FCC Rule Will Modernize Broadcaster Transparency, Illuminate Money in Politics

5/1/2012

On April 27, the Federal Communications Commission approved reforms to modernize the disclosure requirements for broadcasters operating on the public airwaves. The rule will create an online database of TV stations' public files – previously available only by appearing in person at station offices – expanding public access to information about the stations' content, including political advertisements. But even as the rule moves forward, significant loopholes remain that will leave the public in the dark about political ad buys in substantial areas of key states during the current election season.

The Public's Airwaves

The public airwaves are a common asset, owned by no one, like the ocean or the atmosphere. But like the ocean and air traffic, the airwaves need “rules of the road” or interference among broadcasting devices would lead to chaos and make communication impossible. Therefore, in 1934, Congress created the Federal Communications Commission (FCC) to regulate use of the public airwaves, with a mandate that such use should ultimately serve the public interest.

The FCC assigned certain parts of the airwaves for use by television and radio broadcasting. To allocate that spectrum, the FCC grants licenses for organizations to broadcast on a particular frequency in a certain geographic area. In exchange for use of the public airwaves, licensees are tasked with serving their communities and are subject to certain obligations established by Congress and the FCC. For instance, TV stations must provide a certain amount of educational programming for children and must offer closed captioning for viewers with hearing disabilities.

Although they provide similar services, cable and satellite TV and radio broadcasters are regulated differently than television broadcasters because they use different technologies. Cable and satellite providers are not subject to as-strict public interest obligations.

Public Inspection Files

Broadcasters must maintain a public inspection file. To enable the public to oversee the use of the airwaves, stations must disclose certain information about their programming and operations. As the FCC notes, "the public file is an excellent resource to gauge a station's performance of its obligations as a Commission licensee." Broadcasters have maintained public files on paper since 1965.

The public files include information on the station's license and ownership, compliance with FCC rules and equal employment opportunity, programming, political advertising, and comments from the public. Cable and satellite companies are also required to maintain public files, including information on political advertising, but with some other differences.

While ostensibly public, access to the files has been limited by their manner of disclosure. Stations have only been required to make a hard copy available at their main studios during regular business hours. Stations also were required to provide copies in person and could charge a "reasonable cost" for reproduction.

These rules limited access to people with the means and time to physically visit a station’s main studio, imposing high barriers. Furthermore, those who did make the trek to a studio sometimes encountered difficulties such as delays, high copying charges, and unresponsive service. Once obtained, the file was a photocopy on paper, not a searchable and reusable digital format, further limiting analysis.

Modernizing Disclosure

To improve public access, the new rule requires TV stations to post their public files to an online database maintained by the FCC. Stations will also be required to link from their websites to their public inspection file.

To reduce burdens on licensees, TV stations will no longer be required to maintain their public files on paper at their studios. The net effect should be an increase in transparency, as online access will be markedly easier for most users than traveling to the studio.

Information about Political Advertising

In the discussion about modernizing the requirements, the political files attracted particular attention. Campaign finance watchdogs focused on the political files as a way to shed light on political advertising, especially ads by super PACs and other third-party organizations that have ballooned in the aftermath of the Citizens United decision. Though they offered proposals to address the decision, Congress and the Federal Election Commission have ultimately failed to update campaign finance rules to effectively regulate or even disclose attempts to influence our elections through massive ad buys on television by undisclosed donors.

Broadcasters adamantly opposed posting the political files on the Internet because the files show the amounts paid for political ads. Broadcasters argued that wider access to their ad rates could weaken their negotiating power with advertisers and put TV stations at a disadvantage vis-à-vis other advertising media.

Supporters of the rule countered that rate information is already public. Even if online disclosure did reduce stations' ad revenue – which has grown by millions of dollars since Citizens United – the FCC is bound to protect the public interest, not broadcasters' profits.

However, the rule adopts some measures to address broadcasters' concerns. The requirement to post the political file initially will apply only to stations affiliated with ABC, CBS, NBC, or FOX in the 50 largest media markets. Stations in the remaining markets, and stations not affiliated with the Big Four networks, are exempt from online disclosure of their political files until 2014. As a result, disclosure for the 2012 elections will be partial and will exclude many areas of "swing states" in the upcoming presidential election, as well as Spanish-language networks. In addition, the FCC will collect comments in 2013 on the effect of online disclosure of political files for those stations already required to comply in order to consider possible refinements before the full requirement goes into effect.

Limitations

Other aspects of the rule will further limit its effectiveness at strengthening transparency. The FCC did not establish any specific formats for disclosing the information. Instead, the agency simply required stations to submit the information in its native format to the extent feasible. As a result, the information will likely be posted in a hodgepodge of formats, making it more difficult to search for particular information or extract the data for further analysis. Stations also are permitted to upload scanned documents. Although the FCC will endeavor to make these files searchable, technical limitations in this process will further limit the usefulness of the online public files.

In addition, the FCC exempted from online disclosure letters and e-mails from the public to stations regarding their programming, even though this information will remain in the public file available in person at the studio. Finally, although TV and radio broadcasters are required to maintain the same public files, the new online disclosure rules apply only to TV stations. Given the role of talk radio in our political process, this is a particularly troubling omission.

In addition, the final rule abandoned elements of the FCC's earlier proposal to expand the content of the public files. The FCC had proposed to require stations to disclose more information about product placement, including "pay-for-play" news, and sharing agreements between stations, which advocates argue can circumvent ownership limits meant to foster programming diversity.

Next Steps

The FCC should ensure that the database is easy for the public to use. To maximize usability, the FCC should move toward collecting information in a structured format, allowing it to be disclosed in ways that facilitate analysis and reuse. Although the FCC chose not require a particular format at the current time, it should ultimately make the submission of structured information mandatory.

The fact that online disclosure will not apply to radio licensees is an obvious disparity that the FCC should revisit in the near future. This disparity highlights the need for a government-wide approach to updating disclosure policies for the 21st century. All companies that use public resources should be required to uphold high standards of accountability.

The administration and Congress should also seek to establish new reporting requirements that will create more universal reporting on spending for political advertising. This could mean creating requirements for cable and satellite companies similar to those for television broadcasters. Alternatively, the problem could also be solved by establishing new transparency requirements for those producing political advertising. In 2010, the Democracy Is Strengthened by Casting Light On Spending in Elections (DISCLOSE) Act was introduced in both the House and Senate as a legislative effort to respond to the Citizen United decision and create new reporting. The House passed the legislation but the Senate failed to approve the bill.

Editor's note: This article has been updated since its original publication date to clarify requirements for cable and satellite providers.