FCC’s VNR Fine: More to Come?

Levy against Comcast for unidentified video news release could be start of get-tough policy

The FCC’s proposed $4,000 fine last week against Comcast for airing an unidentified video news release on one of its local cable news—a hardly noticed item—could be the tip of an iceberg waiting ahead for nearly 100 TV stations and a handful of cable outlets. The fine was being billed by at least one commissioner as the first ever for violating the FCC’s sponsorship identification rules, though Comcast, for one, was still disputing that the FCC had any jurisdiction over the cable news channel’s programming.

The FCC concluded that a video news release for a sleep aid that aired in a consumer segment on CN8, a regional cable news channel in 12 states and the District of Columbia, dwelled sufficiently on the product to require sponsorship identification.

VNRs don’t usually require on-screen identification unless they are political or controversial, or provided in exchange for cash or in-kind compensation. But the FCC says there is a caveat for releases that focus on a product or brand name “beyond an identification which is reasonably related to the use of such service or property on the broadcast.”

SLEEP ANALYSIS

In this case, the FCC pointed to the fact that the product, Nelson’s Rescue Sleep, was the only one featured in the segment, which contained “extensive images and mentions of the product,” said the FCC, “and includes the statement that 'If you are one of the estimated 70 million Americans who have trouble sleeping—Rescue Sleep may be what you’re looking for.’”

Comcast was among a handful of cable outlets and TV stations totaling 111 identified by anti-media-consolidation activist Free Press and the Center for Media and Democracy. The two filed two separate complaints against the stations, including one against 77 of them back in April 2007, and a second in November after the center had done a follow-up study that identified even more.

At the time, the Radio-Television News Directors Association said the allegations against the stations were either inaccurate or targeted isolated incidents at variance with station policies and RTNDA guidelines about identifying video news releases. RTNDA President Barbara Cochran echoed those sentiments last week, but added some more:

“It was not Congress’ intent to apply the rule the way the FCC is applying it in this case,” she said. “This is not how the FCC has applied the rules previously. If they wish to address this, then the way to do this is not through a fine, but through a rulemaking procedure.”

The FCC has been actively investigating the stations cited in the complaints. Cheerleading that effort has been FCC Commissioner Jonathan Adelstein.

“I applaud the Enforcement Bureau’s decision to enforce our sponsorship identification rules, and to propose, for the first time, a forfeiture for the failure to disclose the sponsor of a video news release,” Adelstein said last week. “Commission rules are clear: Viewers have a right to know who is trying to persuade them so they can make up their own minds about what they are presented. I applaud Chairman Martin’s leadership, and look forward to quick action on the many other pending video news release complaints.”

Some sources on both the industry and activist sides were surprised that the first proposed fine was issued against a cable operator that only represented a fraction of the total, and was not even one of the initial 77 cited in the first complaint.

Comcast was even more surprised, saying last week it was perplexed by the decision and would tell the FCC once again it believes it did nothing wrong.

In a letter to the FCC defending its use of that and four other VNRs, Comcast said that the footage had been chosen by a reporter using her own judgment, that as far as it knew the VNR producer was not compensated for its use, and that in any case, it did not believe the sponsorship identification rules applied to cable. But Comcast also said it has since adopted a rule that any VNRs used should be identified onscreen as being from a third party.

Did Craig Aaron, communications director for Free Press, see something materially different in the Comcast VNR usage versus that of the other stations Free Press complained about? “I certainly don’t think there is,” he said, pointing out that the same VNR ran on a station in Portland, Ore.

“We are eager to see the FCC respond to all of the complaints,” said Aaron.

Kevin Foley, who runs his own video public relations company and is president of the National Association of Broadcast Communicators, which represents video news release companies, wrote FCC Chairman Kevin Martin last fall to complain that its investigation into the stations was based on unfounded allegations.

“From where we are sitting, this is a first step,” Foley said. The other steps being the other 110 stations being investigated? “That’s what one would think,” he said. NABC will watch it run its course, he said, while continuing to maintain that this is just the electronic version of the print press release.

“We think the government should refrain from getting involved with TV news decision-making,” he added, arguing that stations don’t have to identify the VNRs unless they are political, controversial or paid for.

Foley said NABC’s lawyers continue to look at the Free Press allegations, but that the rules were “distorted” by activists and that there “seems to be no violations of FCC rules.”

CONGRESSIONAL INQUIRY

Adding fuel to the fire, House Telecommunications and Internet Subcommittee Chairman Ed Markey and Government Oversight Subcommittee Chairman Henry Waxman wrote Martin last week asking for a broad inquiry into the FCC’s sponsorship rules as they relate to product placements and integrations, saying they thought they, too, needed full disclosure to viewers.

One identification that should have not been made was the FCC’s identification of D.S. Simon Productions as the producer of the VNR at issue. While it did distribute the VNR, said Foley, it did not produce it.

Doug Simon, who heads the company, said he has asked the FCC to change the notice of apparent liability to remove that identification, but added that he informed the FCC back in November that his company’s name should not have been on it.

The FCC reaffirmed its sponsorship ID rules last year in the wake of the flap over Armstrong Williams’ contract with the Bush administration to tout its No Child Left Behind policy, as well as questions about unidentified government health care VNRs.

E-mail comments to john.eggerton@reedbusiness.com