Articles Posted in Advertising

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When the U.S. Supreme Court overturned various restrictions on political spending by corporations in the Citizens United decision, it set off a flurry of activity in Washington. Many, including famously the President in his State of the Union address, derided the decision as opening the political process to the corrupting influence of corporate cash. Many in Congress promised a swift legislative response to minimize the impact of the Court’s ruling. Regardless of where you stand on the Court’s decision, I have to say I was disturbed by a number of statements coming out of Capitol Hill afterwards which made clear that the speakers had no understanding of the laws already on the books relating to political advertising on electronic media. Some promised to change the law to what it actually already is (although they apparently didn’t know it), and others pointed out “problems” that would result from the Citizens United ruling that current law already prohibits from occurring.

Grandstanding without basis is, however, a well-established Washington tradition, and I presumed that when legislative staffers got together to draft the legislation, they would quickly figure out that these criticisms and unneeded solutions had been off-base. I apparently was too optimistic. Today, Senator Schumer of New York unveiled the Senate version of the legislation (Senate link not yet available) at a news conference on the steps of the Supreme Court. The President publicly applauded the legislation, and the House has promised hearings within a week on its version of the bill in hopes of enacting it quickly enough to govern this Fall’s elections. The DISCLOSE Act (the acronym for “Democracy Is Strengthened by Casting Light On Spending in Elections”), as its name indicates, requires ample disclosure when corporations or unions spend money on ads relating to a federal political campaign. Unfortunately, it does not stop there, and attempts to then rewrite political advertising laws contained in the Communications Act of 1934 that were not impacted by the Citizens United ruling. These changes appear to be an effort to require broadcasters, as well as cable and satellite operators, to subsidize the ads of not just candidates, but of their national political parties as well, in an effort to make their ad dollars go farther than those of a corporation exercising its rights under Citizens United.

Setting aside the wisdom or constitutionality of that approach, the rub is that the legislation was apparently drafted in such a rush that aspects of it quite literally make no sense. For example, the relevant section of the bill is entitled “TELEVISION MEDIA RATES”, but it then amends the political advertising provisions of the Communications Act that affect both television and radio. Even if the impact on radio was unintended, the matter is further confused by a requirement that the FCC perform random political audits during elections of at least 15 DMAs of various sizes, and that each DMA audit include “each of the 3 largest television broadcast networks, 1 independent television network, 1 cable network, 1 provider of satellite services, and 1 radio network.”

Similarly, the statutory exceptions to the requirement for providing equal time to a candidate’s opponents when the candidate appears on-air would be amended to exclude certain appearances by a candidate’s representative as a triggering event. However, since only the appearance of a candidate can trigger equal time in the first place, creating an exception for appearances by a candidate’s representative serves no purpose.

Further indicating that the bill is premised on a misunderstanding of the current law, the Reasonable Access provisions of the Communications Act would be amended so that instead of FCC licensees being required to provide federal candidates with “reasonable amounts of time,” they would be required to provide “reasonable amounts of time, including reasonable amounts of time purchased at the lowest unit charge ….” The premise of this change appears to be a lack of understanding that all time sold to a candidate in the 45 days before a primary and the 60 days before a general election must be sold at the lowest unit charge for that class of time. The broadcaster has no discretion to charge anything but the lowest unit charge during that time, making this change pointless as well.

A number of other odd provisions in the Senate version of the bill that would significantly impact media companies (and not just broadcasters) is discussed in an Advisory we issued to our clients earlier today. Two of particularly great concern would drastically reduce the lowest unit charge for political advertising while significantly expanding the pool of entities eligible to receive lowest unit charge. It is worth noting that none of these media-oriented provisions appear to be in the House version of the bill, so hopefully they will be excised from the Senate bill before any harm is done. Regardless, broadcasters, as well as cable and satellite providers, need to be vigilant to ensure that these provisions, if not eliminated outright, are at least heavily modified before any final bill emerges.

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4/29/2010
Several members of Congress led by Senator Schumer and Congressman Van Hollen introduced today the “Democracy Is Strengthened by Casting Light On Spending in Elections” Act–the DISCLOSE Act. The House and Senate versions differ, with the Senate version vastly expanding eligibility for Lowest Unit Charge, reducing the Lowest Unit Charge, prohibiting preemption of political ads, and requiring the FCC to perform political audits of broadcasters, cable, and satellite operators.

The DISCLOSE Act is primarily aimed at reversing, to a large degree, the recent 5-4 decision of the Supreme Court in Citizens United v. Federal Election Commission, in which the Court held that corporations, and by implication unions, have a constitutional right to make independent expenditures for advertising supporting or opposing the election of political candidates. As we reported in a Client Alert in January of this year, the decision opened the way for increased political advertising by invalidating limits on corporate political ad spending. The decision allows, among other things, corporations (and unions) to purchase airtime at any time to directly advocate for or against candidates for federal elective office. While the decision invalidated limits on corporate spending on political advertisements, it did retain certain disclosure and disclaimer requirements found in the Bipartisan Campaign Reform Act.

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Proceeding Is Important to Electronic Media Content Producers, Television Stations, Advertisers, Educators, Electronics Manufacturers, and Privacy Experts.

On January 13, 2010, the FCC released an Order granting two requests for extension of time to file comments in response to the FCC’s Notice of Inquiry (“NOI”) in its “Empowering Parents and Protecting Children in an Evolving Media Landscape” proceeding. One of the requests was filed jointly by the Association of National Advertisers, the American Advertising Federation, the American Association of Advertising Agencies, the Direct Marketing Association, the Interactive Advertising Bureau, and the Promotion Marketing Association. The second was filed jointly by the Children’s Food and Beverage Advertising Initiative and the Children’s Advertising Review Unit of the Council of Better Business Bureaus, Inc. These parties requested additional time to prepare their comments in light of the numerous issues raised in the NOI and the year-end holidays that fell in the middle of the comment period. The new date for filing Comments in the proceeding is February 24, 2010 and the new date for filing Reply Comments is March 26, 2010.

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November 2009
On December 1, 2009, the FTC’s newly-revised Guides on Endorsements and Testimonials will become effective. Broadcasters, including their on-air talent, need to know when a claim is an endorsement/testimonial, what on-air disclosures may be required, and what their obligations are to ensure that claims are truthful and not misleading. These endorsement/testimonial-related issues can arise in a variety of contexts, including when station personnel voice commercials, prepare copy for advertisers, engage in banter regarding a product or service, serve as a spokesperson for an advertiser, or provide content to their station websites.

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11/11/2009
In Satterfield v. Simon & Schuster, Inc., 569 F.3d 946 (9th Cir. 2009), the Ninth Circuit held that unsolicited text messages to mobile phones sent by a retailer may constitute a “call” in violation of the Telephone Consumer Protection Act (the “TCPA”). This decision has sparked an increase in consumer class actions filed against retailers who send advertisements to consumers by text message.

The TCPA makes it unlawful “to make any call” using an automatic telephone dialing system (“ATDS”) to, among other things, a mobile telephone or pager. 47 U.S.C. Section 227(b)(1)(A). Congress enacted the TCPA in 1991, before text messaging was available, and intended it to prohibit automated voice calls from telemarketers to mobile phones. The U.S. Court of Appeals for the Ninth Circuit, in Satterfield v. Simon & Schuster, Inc., 569 F.3d 946 (9th Cir. 2009), extended this consumer protection to text calls made using ATDSs.

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10/15/2009
On October 5, 2009, the Federal Trade Commission announced that it finalized the update to its Guides Concerning the Use of Endorsements and Testimonials in Advertising (the “Guides”), which have been in effect in their current form since 1980.1 The evolving practice of companies marketing their goods and services through bloggers and other “new media” received special attention.

The FTC’s changes now make explicit that the principles in the Guides apply to a company’s marketing of its products or services through third parties using “new media,” such as blogs and social networks, and that both advertisers and their “sponsored” endorsers have responsibility for the content of such endorsements as well as for disclosure of commercial links that consumers would not expect to exist between the advertiser and the endorser (such as payments or free products in exchange for a blog post containing a positive product review). The update also includes a couple of changes to the old rules, including the elimination of the safe harbor originally authorized under the 1980 Guides for ads with unrepresentative consumer testimonials–in most such ads now, including a disclaimer such as “results not typical” or “results may vary” will no longer be sufficient.

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February 2006
Notwithstanding the fact that it has been over 35 years since Congress banned cigarette ads from the airwaves, broadcasters continue to ask for advice on whether they may air certain types of tobacco-related advertisements. In fact, questions in this area of law appear to be on the increase. One reason is the proliferation of small, independent cigarette manufacturers resulting from the 1998 tobacco settlement. That settlement has caused the price of cigarettes to rise, thereby making it profitable for small companies to become cigarette manufacturers. Given the pressure that these manufacturers and their retail outlets are likely to place on broadcasters to help in promoting these new tobacco products, we offer the following Q&A to aid broadcasters in complying with tobacco advertising restrictions should they be asked by any company to air tobacco-related spots… article continues