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URL 33: The FCC’s Double-Talk (September 13,1972)

URL 33: The FCC’s Double-Talk (September 13,1972) (In Chapter 36, page 171) (2,902 words) (37,602 cum words)

Part One: The Commission has under consideration: (1) its Notice of Apparent Liability, dated January 26, 1972, addressed to Channel 13 of Las Vegas, Inc., licensee of Television Broadcast Station KSHO-TV, channel 13, Las Vegas, Nevada; and (2) the licensee’s response to the forfeiture notice, dated March 21, 1972.

Part Two: Station KSHO-TV is affiliated with the ABC television network. The Notice of Apparent Liability charged that KSHO-TV on occasions joined the network after sponsored network programs started and discontinued the broadcast of such programs prior to their conclusion, in order to insert local commercial matter during station breaks. In support of that charge, the Notice recited the results of a spot check of five sponsored daytime network programs carried by the station on 20 days from February to November 1971, comparing the station’s logs with the network schedule. In many instances, the material deleted at the end of the programs included the disclosure of receipt of payment for the use or promotion of merchandise on the program, which is required by Section 317 of the Communications Act of 1934,as amended, and by Section 73.654 of Our Rules. For example, of the 19 “Let’s Make a Deal” programs covered by the spot check, 10 deleted all (20 or some (8) of the required sponsor identification announcements. Similarly all (4) or some (3) of the required announcements were deleted 7 times at the end of the “Newlywed Game” and all (4) or some (6) of the required announcements were deleted at the end of10 “Dating Game: programs.

Part Three: While these events were occurring, KSHO-TV was submitting weekly commercial reports to ABC that certified “Everything carried according to schedule except as noted in the interruption, deletions, cancellation, or pre-emption column above. In the event any of the programs were not carried in their entirety for any reason not stated herein, payment to the station for such program or programs shall be waived.

The reports did not disclose the deletions mentioned in the previous paragraph. The Notice therefore found that KSHO-TV had incurred an apparent liability for a $10,000 forfeiture for violating Section 317 of the Act and Sections 73.654 and 73.1205 of our Rules.

Part Four: In its response, KSHO-TV does not deny that it failed to broadcast all of the material fed to it by the network, or that it certified to the network that it carried all of the network material in the instances cited in the Notice. Nonetheless, KSHO-TV asserts that the assessment of a forfeiture lacks legal or factual basis, and that the Notice should be withdrawn. KSHO-TV argues that Section 73.1205 of our Rules does not cover the practices engaged in by the station. Section 73.1205 is as follows:

Fraudulent Billing Practices: No licensee of a standard, FM, or television broadcast station shall knowingly issue to any local, regional or national advertiser, advertising agency, station representative, manufacturer, distributor, jobber, or any other party, any bill, invoice, affidavit or other document which contains false information concerning the amount actually charged by the licensee for the broadcast of advertising for which such bill, invoice, affidavit or other document is issued, or which misrepresents the nature or content of such advertising, or which misrepresents the quantity of advertising actually broadcast (number or length or advertising messages) or the time of day or date at which it was broadcast. Licensees shall exercise reasonable diligence to see that their agents and employees do not issue any documents which would violate this section if issued by the licensee.

This rule was adopted in Fraudulent Billing Practices, 1 FCC 2d 1068 (1965); examples of its applicability are set out in Applicability of Fraudulent Billing Rule, 1 FCC 2d 1075 (1965); and the rule was modified in Fraudulent Billing Practices, 23 FCC 2d 70 (1970). KSHO-TV asserts that there is nothing in those documents to indicate that the rule was designed to cover anything except “classic” double billing, or that the rule was designed to cover network-station relations, or announcements made pursuant to Section 317 of the Act. The licensee argues that if Section 73.1205 does cover the circumstances in question, the rule is too vague to serve as the basis for a forfeiture.

Part Five: There is no suggestion in the words of the rule that its terms are limited solely to so-called “classic” double-billing, however that term may be defined. The wording of the rule is broad in scope. Unlike KSHO-TV, we do not equate breadth with vagueness. As applied to the facts of this case, the rule states, “No licensee of a TV broadcast station shall knowingly issue to any part, any document which misrepresents the quantity of advertising actually broadcast (number or length of messages). Thus, in our view, as long as the material clipped contained advertising, KSHO-TV’s conduct is encompassed by Section 73.1205. It is true that the examples given of fraudulent billing practices in the documents cited above differ from KSHO-TV’s activities. However, the examples should not be construed as substitutes for the rule. As we previously stated, “The proposed rule is concerned with the principle involved rather than the form in which it appears.” (1 FCC 2d at 1068) We note that the form of fraudulent billing that is presented here has previously resulted in the imposition of forfeitures for violation of Section 73.1205, Radiozark Broadcasting of Louisiana Inc, 32 FCC 2d 603 (November 29, 1971). See, too, Letter to Wake County Broadcasting Company (WAKS), FCC 70-780 (July 15, 1970), and Letter to Chapman Television of Tuscaloosa Inc. (WDCF-TV), FCC 70-1197 (November 4, 1970).

Part Six: KSHO-TV contends that the clipped material is not advertising. The material in question is broadcast at the end of quiz programs and states essentially that certain prizes or services awarded throughout the course of the program were provided by various firms or that a fee also was paid for their use. We require that such announcements:

…should at least state in language understandable to the majority of viewers that suppliers of goods or services have paid the network or producer of the program to display or promote the products or services, and each such supplier should be properly identified. In order to achieve the purpose of Section 317 and our Rules, the video portion of such announcement should be given in letters of sufficient size to be readily legible to an average viewer; should be shown against a background which does not reduce legibility, and should remain on the screen long enough to be read in full by an average viewer. (National Broadcasting Company, 27 FCC 2d 75 (December 16, 1970)

We also stated in that decision that, “if the announcement is given because of the receipt of consideration other than the services or properties exempted under the proviso clause of Section 317, it is a commercial announcement and should be so computed,” 27 FCC 2d at 76. In this case, the producer of the programs did receive a fee. We conclude, therefore, that the material deleted by KSHO-TV was advertising.

Part Seven: By letter dated March 5, 1971, ABC assured us of its compliance with our decision, stating, among other things, that after March 15, 1971, it would use the following disclosure announcement: “The following companies have furnished prizes or paid a fee for their promotion on the program,” followed by a list of the companies. However, ABC sought reconsideration as to the requirement that the disclosure announcements at the end of the program be logged as commercial time. Reconsideration was denied in American Broadcasting Company 30 FCC 2d 827 (June 16, 1971. (Footnote 1) We stated there:

The identification of the person paying for exposure of a product or service in a quiz show or audience participation program is no less commercial matter when contained in a “crawl” positioned at the end of a program than when positioned in or in proximity to a commercial spot announcement. The fact that the sponsor’s identity is announced at the end of the program, rather than at the time the product or service is advertised, does not change the essential nature of the announcement. It may be noted that the sponsorship identification contained in the “crawl” may also be a form of product or service advertising in that broadcast exposure, implicit in the contractual relationship with the program producer, is provided. The Commission has recognized that even the mere mention of the name of a business entity has commercial advantage. See for example, Note 1 to Section 73.503 of the Rules governing Noncommercial Educational FM Broadcast Stations. (30 FCC 2d at 827)

Thus, initially and on reconsideration we held that the sponsor “crawls” at the end of the programs constitute advertising when financial consideration is received.

Part Eight: KSHO-TV further contends that it receives no compensation for broadcasting the “crawls.” Therefore, KSHO-TV concludes that the “crawls” are not advertising. As previously indicated, the programs in question are sponsored network programs. The station receives compensation from the network for carrying such programs. The affiliation contract between ABC and KSHO-TV states that, in exchange for compensation, KSHO-TV agrees “to broadcast network sponsored programs in their entirety, including but not limited to the network commercial announcements, network identifications, program promotional material or credit announcements contained in such programs which you accept, without interruption or deletion or addition of any kind.” Thus, contrary to KSHO-TV’s contention, it is compensated for broadcasting the entire network sponsored program, KSHO-TV’s argument must, therefore, be rejected.

Part Nine: KSHO-TV argues that it is unfair to hold it liable for violating Commission rules as interpreted by the National Broadcasting Company and American Broadcasting Company cases above, since only three of the violations cited in the Notice occurred after the decision denying reconsideration. (Footnote 2) However, Section 405 of the Act states, in part, “No such application (for reconsideration) shall excuse any person from complying with or obeying any order, decision, report, or action of the Commission, or operate in any manner to stay or postpone the enforcement thereof, without the special order of the Commission.” Thus, the decision we are concerned with, in terms of compliance with the rule, is the decision of December 16, 1970, since we issued no “special order” deferring its effective date. All of the examples given in the Notice fall well after that date. Accordingly, we find no unfairness in holding KSHO-TV liable for its actions taken after public notice of the decisions was given on December 17, 1970. Accordingly, we find no unfairness in holding KSHO-TV liable for its actions taken after public notice of the decisions was given on December 17, 1970.

Part Ten: KSHO-TV asserts that the Notice lacks the facts necessary to establish violations of Section 31 of the Act and Section 73.654 of our Rules pertaining to sponsor identification. KSHO-TV takes the position that no violation can be found unless the clipped “crawls” contained sponsor identifications required by Section 317. The Notice stated that the “crawls” were required according to ABC. KSHO-TV states that it isn’t prepared to accept ABC’s determination because, in the area of prizes or services awarded in contest or giveaway programs, the determination as to what is and what is not required sponsor identification can be very close, citing example 23 of the House Report on Communication Act Amendment, House Report No. 1800, 86th Congress, 2d Session, Pike & Fischer Radio Regulation, Current Service, pp. 10; 413, 10:429-30 (1960). KSHO-TV contends, therefore, that in order to judge whether the “crawls” at the end of the program were required, the insufficiency of any announcements made during the program must be established. However, in the programs cited in the Notice, no announcements or disclosures as to consideration appeared during the body of the program, only at the very end. (Footnote 3) Thus, the question of whether anything said during the body of the program was sufficient for Section 317 of the Act and Section 73.654 of our Rules.

Part Eleven: KSHO-TV alleges that the Notice is not clear as to whether the violations of Section 317 of the Act and 73.654 of our Rules are an independent basis for the forfeiture, in addition to the violations of Section 73.1205. Therefore, KSHO-TV concludes that the Notice is invalid under Section 503(b) (2) of the Act as lacking specificity. (Footnote 4) We have no such difficulty with the Notice. It clearly states that a forfeiture was imposed “for willfully or repeatedly failing to observe the provisions of Section 317 of the Communications Act and Sections 73.654 and 73.1205 of the Commission’s Rules and Regulations.” The facts upon which the violations were founded were set out in the body of the Notice. In our view, all elements required by Section 503(b) (2) of the Act were supplied by the Notice. We therefore reject KSHO-TV’s position.

Part Twelve: KSHO-TV notes that in the National Broadcasting Company and American Broadcasting Company cases, above, we asked only for a statement from the networks as to what they proposed to do in view of our ruling. Since we held KSHO-TV apparently liable for a $10,000 forfeiture, KSHO-TV argues that it is being held to a harsher standard than the networks. The different treatment, according to KSHO-TV, is contrary to the requirements of Melody Music Inc. v. FCC, 345 F 2d 733, 4 RR 2 d 2029 (D.C. Cir. 1965). There, the court remanded the case to us for an explanation as to the different treatment accorded two parties when both were engaged in essentially the same misconduct. In this case, the networks were asked what they proposed to do to bring their logging practices into compliance with our ruling. Every indication in the networks’ statements indicates that their logging practices prior to our ruling were based on their good faith interpretations of our Rules and the Act. They brought their conduct into compliance with our ruling after it was issued. There is no basis for imputing fraud to the networks’ actions. KSHO-TV, on the other hand, for approximately 11 months after the Commission had specifically ruled in its letter to ABC that the sponsorship identification “crawls” were commercial matter, continued to delete network material that contained the required sponsor identification. Furthermore, it continued to certify falsely to the network that all network material, “without deletion of any kind, was being broadcast. Thus, we consider KSHO-TV’s conduct to be readily distinguishable from that of the networks. We further consider KSHO-TV’s conduct to be readily distinguishable from that of the networks. We further consider KSHO-TV’s conduct to be a serious departure from the degree of responsibility we expect of a licensee. We therefore conclude that the holding of the Melody Music case is inapplicable to the facts presented here.

Part Thirteen: KSHO-TV believes that the amount of the forfeiture is excessive, particularly in view of the financial difficulties of the station. We considered the station’s financial condition at the time we issued the Notice. We find no basis for changing our determination.

Part Fourteen: In view of the above, it is ordered that the request of channel 13 of Las Vegas Inc., licensee of Station KSHO-TV, Las Vegas, Nevada, that the Notice of Apparent Liability be withdrawn, is denied.

Part Fifteen: It is further ordered that Channel 13 of Las Vegas Inc., forfeit to the United States the sum of ten thousand dollars ($10,000) for violations of Section 317 of the Communications Act of 1934, as amended, and Sections 73.654 and 73.1205 of the Commission’s rules. Payment of the forfeiture may be made by mailing to the Commission a check or similar instrument drawn to the order of the Treasurer of the United States. Pursuant to Section 504 (b) of the Communications Act and Section 1.621 of the Commission’s Rules, an application for mitigation or remission of forfeiture maybe filed within thirty (30) days of the date of receipt of this Memorandum Opinion and Order.

Part Sixteen: It is further ordered that the Secretary of the Commission send a copy of this Memorandum Opinion and Order by Certified Mail—Return Receipt Requested, to Channel 13 of Las Vegas, Inc.

Footnotes:

1: The decision was adopted in our meeting of June 16, 1971. The letter was mailed, and public notice of the action was issued the following day, June 17, 1971. Subsequently, when printed for the FCC Reports, a typographical error was made, and the date of adoption was given as June 16, 1971.

2: Relying on the date appearing in the FCC Reports, KSHO-TV found only one violation cited in the Notice after the date of the decision denying reconsideration. In view of the typographical error described in the preceding footnote, KSHO-TV’s argument must be based on three dates’ that is, those violations occurring after June 17, 1971.

3: Our basis for this conclusion is the following statement from ABC: “The announcement that a fee had been paid in addition to the donation of the prize itself was made solely at the end of the program in the disclosure announcement. No disclosure occurred during the body of the program.”

4: Section 503(b) (2) provides, in part: A notice issued under this paragraph shall not be valid unless it sets forth the date, facts, and nature of the act or omission with which the licensee or permittee is charged and specifically identifies the particular provision or provisions of the law, rule, or regulation or the license, permit, or cease-and-desist order involved.

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