Earlier this month, the Federal Communications Commission (FCC) issued an enforcement advisory to remind broadcasters of their sponsorship obligations.
What is the Sponsorship Identification Rule?
Under section 317 of the Communications Act of 1934 (the Sponsorship Identification Rule), when a broadcast station transmits any matter for which money, a service, or other valuable consideration is either directly or indirectly paid or promised to, or charged or accepted by, such station, the station, at the time of the broadcast, must make a disclosure that states: (1) that such matter is sponsored, paid for, or furnished, either in whole or in part, and (2) by whom or on whose behalf such consideration was supplied. The notice provides that broadcasters who are paid for programming without disclosing the program’s sponsor can “mislead the public and promote unfair competition.” Further, the disclosures help audiences distinguish third-party content from station editorial content.
The advisory also reminds broadcast licensees to exercise reasonable diligence to obtain from their employees, or from third-party suppliers, sponsorship identification information in order to enable the licensee to air the required sponsorship identification announcement disclosing that the material was broadcast in exchange for consideration.
Per the public notice, violation of the Sponsorship Identification Rule can lead to sanctions, including imprisonment or monetary forfeitures.
Takeaway: The enforcement advisory serves as an important reminder to commercial broadcasters to ensure they understand and comply with the Sponsorship Identification Rule. Advertisers should be aware of the rule as well, especially those that might be running public service announcement-like ads in paid media. The Sponsorship Identification Rule is generally met if: (i) the advertisement mentions the name of the source of the ad (i.e., the name of the brand, company, non-profit or governmental entity paying for the advertising space), and (ii) there is a commercial product or service mentioned in the advertisement. However, in the context of a public service announcement, there is not normally a commercial product or service mentioned in the ad. Thus, advertisers who want to run public service announcement-like advertisements will likely receive pushback from commercial broadcasters if their ads do not also disclose the source and the fact that the ads were paid for.