As FCC Chairman Announces an Investigation into Alleged PBS and NPR Advertising, a Look at the Underwriting Requirements for All Noncommercial Broadcast Stations

Yesterday, the new FCC Chairman Brendan Carr sent a letter to NPR and PBS announcing that he has asked the FCC’s Enforcement Bureau to launch an investigation into their advertising practices – suggesting without specifics that these entities had gone beyond the permitted underwriting announcements by airing prohibited advertisements for commercial products and services (Commissioner Starks and Gomez issued statements questioning the basis for this investigation).  While the Chairman’s letter was vague on specifics, and unclear as to whether there were specific listener or viewer complaints that triggered the investigation (which is how the FCC typically initiates an investigation into a broadcaster’s regulatory compliance ), the letter does suggest that all noncommercial broadcast stations, including all LPFM stations and other full-power stations not affiliated with NPR or PBS, should examine their practices to ensure that they comply with the FCC’s underwriting policies. 

What do these rules require?  Noncommercial stations can air acknowledgments of those making financial contributions to stations, but the identification of such sponsors must be limited – you can give their name, a general description of what their business is and where they are located, but such information must be provided in an objective, non-promotional manner. FCC standards prohibit calls to action (e.g., “visit this store,” “come on down”), inducements to buy (e.g., “we have a two for one special,” “mention the station and you’ll get a discount on all that you buy”), price information (e.g., “tickets only $29.99” or “this week, we have our end-of-year sale” or “10% senior discounts”) or qualitative claims (“the best pizza in town,” “quality merchandise and a friendly staff”).  We have written many articles on these issues (see, for instance, articles here, here and here) and the fines that have arisen when the rules were not followed.  

In another article, we discussed fines issued by the FCC for improper underwriting announcements where the announcements were of excessive length (even when the announcement ran in programming that was not originated by the station, and from which the station received no consideration).  While some limited information can be provided about specific product lines carried by a sponsor, not only must they meet the limitations above, but the list cannot be excessive – generally not more than three products should be named.  We have seen fines or consent decrees with the FCC carrying penalties of over $100,000 for violations of these requirements (see, for instance, the case we wrote about here).

We’ve written that the FCC’s guidelines call for spots to be informational and not promotional.  We even suggested that they be “kind of boring”  (see our article here about a $76,000 penalty where we mention pushback from a broadcaster about that suggestion).  Underwriting announcements are meant to simply give the facts about a sponsor – without embellishment.  They are not meant to be commercials – they are instead a thank you to station supporters.  In speaking about these rules before noncommercial broadcast groups, I often get complaints from stations that donors want more in their underwriting announcements.  But that is what commercial radio is for – giving advertisers all the promotion that they want.  Noncommercial stations need to stay away from anything that can look too promotional. While the FCC has acknowledged that the lines sometimes may not be so clear, the Chairman’s letter seems to indicate that this is a time of heightened scrutiny – so noncommercial stations need to be very careful.  Because of the very fact-specific questions as to whether or not an underwriting spot crosses these FCC lines, stations should routinely be in communication with counsel or others experienced in these issues to make sure that they comply with the rules. 

As this article may be read beyond the broadcast community, it is important to highlight one exception to these rules.  These rules do not apply to promotions for non-profit groups, which can be promotional and contain price information.  So, an underwriting spot for a play at the local high school, a fish-fry by the local Chamber of Commerce, or a concert at the local church, can contain calls to action and sound like advertisements that are heard on commercial stations (see our article here).  I think that, in some instances, these promotions for nonprofit groups can give rise to concerns about commercialization – but Congress permitted these announcements for nonprofit groups, so they should not be a matter of concern for the FCC, or for listeners and viewers.