Political Spending Equals Public Files Interest

As of July 1, virtually all TV stations must upload their political files to the FCC’s online inspection site. Prior to that date, only the top four stations in the top 50 markets were required to use the Web-based system. With 2014 marking the first full year of a national election under relaxed rules for how much can be spent on a political campaign, stations are poised for record campaign spending that can translate into record levels of political file reporting.

Count on these filings being heavily scrutinized. It’s more important than ever to ensure everyone involved is up to speed on what needs to happen and how to avoid any potential fines or the damage to a station’s reputation that can result from running afoul of campaign advertising disclosure rules.

First the good news. Broadcast TV stations and networks are anticipating a 31% to 33% increase in advertising revenue in 2014 compared to what they garnered back in 2006. Political advertising is likely to make up almost 10% of all revenue this year — up from less than 7% back in ’06, according to Carl Salas, a VP and senior credit officer specializing in media and entertainment at Moody’s Investors Service.

Salas, who delivered a keynote address at Media Finance Focus 2014, the annual conference for MFM and BCCA held in May of this year, said he expects political ad spending for 2014 will be around $2.5 billion. This projection is right in line with Kantar Media Ad Intelligence’s CMAG unit estimate of $2.6 billion.

As Salas also pointed out, 2014 marks the first midterm election year when we will feel the full impact of the Supreme Court ruling in the Citizens United case. While the ruling came down during the 2010 elections, a number of experts felt political organizers were unable to take full advantage of the new opportunity.

Moody’s outlook for the 2016 political ad season – and broadcast television’s share of the total spend — was also very promising. But let’s get through the challenges for making the most of this year’s opportunity first.

One of this year’s biggest difficulties for stations is likely to be ensuring they are disclosing all of the required political advertising data. Now that these forms must be posted online, access to those details is just a click away.

And those clicks are happening. Back in May of this year, before the disclosure rules were extended to all stations, the Campaign Legal Center and the Sunlight Foundation filed complaints against 11 TV stations. The Institute for Public Representation of Georgetown University Law Center represented the two watchdog groups.

The organizations detailed their complaints, including links to the disclosure filings for the 11 stations, in a press release issued by the Campaign Legal Center. “The complaints stem from reviews of the stations’ online political files, which exposed widespread noncompliance with the disclosure requirements,” stated the release, which is posted on the Legal Center’s website. Examples of missing information on the forms included failure to identify “the candidate to which the ad refers; the issue of national importance to which the ad refers; and/or the chief executive officer or board of directors of the sponsor.”

In another instance, which also occurred prior to July 1, a network affiliate in Denver removed a disclosure filing from its online public files concerning a $740,070 contract for 1,326 political ad spots. According to a press report, the filing left out any information concerning who was paying for the ad. In this particular case, the station said it shouldn’t have posted the filing in the first place, since the ads weren’t of national importance.

While legal counsel for the Denver station verified this particular buy didn’t need to be disclosed, it illustrates how vigilant stations must be this year to ensure the right campaign ad buys are disclosed and that each is disclosed the proper way. For many stations, this is the first time someone can read the forms without requesting them in-person at the station. Moreover, the Sunlight Foundation has made the process even easier by creating a portal that allows users to search campaign spending by state, TV market and date.

Coming just weeks before our annual conference, the complaints were the opening topic for a session entitled “Political Advertising” featuring Ann Bobeck, senior vice president and deputy general counsel for the National Association of Broadcasters, and Dawn Sciarrino, a principal in the law firm Sciarrino & Schubert.

As Sciarrino noted concerning the complaints: “They’re saying, ‘We’re paying attention, and your record keeping is not up to par.’”

NAB’s Bobeck identified two factors that make the compliance process more difficult. First, she said, “Often it’s hard to get advertisers or ad agencies to give stations the information that they’re required to keep.”

In addition, as Bobeck pointed out, the forms require more data than station ad sales reps are typically required to obtain. For this reason, she recommended stations charge one point person with the task of scrutinizing political ads to make sure the sponsors are correctly identified and that all other aspects of the record-keeping are in order.

Bobeck also said it’s important for individuals who are tasked with managing the station’s disclosure forms to be aware of the resources they can call upon to answer questions. Those resources include the FCC’s political office headed by Bobby Baker, which she says has taken “a very proactive, resolution-driven approach” toward ensuring compliance.

In addition to checking with your station and company’s legal counsel, be sure to equip the person you have designated for monitoring compliance with the tools provided by the NAB. They include 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.

In several instances cited for non-compliance by the watchdog groups, the stations were using forms provided by the entities purchasing the ads. Because the NAB forms require all the information that needs to be disclosed, you can remove a lot of the risk for non-compliance by requiring political time purchasers to use the NAB forms instead of their own versions.

I would also encourage you to check out 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, published in 2006, provides a working overview of the essential concepts of political advertising. It also provides tools that can be used for evaluating a commercial advertising policy’s compliance with FCC and FEC requirements. In addition, several sections are designed for use in guiding day-to-day dealings with political advertisers.

As Moody’s Carl Salas pointed out, campaign spending by third-party organizations is the reason more political ad money is going to be spent this year than in any preceding non-presidential national election. Just a little extra effort to ensure your public disclosures are in compliance can help keep the watchdogs’ focus on who’s spending the money rather than on stations’ non-compliance.

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.