mid-term political ad spending at $6 billion, including $2.4 billion on television, this is a good time to ensure you’re up-to-date on the ever-changing landscape of regulations governing political advertising.

Although the Bipartisan Campaign Reform Act (BCRA), commonly referred to as “McCain Feingold,” was passed back in 2002, there are some new Federal Election Commission requirements that will be taking effect this year.

“Currently, TV stations in the top 50 markets affiliated with ABC, CBS, NBC, and Fox are required to post their political file on the FCC’s website. However, this coming July 1 all other full-power TV stations will be under the same posting requirements,” Szabo reminds us.

These files must contain information that demonstrates compliance with the federal laws, which require broadcast media to

• Disclose political advertising policies.

• Offer time to candidates at the “lowest unit charge” during specified periods before primary and general elections.

• Provide “reasonable access” to all legally qualified candidates for federal office.

• Provide “equal opportunities” to all legally qualified candidates seeking the same office.

• Refrain from censoring political advertisements.

• Fully identify the advertisements’ sponsors.

• Maintain a political file that’s available for inspection by the public and other candidates.

Szabo says: “Due to the higher risk of non-payment, it’s highly advisable that you require cash-in-advance payments from political advertisers. But this can only be enforced if your credit policy requires cash-in-advance payments from commercial advertisers in similar situations, such as commercial entities that have been established only for a temporary time or purpose, or that have an uncertain credit history.”

One of the challenges affecting stations’ cash-in-advance requirements is the rule concerning when it can be collected. As Szabo notes: it is important keep in mind that cash-in-advance payments from federal candidates cannot be demanded more than seven days prior to the airdate.

In the case of stations that do not have a credit policy that requires cash-in-advance payments for these categories, the FCC requires broadcasters to extend credit under the station’s customary payment credit policy. Additionally, a broadcaster may be required to extend credit to an advertising agency on behalf of a candidate when the agency has accepted full legal responsibility for payment and otherwise qualifies for credit. And keep in mind, broadcasters that accept a credit card payment from one political candidate must do so for all the other candidates in the race.

Stations may want to think twice about accepting credit card payments for political advertising. As Szabo points out: “Don’t be coerced by candidates or their agencies to accept payment by credit card as cash-in-advance. It is not. It carries additional costs; the transaction is subject to dispute; and the political advertiser may not be around to resolve the dispute.”

In addition to the latest requirements under McCain Feingold, Szabo reminds us of the Supreme Court rulings that “continue to adjust the parameters for media with regard to political advertising.”

They include the 2007 Supreme Court decision to allow issue ads that air on television in the days leading up to an election as opposed to banning such ads for as much as 60 days before a general election. There is also the 2010 Citizens United decision, which eased campaign restrictions for corporations and interest groups.

In his brief overview about the changing landscape of political advertising Szabo concludes with, “media should always consult industry experts and legal counsel when questions arise.”

One of those resources is the Political Advertising Handbook for the Television Executive, produced by Garvey Schubert Barer, which is available at no charge on the MFM website.

The easy-to-use Handbook is designed to help you at every stage of the political advertising sales process, including as a means to gain a working overview of the essential concepts of political advertising, a tool for evaluating your commercial advertising policy’s compliance with FCC and FEC requirements and for use in day-to-day dealings with political advertisers.

Another essential tool is the National Association of Broadcasters’ Political Broadcast Catechism, which is available in the NAB Bookstore. NAB has also recently updated its Political Agreement Forms, which include the NAB Agreement Form for Political Candidate Advertisements and the NAB Agreement Form for Non-Candidate/Issue Advertisements. NAB Members can access a complimentary PDF of the forms from the NAB Site (www.nab.org).

Of course we will also have at least one panel dedicated to political advertising at Media Finance Focus 2014, May 19-21 in Miami. Check the MFM website for the most up-to-date session information.

As Robin Szabo pointed out, the landscape for political advertising is ever-changing. So I hope you’ll consider these observations as just the starting point on your journey to ensure compliance with the latest rules. Avoiding financial penalties will help you make the most out of the 2014 campaign season.

Mary M. Collins is president and CEO of the Media Financial Management Association and its BCCA subsidiary. She can be reached at [email protected]. Her column appears in TVNewsCheck every other week. You can read her earlier columns here.