FCC Repeals COVID-Era Accommodation that Allowed Broadcasters to Offer Businesses Free Advertising Time Without LUC Implications
May 19, 2023
By: David Oxenford, Wilkinson Barker Knauer
On May 15, the FCC’s Media Bureau released a Public Notice announcing that it was repealing the COVID related guidance released in March 2020 that allowed broadcasters, local cable operators, and other media companies subject to the requirements that political candidates be offered Lowest Unit Rates during pre-election periods, to offer free advertising time to advertisers and other local businesses without those spots being considered in calculating the LUC during the periods that these spots were running. This accommodation by the FCC was offered in the early days of the pandemic when the advertising market collapsed as many local businesses (like movie theaters, restaurants, travel companies, theme parks, and others) had nothing to advertise as so many businesses were closed by health concerns. Broadcasters needed to fill commercial time, and wanted to support their customers and other local businesses who were struggling during those early days of the pandemic. The FCC allowed broadcasters to give free advertising time to businesses without considering those spots in any LUC calculation, as long as those spots were not directly tied to an advertising contract. A broadcaster could not promise an advertiser this free time in a way which tied that free time to the purchase of an advertising schedule, but the broadcaster could just voluntarily run those ads many more times than the contract provided to fill the broadcaster’s unsold inventory and to help the local business. Or the broadcaster could, without LUC implications, run spots promoting local businesses in other ways (e.g., by providing lists of stores open during the pandemic, or restaurants providing take-out services), even if the business was also buying advertising time, as long as the extra promotion was not tied to the paid schedule. See our articles here and here for more about this policy.
With the pandemic emergency now declared over by the federal government, the FCC believes that this specific accommodation can come to an end. This does not necessarily mean that there are no circumstances in which a broadcaster might be able to offer free time without LUC implications. There may be circumstances where a potential advertiser is not currently running ads on a broadcast station, where the station agrees to give the business free ad time to try out broadcast advertising to see if it would help their business. There are old FCC cases suggesting that free packages in limited circumstances, principally where there are no paid ads for those businesses running on the station at all, may still not affect LUC. These instances are limited, and you should consult your attorney about where this limited exception might apply. But if you are running ads for an advertiser, and because you want to enhance the value of the advertising that the advertiser has purchased by giving them additional ad time, with the end of the COVID policy, those additional spots likely need to be considered in computing the price of spots offered to candidates in the political windows – 45 days before a primary and the 60 days before any general election.
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). There are no additional costs for the call; the advice is free as part of your MAB membership.