By: David Oxenford, Wilkinson Barker Knauer LLP
With the lowest unit charge window for the November elections going into effect on September 4, just two and a half weeks from now, we thought that it was a good idea to review the basic FCC rules and policies affecting those charges. In this election, with the Presidency and control in both houses of Congress at stake as well as many state offices, and with in-person campaigning limited by the pandemic, there may have never been a time when broadcast advertising was more important to political candidates – and likely more in demand by those candidates. Your station needs to be ready to comply with the FCC’s political advertising rules. Today, we will look at lowest unit rate issues. 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 running in any particular daypart. Candidates also 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 that offers substantially different benefits to an advertiser will be its own class of time 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). So, in the same time period (e.g. morning drive on a radio station), there may be spots running in that period that have multiple lowest unit rates (e.g. spots may end up running in that period that were sold just for morning drive, as well as cheaper spots that were sold as part of a 6 AM to 6 PM rotation that just happened to fall within that period). Federal candidates can buy into any of those classes of time, and they take the same chances as does a commercial advertiser as to where their spots will land (e.g. if a candidate buys a 6 AM to 6 PM rotator, and that rotator ends up in morning drive, another candidate may buy that same rotator the next week and end up at 4 PM. That second candidate can only guarantee that they will end up in morning drive by buying a spot guaranteed in that time period).
Even in the same time period, there can be preemptible and non-preemptible time, each with different costs and thus are 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 make sure that lowest rate will be what the candidate is charged.
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. See our past articles on this topic here and here.
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). Under federal law, 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 buyers are requesting lowest unit charges and are authorized by a candidate. In these cases, these 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 message is specifically authorized by the candidate. Under federal law for federal candidates, these purchases will be by political parties and 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, the spots should make that coordination clear with the “I approved this message” tag. While the FCC has not formally ruled on it, it appears that some states have similar state laws that allow third parties to buy spots that are authorized by a candidate and may be entitled to lowest unit rates. Talk to your own attorney if you are faced with that issue. Not all third-party spots are entitled to this treatment – only this special class of coordinated expenditures – and stations are entitled to get written confirmation from the candidate that the expenditures are coordinated under applicable 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. We wrote more about this process of allocating spots in a package here.
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. Check with your own legal advisor to discuss the specifics of these issues as they arise as they are often very difficult to apply in the real world. Some of the other situations that arise with lowest unit rates, and with other political issues that come up in any election season, are covered in our Political Broadcasting Guide, available here. This article in an update of an article from a series that we did several years ago on Political Broadcasting Basics, which we may update from time to time over the next few weeks. Other articles that deal with other political broadcasting subjects can be found on our blog by clicking on these links: equal opportunities, reasonable access, the no-censorship provision that governs candidate ads, and the potential for station liability for untruthful statements made in third party ads. Also, see our article here about the obligations for the political file required as part of the online public file, and the importance that the FCC puts on that file. And our articles here, here, here and here on the new requirements for the identification in the public file of all the issues mentioned in any advertising on federal political issues or candidates. The laws regarding political broadcasting are extremely complicated – talk to your own attorney for specific advice on situations that arise at your station.
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.