3rd-Party Issue Ads A Billion-Dollar Question

A recent radio news story reported that more than $1 billion (that’s right, with a “B”) has been spent so far in this off-year mid-term election cycle. In Audie Cornish’s Oct. 16 All Things Considered interview with Elizabeth Wilner of Kantar Media about the landscape of political TV advertising in the run up to the 2014 election she even ventured that election spending this year could reach $2 billion, although a lot will be concentrated in specific markets. Granted she was talking about TV, but still – a lot of the money is also going to radio, and radio is facing the same regulatory issues as TV.

We are now only weeks away from the 2014 mid-term election. In an election year, I always get a lot of questions about FCC political advertising regulation, and they come at an ever more furious pace as we get closer to election day. Typically, they run the gamut of political broadcasting issues. This cycle, however, the hands-down winner is how to handle third-party issue ads.

Wilner noted that nearly 30% of these ads are paid for by super PACs or outside political groups and that the spending is even outpacing the last presidential election. The questions are:

• Do I really have to list all of the board of directors of all the issue advertisers?
• If so, when does that requirement apply?
• What has to go into my public file?
• What are the requirements for sponsorship ID.
• What if a candidate appears in the ad, must they say they stand by it?

THIRD-PARTY ADS

In the case of non-candidate advertising that communicates a message relating to any political matter of national importance, including a candidate for federal office or a national legislative issue of public importance, Section 315(e) of the Communications Act  requires broadcast licensees to maintain in their public file the name of the entity purchasing the time, the name, address, and phone number of a contact person for such entity, and a list of the chief executive officers or members of the executive committee or of the board of directors of such entity.

The FCC rules are even broader. Section 73.1212(e) of the rules states that whenever a broadcast includes political matter or involves the discussion of a controversial issue of public importance and a corporation, or any unincorporated group, pays for or furnishes the broadcast matter, then additional requirements are added to the sponsorship identification requirement.

Specifically, the station must post in its public file one of the following lists pertaining to the sponsoring or furnishing entity:

• the chief executive officers, or

• members of the executive committee or

• the board of directors

The sole exception is when the broadcast is originated by a network. In that case, the list may, in the alternative, be retained at the headquarters office of the network. Finally, such lists are to be kept and made available for two years.

While we’re at it, let’s revisit some other important principles of broadcast political advertising and answer the remaining questions.

WHAT ARE THE REQUIREMENTS FOR SPONSORSHIP ID?

This is the basic one:  §73.1212 requires that any matter broadcast for consideration must be announced that it was sponsored, paid for, or furnished, either in whole or in part, and by whom. The term “sponsored” is deemed the equivalent of “paid for.”

A television ad concerning candidates for public office must also visually identify the sponsor with letters at least equal 4% of the screen height that must air for at least 4 seconds.

THE STAND-BY-YOUR-AD REQUIREMENT

This requirement comes from the Bipartisan Campaign Reform Act. Generally, this provision relates to candidates’ requirements and is enforced by the Federal Election Commission. However, the failure to make this announcement by a federal candidate results in the loss of his or her entitlement to lowest unit charge (LUC), and that is an FCC matter under the Communications Act.

The commission has not promulgated any rules on this LUC matter, but has stated that whatever a broadcaster does, i.e.; whether it continues to provide LUC to a federal candidate who has violated this provision or not, it may not discriminate among candidates in its treatment.

It comes up in the discussion of third party advertising since, under FEC regulations, up to certain limits, political parties can make “coordinated expenditures” with their candidates for campaign advertising, and when approved by the candidate, such ads must also bear the stand-by-your-ad statement. See: http://www.fec.gov/info/charts_441ad_2014.shtml

Gregg P. Skall is a partner in the law firm Womble Carlyle Sandridge & Rice LLP. 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.