An Eye Opener On Sponsorship Identification

Posted on August 1st, 2013 by

After a lengthy investigation, the FCC and a broadcaster have entered into a consent decree related to violations of the FCC’s sponsorship identification rules.  Those rules have certainly not been a hotbed of enforcement activity by the FCC in recent years, but this case serves as a good example that a complaint to the FCC – even on its more arcane rules – can ruin your day.

To review, the sponsorship identification rules require broadcasters to identify sponsors on-air whenever any money, service or other valuable consideration is paid or promised to the station for the broadcast of program material.  The idea behind the rule is that the listeners and viewers are entitled to know who seeks to persuade them.  The rules contain some exemptions, the most familiar of which is that when it is clear from the broadcast material that the mention of the name of the product constitutes a sponsorship identification, then the mere inclusion of the product name is sufficient to identify the sponsor, and no further announcement is needed.  Otherwise, the sponsor’s corporate or trade name must be included.

Seems simple enough, right?  Wrong.  In the consent decree case, the FCC received a complaint that the station had aired advertisements sponsored by The Cigarette Outlet, but intentionally omitted the sponsor of the announcements in order to avoid violating the FCC’s rule prohibiting the broadcast of cigarette advertisements.  During the investigation, the station argued that it was unnecessary to include the advertiser’s full name in the announcements because “the identity of each advertisement’s sponsor and the fact of sponsorship of its business were obvious” given that the advertisements included the address and phone number of The Cigarette Outlet, as well as directions to its only store.  From that twisted explanation, you can glean that the station was mentioning the advertiser’s products, but craftily avoiding a mention of the advertiser’s name, hoping that in doing so, it was meeting the sponsorship id rule because it was “clear”, from the products being mentioned, who the advertiser was.  The FCC disagreed without explaining why, and a consent decree followed.  We suspect that the other tobacco products being mentioned didn’t make the sponsor’s identification clear enough for the FCC, even though the advertiser only had one store.

The scope of the consent decree is extensive.  First, the station has to make a $15,000 “contribution” to the government.  Second, the station licensee must take certain actions, including (a) creating operating procedures for broadcasts subject to the sponsorship id rules, (b) developing a compliance checklist for employees to follow, (c) establishing a two-employee cross check process for review of every announcement prior to broadcast, (d) creating a “compliance manual” and a compliance training program for initial and annual employee training, (e) notifying advertisers of the sponsorship identification requirements, (f) establishing a hotline for employees to call to report violations of the compliance plan (g) including a clause in employee contracts related to compliance with sponsorship identification laws, and (h) filing a compliance report with the FCC at least annually.  These obligations continue for 36 months.

That’s not all.  The station licensee also agreed in the consent decree that if it receives a future notice of apparent liability from the FCC alleging violation of the sponsorship identification rules, it will suspend each employee accused of violating the rule, investigate the matter, re-train employees, and take disciplinary action, up to and including termination, if the new incident results in a final ruling from the FCC that a rule violation occurred.

In case you were brushing the sponsorship identification rule aside at the start of this article, we apologize if that last paragraph made you spill your coffee (or choke a little).  It certainly got our attention.  In summary, it would now seem to be the case that an advertiser with the word “cigarette” in its name presents a sponsorship identification problem for any broadcaster.