With the lowest unit charge window for the November elections going into effect Friday (September 7), Wilkinson Barker Knauer partner David Oxenford thought that it was a good idea to review the basics on FCC rules and policies affecting those charges.
Here’s what he has to say.
With this election, where control of Congress may well be hotly contested and may result in competitive elections across the country, your station needs to be ready to comply with all of the FCC’s political advertising rules.
Lowest unit charges (or “Lowest Unit Rates”) guarantee that, in the 45 days before a primary and the 60 days before a general election, legally qualified candidates get the lowest rate for a spot that is then running on the station within any class of advertising time and particular daypart.
Candidates get the benefit of all volume discounts without having to buy in volume – i.e., the candidate gets the same rate for buying one spot as your most favored advertiser gets for buying hundreds of spots of the same class. But, there are many other aspects to the lowest unit rates, and stations need to be sure that they get these rules right.
It is a common misperception that a station has one lowest unit rate, when in fact almost every station will have several – if not dozens of lowest unit rates – one lowest unit rate for each class of time in each daypart. Even at the smallest radio station, there are probably several different classes of advertising spots.
For instance, there will be different rates for spots running in morning drive than for those spots that run in the middle of the night. Each time period for which the station charges a differing rate is a class of time that has its own lowest unit rate.
On television stations, there are often classes based not only on daypart, but on the individual program. Similarly, if a station sells different rotations, each rotation on the station is its own class, with its own lowest unit rates (e.g. a 6 AM to Noon rotation is a different class than a 6 AM to 6 PM rotation, and both are a different class from a 24 hour rotator – and each can have its own lowest unit rate). Even in the same time period, there can be preemptible and non-preemptible time, each with its own set of charges resulting in different classes of time, each with its own lowest unit rate.
Any class of spots that run in a unique time period, with a unique rotation or unique rights attached to it (e.g., different levels of preemptibility, different make-good rights, etc.), will have a different lowest unit rate. Stations need to review each class of time sold on their station, find the lowest rate charged to a commercial advertiser for a spot of the same class that is running at the same time that the candidate wants to buy a spot, and that lowest rate will be what the candidate is charged.
RATE APPLICATION, REGARDLESS OF RACE
One question that still comes up with surprising regularity is whether these rates apply to state and local candidates, as well as Federal candidates.
Indeed they do – so if your station is running advertising for candidates for mayor or city council; or for governor or the state senate; or even for the board of education, municipal court judge, or state attorney general – they and any other candidate in any public election for which your station chooses to accept advertising gets lowest unit rates.
In modern political elections, where PACs, Super PACs and other non-candidate interest groups are buying much political advertising time, broadcasters need to remember that these spots don’t require lowest unit rates. Even if the picture or recognizable voice of the candidate that the PAC is supporting appears in the ad, spots that are sponsored by an independent organization not authorized by the candidate do not get lowest unit rates (note, however, that spots purchased by independent groups featuring the voice or picture of the candidate may trigger public file and equal opportunities obligations for the station if the station decides to run those spots). Stations can charge these advertisers anything that the station wants for non-candidate ads – no need to stick to lowest unit rates.
From time to time stations may face the one exception to the above paragraph, where political parties are requesting lowest unit charges. In some cases, parties may in fact be entitled to these rates – but only where the spot features the recognizable voice or picture of the candidate and the party is using specific types of donations to pay for the ad. These donations are ones that are subject to political campaign donation limitations (known as “hard money”).
To get lowest unit rates, the advertising purchases must be authorized and “coordinated” with a candidate (and, in Federal races (and in several states that have adopted laws on the subject), the spots should make that coordination clear with the “I approved this message tag” or, under some state laws, some variant of the tag that discloses the coordination. Not all party spots are entitled to this treatment – only this special class of coordinated expenditures – and stations are entitled to get written confirmation from the party or the candidate that the expenditures are coordinated under the election laws. If not coordinated, the parties get charged the same as any other third-party organization.
Various advertising sales packages, and how they are factored into lowest unit rate calculations, also seem to lead to many questions by broadcasters. Candidates cannot be forced to buy single-station packages to get low unit rates. Instead, the package must be broken down by the station into a price per spot for each class of spot that is contained in the package. That is done by allocating the package price to the various spots of each class that are contained in the package. Then the allocated rates, on a unit basis, are compared to other spots of the same class that have been sold on the station either on their own or in other packages to determine if the spots from this package have any impact on the station’s lowest unit rates.
This allocation is done in an internal station record, which does not need to go into the public file, and does not need to be revealed to the candidate. Other than the station, only the FCC will see this allocation if they decide to conduct some sort of audit.
These are just some of the myriad issues that arise in computing lowest unit rates. Stations need to be familiar with these rules, and apply them accurately through the lowest unit rate window.