FCC Issues Advisory on Nondiscrimination Clause Required to Be Included in All Broadcast Advertising Contracts - What Should the Clause Say? - Why An Advertising Contract is Important

by Davis Wright Tremaine LLP
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Last week, we wrote about the new requirement for a nondiscrimination clause in all broadcast advertising contracts. In the new license renewal applications, broadcasters must certify that they do not discriminate in the sale of advertising time and that their contracts contain the required certification. Today, the Enforcement Bureau of the FCC issued an Enforcement Advisory, answering questions about the new requirement. Unfortunately, that advisory really does little but reiterate what the FCC has already said - that the Commission is concerned about "No Urban, no Spanish dictates", and that broadcasters must make sure that there is no discrimination in the purchase of advertising time on their stations. But, the Commission does make clear in an accompanying News Release, through a statement from Chairman Genachowski, that the Commission "will vigorously enforce its rules against discrimination in advertising sales contracts." The advisory does highlight one new matter - that stations that use advertising rep firms or other sales agents must make sure that these agents have nondiscrimination clauses in their own contracts used to sell advertising time on the station.

This policy has raised several questions from broadcasters. Many have asked what they should do if they have no advertising contracts. Apparently, many broadcasters, especially in smaller markets or when dealing with regular customers, book advertising through emails or phone calls - not formal contracts. The FCC does not address how this should be handled. We've suggested that broadcasters include the nondiscrimination clause in the exchanges that essentially form the contract - e.g. the email confirming the schedule, the rate cards offering the spots for sale, or other communications between the station and the advertiser. We also suggest that stations adopt written contracts, as these contracts can cover issues that are important to broadcasters, e.g. indemnifications from advertisers that they have the rights to all the music and other material used in their ads, statements that the broadcaster reserves the right to preempt ads if they don't like the content or if the broadcaster needs to run something more important, that advertising sold to one party should not be re-sold to anyone else, that the broadcaster is not liable for any consequential damages if an ad does not run for technical or other reasons, and similar issues.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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