GAO Outlines Broadcast/Wireless Ad Battle Over Spectrum

Report provides no conclusions on how broadcasters disclose, air, ads backing their interests
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A new Government Accountability Office (GAO) report released Sept. 17 chronicles the on-air ad campaign battle between broadcasters and the wireless industry over spectrum, but makes no recommendations about how broadcasters do or not disclose ads aired in their own interest.

Reps. Darrell Issa (R-Calif.), chairman of the House Oversight Committee, and Mike Quigley (D-Ill.) had asked the GAO to "assess broadcaster disclosure requirements and practices of television and radio broadcast stations that air content intended to influence Congress."

Those would include association spots on issues like spectrum, retrans, or a performance license.

GAO pointed out that disclosure of such ads depends on a number of factors and that broadcasters are not required to air opposing views—which had been a mandate under the dispensed-with Fairness Doctrine.

For example, it pointed out, "public file requirements for program material that has been provided to broadcast stations by other entities on certain issues of public importance, as described below, differ depending upon whether air time has been purchased or the content has been aired free of charge." For example, disclosure usually applies to paid programming, but if it is an issue of public importance, broadcasters must identify the source even if no money has changed hands.

According to CMAG figures supplied to GAO, between 2007 and 2012, as the FCC reclaimed its first tranche of spectrum for the HDTV transition, then prepared for the second-wave incentive auction, 59 TV stations in 28 markets affiliated with six networks (ABC, CBS, Fox, NBC, MNTV and CW) aired a total of 1,541 ads from the National Association of Broadcasters on the issue of spectrum allocation, as well as 62 ads on performance rights. Over the same period, CTIA: The Wireless Association, ran 1,043 spots on spectrum (none on performance rights), though those were all in the Washington, D.C., media market on five network affiliates (MNTV was not part of the buy).

CMAG cost estimates pegged CTIA's spend about $780,000, at an average spot cost of $749.

NAB's average cost was about $100 for a total of $175,000, though GAO points out that that those estimates may not reflect bulk discounts or the fact that the spectrum ads ran for free. In such case, GAO measures it as an opportunity cost, or what the spot could have been sold for to an advertiser, which means it had to assume the time was otherwise sellable, which it did given that some of the spots aired in the Sugar Bowl, Wheel of Fortune and Glee.

The NAB ads got a lot more premium space, with 154 airings in primetime or prime access, versus 83 CTIA ads. And given that the NAB ads were aired for free, and CTIA's weren't,  NAB had 249 overnight airings, when the time was most likely to be unsold and the opportunity cost close to zero, while only 9 CITA ads ran overnight.

"The economic argument could be made that stations that aired NAB advertisements free of charge considered it to be in their interest to air advertisements that advocated on their behalf and that stations were therefore willing to forgo profit in the near term in order to advance their long," said GAO. But it then added that the researchers and broadcasters it had talked with said broadcasters would be unlikely to air free ads during slots they could get paid for.

The FCC provided technical comments for the report, but did not otherwise weigh in.

The Music First Coalition, which has been battling NAB over the performance right issue, said that the report essentially confirmed that NAB had been flooding the airwaves with advocacy ads while excluding other viewpoints.

In a letter to FCC Chairman Tom Wheeler, the coalition asked that he "consider the transparency, disclosure, and recordkeeping issues raised by the GAO's effort to investigate these subjects as part of your ongoing review of broadcaster abuses in MB Docket No. 09-143."

That is an open FCC docket looking into a MusicFirst complaint about broadcaster pushback on the performance Rights Act.

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