$15,000 FCC Fine Proposed for Underwriting Announcements that Were Too Commercial
By: David Oxenford, Wilkinson Barker Knauer LLP
When do noncommercial stations stray from permissible acknowledgment of those local businesses that provide funding for its operations to impermissible commercials? That question was addressed in a Notice of Apparent Liability issued by the FCC’s Enforcement Bureau on Thursday (7/2), proposing a $15,000 fine for a low power FM station whose underwriting announcements were deemed too commercial. The decision, which includes examples of the announcements deemed problematic, is must-reading for all noncommercial licensees who want to avoid fines from the FCC in connection with their underwriting acknowledgements for commercial entities.
The decision breaks down into four categories the reasons for finding the announcements in this case to be too promotional. The first category is one that often arises in connection with these announcements – the underwriting announcement uses terms that make qualitative claims about the sponsor. You can’t talk about a commercial sponsor being voted the “best” or being the “most experienced.” Talking about mechanics who are “experts” in working on certain cars, or decorators who have “an exceptional eye for the perfect arrangement” are all examples of announcements that cross the line. In this case, some of the examples of impermissible qualitative claims include a car repair shop with “certified master technicians” who use “state of the art equipment.” Another was for a new real estate company that was characterized as being “one of the fastest growing real estate companies in the country” having “23 agents and a combined experience of over 300 years” and being a “national company with a local flair” having “recruited some of the most well-known agents.” Another for a computer repair company was perhaps closer to the line but still was deemed too promotional, saying “don’t waste your time when you have a professional nerd to help make your life run easier” and “we’re not your average nerds.” In some cases, like the last one, had it been the only identified issue, the FCC may have just determined that it was an exercise of licensee judgement about what was too promotional and let it go. But in a case like this one, with so many other issues, it was identified as being a problem.
The second category of violations in this case was described as “using pricing language and/or offering inducements to do business.” Underwriting announcements for commercial entities should not contain price information or information about sales (no “2 for 1” sales or “25% discounts for seniors on Tuesday” messages). Some of the examples here were subtler, and not as price-focused – in some cases instead apparently focusing on the “inducements to do business.” For a realty company, it appears that the FCC may have had concerns with a new realty partnership saying that they were formed “to further our involvement in the community and to help our friends and family sell their home and find their dream home.” Another was clearer – an auto repair shop offering to take $30 off a repair bill if a customer donated $15 to a local charity. Seemingly in the category of offering an inducement rather than specific price information was an announcement for a company that claimed to not just be a sponsor, but “also fans of the most wonderful music ever recorded.” Again, that last one might have been overlooked had there not been so many other issues.
The third category of violations was one that does not often get too much attention – that being the inclusion in an underwriting announcement of “menu listings” (e.g., excessive arrayal) of products or services offered by the sponsor (though this issue and the fourth category were discussed in this case we wrote about in 2018 which imposed a $115,000 fine on a noncommercial station for underwriting violations). What the FCC has said in the past is that an underwriting announcement can identify the sponsor and generally say what its business is, but it should not be overly inclusive in its listing of the products and services offered by the business. So saying that you are a furniture store is permissible, but listing all the brands that your store carries likely creates an issue. In this case, a message for a steakhouse that included the following description of products and services was deemed too much: “a nine-ounce large filet mignon or the Cattlemen’s 20oz club steak…. their basic burger, mushroom burger, bronco burger and house patty melt…. with any entree, you get combo chicken, shrimp or rack ribs. Banquet facilities and private rooms available.” Another restaurant offering “carne asada, spicy coconut red curry lobster, chicken fried ribeye, beef tenderloin scallops, smoked pork chops, a cubano sandwich, a bison burger, a lamb burger and a variety of soups and salads” was also deemed to be a problem. Similar issues were found with an announcement for a computer services company offering help “with virus removal, hardware, computer repair, software tech support, data recovery, computer service, laptop computer repair, network computer support and business tech support….[they] cover any make or model of computer servers, desktops, laptops, notebooks, tablets, smartphones, game devices, personal data assistance and cameras, printers and scanners.” The take-away – keep the description of the products or services short and general.
The final issue was a concern about underwriting announcements that were more than 30 seconds long. It is hard to provide the examples here as there is no audio in the FCC decision – and the text of the announcements identified as being problematic don’t readily show their length. But, the FCC has in the past suggested that the bare acknowledgment of a sponsor and a brief statement of what they do with some general location data or a website address or phone number – without a call to action saying to visit the sponsor or any of the other problems identified here – should not take long. In at least one case the FCC has had problems with an overly produced underwriting announcement that was too long and just sounded too hyped – even if the language of the announcement itself was within permissible boundaries. So here, the message is to be cautious – if it sounds too much like it could be a commercial, the FCC may well think that it is. And, certainly, do not exceed 30 seconds in length – and even shorter is better.
We’ve suggested before that underwriting announcements should be kind of boring – just the facts – and keep them short. We have received some pushback from underwriting managers at noncommercial stations about that advice to be boring. It was suggested that a better way to characterize it is that announcements should be informational not promotional. No matter how it is characterized, noncommercial stations should be careful. Commercial competitors and others can be listening and, as this case shows, if there are issues raised, the FCC is not hesitant to ask questions and issue fines. Talk to your station’s attorney about the issues that can arise in underwriting so that your station is not the next one to receive this kind of notice from the FCC.
David Oxenford is MAB’s Washington Legal Counsel and provides members with answers to their legal questions with the MAB Legal Hotline. Access information here. (Members only access).
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