Collins | Navigating Tricky Political Public Files Rules

Politics and the upcoming elections continue to feature prominently in the national conversation, even as the nation deals with the COVID-19 pandemic.

Last week right after Wisconsin held its in-person primary despite calls to postpone it to protect its citizens, Sen. Bernie Sanders announced he was dropping out of the presidential primary race, making Joe Biden the presumptive Democratic nominee.

And, in late March, Priorities USA Action, a Democratic Party super PAC, created a 30-second spot in which President Trump is featured downplaying the seriousness of the virus and saying the pandemic is a “hoax.” Immediately after the ad began airing, the Trump reelection campaign began sending “cease and desist” letters to the stations airing the ads, saying the commercial contains a “false assertion” and threatening legal action.

Ads such as those being created by Priorities USA Action have become increasingly prevalent since the U.S. Supreme Court issued its 2010 decision in Citizens United v. Federal Election Commission. In that ruling, the court held that political spending is a type of free speech protected by the First Amendment.

This decision, often referred to with the adjective, “controversial,” essentially allows corporations, unions and other groups to spend unlimited dollars to promote a candidate or a political party, as long as the group is acting independently of that campaign.

These types of political messages make for more than interesting news; they also offer real and present headaches for media companies. The move to online public files for all broadcast stations has changed the compliance landscape. It is now much easier for competitors, public interest groups, and the FCC to monitor political ad purchases by candidates and issue advertisers.

New Political File Requirements

The concern is in response to some “new and complex political file requirements” resulting from a series of decisions the FCC made in late 2019. In her column for the March/April issue of MFM’s member magazine, The Financial Manager, Lerman Senter PLLC attorney Sally Buckman refers to the situation as “a political quagmire.” While there are calls for the commission to reconsider its decisions, “for now companies are required to comply with new and complex political file requirements.”

Last October, the FCC released a Memorandum Opinion and Order that both clarified and increased the public file obligations relating to political ads aired by broadcasters or via cable TV or DBS. Specifically, it requires a public file record of any ad that “communicates a message relating to any political matter of national importance [emphasis added].”

Buckman notes that the political files must include: “rates charged; dates and times spots air; the type of time (e.g., non-preemptible or preemptible); and the name of the candidate, election or issue referenced.”

Additionally, she says, “for issue ads the name of the entity purchasing the ad is required, along with contact information and a list of executive officers or board members.” The FCC requires the information to be placed in the file immediately, which is taken to mean within one day.

Three Key FCC Decisions

According to Buckman, three decisions released by the FCC in late 2019 are behind the expanded disclosure rules. While resolving the complaints against a number of different television stations, these decisions also made the political file process more complex for all media companies.

For each ad, all political matters of national importance must be referenced, including the names of all federal candidates, the offices they are running for, “as well as all elections for federal office and all national issues discussed.” Even if an ad references a federal candidate, but not the specific election, she says it will still trigger these disclosure obligations.

Uploaded forms must also include the name of the candidate and specific race. Buckman cites an election in Georgia where these specifics were not included in the files that came under FCC scrutiny.

She also offers the example of a Democratic Congressional Committee ad that criticized a congressional candidate’s work with a lobbying group that received money from taxpayers. In this case, the FCC decided the media company should have referenced the candidate and identified the issue, which the FCC said was the national debt, even though it was not part of the substance of the ad.

In another instance, a company was admonished for identifying the sponsor of an ad with an abbreviation — DSCC — rather than spelling out Democratic Senatorial Campaign Committee.

While the FCC offered only admonishments for complaints that arose under the new rules last year, the commission has made it clear that failure to comply will result in fines. These fines can be significant; in 2016, one radio station was fined $540,000 under the then-existing rules.

It’s not enough for a political file to list one or two people associated with the entity responsible for a political ad. The FCC’s decisions make it clear that the online files must include “the list of chief executive officers or board members of a sponsoring organization.” If the paperwork includes only a name or two, the media company must contact the advertiser to ask for additional names to be included.

Media Companies Request Reconsideration And Clarification

Buckman notes that media companies have asked the FCC to reconsider several aspects of the commission’s rulings including their “reasonable, good faith efforts to identify and disclose the elections, races, and issues that political ads reference.”

In addition, these businesses have asked the FCC to confirm that the regulations above only relate to issue ads, that the companies are not expected to include the same details for candidate advertising.

Given the frenetic pace of ad sales during the political season, she says, media companies point out the fundamental unfairness of requiring stations to “guess how FCC staff will interpret the requirement to adequately identify and describe various elections, races, and issues.”

In the last three weeks, the FCC has sought to help broadcasters through the current crisis realizing that the business of broadcasting now is vastly different than it was just a month ago.

The commissioners have already clarified that specific no-charge spots will not count when calculating lowest unit rate for political advertisers. Additionally, they are allowing stations to request waivers to allow for shared news coverage during the COVID-19 crisis.

Still, it remains to be seen how these new rules around issues advertising will be affected; media businesses anxiously await some further clarification. In the meantime, as Buckman advises, companies must “do their best to comply with the new requirements by carefully reviewing the information included in their political files.”

Mary M. Collins is president and CEO of the Media Financial Management Association and its BCCA subsidiary, the media industry’s credit association. She can be reached at [email protected] and via the association’s LinkedIn, Facebook, Instagram, and Twitter accounts.