Advertising and Marketing

Supreme Court Throws Out Ban On Corporate Funding Of TV And Radio Spots

5-4 decision potentially frees up more money for broadcast and cable political spots 1/21/2010 11:15:44 AM Eastern

In a close 5-4 decision that included a host of partial
dissents and concurrences, the Supreme Court has thrown out the prohibition on
corporate use of treasury funds for political speech, taking a big bite out of
campaign finance reform law. "No sufficient governmental interest
justifies limits on the political speech of nonprofit or for-profit
corporations," said the court in an opinion authored by Justice Anthony
Kennedy and joined in part by Chief Justice John Roberts and Justices Antonin
Scalia, Samuel Alito and Clarence Thomas.

The Bipartisan Campaign Finance Reform Act of 2002 prevented
corporations and unions from using treasury funds to pay for broadcast, cable
or satellite-delivered "electioneering communications" within 30 days
of a federal election. And law going back over 50 years had prohibited those
same treasury funds from being used for express advocacy spots that advocated
the election or defeat of specific candidates.

But the court majority held Thursday (Jan. 21) that those
prohibitions were a ban on speech.

That money had to come from PACs.  Although the First Amendment provides that
"Congress shall make no law . . . abridging the freedom of speech," said the
court, "prohibition on corporate independent expenditures is an outright
ban on speech, backed by criminal sanctions.

And the fact that PAC money could be used to pay for the
broadcast and cable ads did not protect the prohibition.

"It is a ban notwithstanding the fact that a PAC
created by a corporation can still speak, for a PAC is a separate association
from the corporation," wrote the court. "Because speech is an essential
mechanism of democracy-it is the means to hold officials ac-countable to the
people-political speech must prevail against laws that would suppress it by
design or inadvertence."

Somewhat ironically, the court actually ruled against
Citizens United, which brought the appeal, on the narrower issue of whether
broadcast and cable spots it wanted to run promoting a documentary of then
candidate Hillary Clinton were subject to discloser requirements under BCRA.
The court held that they were, but said it could not stop there and needed to
rule on the constitutionality of the ban on corporate and union treasury
funding.

"Viewed from a First Amendment perspective,
McCain-Feingold was perhaps the worst legislation ever enacted and subsequently
upheld as constitutional by the Supreme Court," said Media Institute
President Patrick Maines. "It is welcome news for those who believe in
free speech that the court agrees that there is no justification for imposing
limits on political speech." 

The institute is a Washington-based, media-backed First
Amendment think tank.

Paul S. Ryan, FEC program director and associate legal
counsel for the Campaign
Legal Center,
slammed the decision. "Today the Supreme Court majority declared that
corporate speech trumps the rights of American voters to government free of
corporate corruption. The courts opinion is the most radical in the Supreme
Court's history in the area of campaign finance law. The Roberts court has
abandoned all judicial restraint and respect for precedent by overturning more than
50 years of settled law.

Ryan said the court showed its "true activist
colors" by expanding the case to law not challenged by either side in the
case and overturning the court's own 1992 decision upholding the campaign
finance law.

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