On April 22, 2021, the Federal Communications Commission (FCC or the Commission) released a Report and Order (the Order) wherein it adopted rules requiring broadcasters to disclose whether certain programming aired on their stations was directly or indirectly sponsored, paid for or furnished by a foreign governmental entity. Noting the increased use of leasing agreements by foreign governmental entities to broadcast programming on U.S. stations without disclosing those entities as the sources thereof, the FCC expanded broadcasters’ existing sponsorship identification requirements. The revised rules are designed to eliminate ambiguity to the consumer regarding programming paid for by a foreign government – especially in instances when a foreign government is seeking to influence the American public. This Alert breaks down the new foreign sponsorship identification requirements and explains when these new rules will take effect.
The Existing Sponsorship Identification Requirements
Section 317 of the Communications Act of 1934, as amended (the Act) and Section 73.1212 of the Commission’s rules require broadcasters to make on-air disclosures when any programming is broadcast on a station in exchange for consideration – i.e., broadcasts in exchange for money, services or anything else of value paid to the station, either directly or indirectly. While “consideration” would normally be thought of as payment, in the context of broadcasts of any political program or any program involving the discussion of any controversial issues, “consideration” can include the provision of the programming itself to the station for free as an inducement to air that programming.
Scope of Sponsorship Disclosures for Foreign-Sponsored Programming
The Commission has now extended the sponsorship identification requirements to programming aired on a station pursuant to an airtime lease agreement if the direct or indirect programming provider is a “foreign governmental entity.”
1. Foreign Governmental Entity. For purposes of the new disclosure requirement, a “foreign governmental entity” is defined as (1) a “government of a foreign country”; (2) a “foreign political party”; (3) an “agent of a foreign principal” whose “foreign principal” is, or is controlled by, a government of a foreign country or a foreign political party; or (4) a U.S.-based foreign media outlet.
For FCC purposes, the first three terms will share the definitions currently used by the Foreign Agent Registration Act (FARA), 22 U.S.C. § 611. A “foreign principal” is defined by FARA as either a “government of a foreign country” or a “foreign political party.” An “agent of a foreign principal” is defined under FARA as any person who acts as an agent, representative, employee or servant of a foreign principal or of a person directly or indirectly supervised, financed or controlled by a foreign principal by undertaking certain activities in the United States on behalf of the foreign principal. These activities include political activities, public relations, solicitation/collection/disbursement of money or representation of interest before any agent or official of the U.S. government. Such persons or entities are also required to register with the U.S. Department of Justice (DOJ) – though it should be noted that many do not do so unless or until the DOJ FARA Unit insists. The foreign disclosure rule is triggered for an “agent of a foreign principal” when the foreign principal is either (a) a government of a foreign country or a foreign political party; or (b) directly or indirectly operated, supervised, directed, owned, controlled, financed or subsidized by a government of a foreign country or by a foreign political party.
A “U.S.-based foreign media outlet” is an entity or individual required to file reports with the Commission pursuant to Section 722 of the Act (codified at 47 U.S.C. § 624). Such reports are required by any U.S.-based foreign media outlet that (a) produces or distributes video programming that is transmitted, or intended for transmission, by a multichannel video programming distributor (MVPD) to consumers in the United States; and (b) would be an agent of a “foreign principal” but for a FARA exemption. Under Section 722, “foreign principal” has the same meaning as under the FARA.
2. Lease Agreements. The new FCC foreign disclosure requirement is limited to programming aired on a broadcast station pursuant to a lease agreement in which the programming was sponsored, paid for or furnished for free as an inducement to air by a foreign governmental entity. The foreign governmental entity, however, does not have to be a party to the lease agreement. Instead, as further explained below, the foreign disclosure requirement is triggered whenever the foreign governmental entity directly or indirectly provides the programming aired on the station – whether as the lessee or through another person or entity acting as the lessee.
The Commission noted in the Order that it interprets the term “leasing arrangements” broadly to include a wide variety of agreements – whether oral or written – and that the term is not limited to formal Time Brokerage Agreements and Local Marketing Agreements. Rather than looking to the title of an agreement, the Commission will consider as a “leasing arrangement” any agreement in which a licensee makes a discrete block of time available to be programmed by another party in return for compensation. The Commission did make clear that traditional sales of short-form advertising would not fall into this definition. Interestingly, in a footnote, the Order explicitly said that it was not addressing whether a barter-based network affiliation-type agreement (where the station purchases programming in return for advertising time) would trigger disclosure, based on no parties indicating in the record that such agreements existed with foreign government-controlled programmers.
Although it did not create a clear carve-out for noncommercial education (NCE) stations, the Commission concluded that those stations would not likely fall under the purview of the new foreign sponsorship rules because NCE stations have limited abilities to engage in leasing arrangements (i.e., NCE stations may only air programming provided by third parties if the consideration does not render a profit for the station).
3. Consideration. As noted above, the foreign sponsorship identification rules will be triggered if any money, service or other valuable consideration is directly or indirectly provided to a broadcast station in exchange for airing programming provided by a foreign governmental entity in the context of a lease agreement. The Commission noted that the provision of the programming itself (i.e., for free) would be sufficient to trigger the disclosure requirement – especially in the context of airing a political program or a program involving discussion of a controversial issue.
Moreover, consistent with Section 507 of the Act (codified at 47 U.S.C. § 508), the Commission found that a third party involved in the production or distribution of programming intended to be aired on the station receiving any political program or program involving discussion of a controversial issue from a foreign governmental entity for free or at a nominal charge as an inducement for its broadcast was required to disclose that fact to the appropriate person or entity (including the licensee). Stations that know of, or should reasonably know of, such an arrangement would be obligated to comply with the foreign disclosure requirements if the same programming was then broadcast by the station pursuant to an airtime lease.
The FCC also adopted a requirement that broadcast licensees exercise “reasonable diligence” to determine whether the lessee or any party within the production/distribution chain of the programming broadcast on a station is a foreign governmental entity. To exercise “reasonable diligence,” the broadcaster must, at a minimum:
- Inform the lessee of the foreign sponsor disclosure requirement;
- Ask the lessee whether it qualifies as a foreign governmental entity; and
- Ask the lessee whether any person or entity within the production/distribution chain of the programming broadcast qualifies as a foreign governmental entity and has provided some type of inducement to air the programming.
The broadcaster must make these inquiries at either the time of execution of the lease agreement or the time of renewal thereof. In addition, any parties to existing agreements must undertake this diligence within six months of the new rules going into effect.
At these times, the broadcaster must also independently confirm whether the lessee is a foreign governmental entity by checking the DOJ’s FARA database and the FCC’s U.S.-based foreign media outlets reports. Finally, the broadcaster must memorialize the above-listed inquiries and investigations to track compliance and to provide to the FCC in response to any inquiries on the issue.
A lessee also has an independent duty under Section 507 of the Act to inform the licensee of any information relevant to determining whether a foreign sponsorship disclosure is necessary by the station.
Broadcasters must make on-air disclosures of foreign sponsorship at the time the sponsored programming is aired. Specifically, the timing of the disclosure varies depending on the length of the program:
- Less than five minutes – At the beginning OR the end of the program.
- Five minutes or more – At the beginning AND the end of the program.
- Greater than 60 minutes – At the beginning AND the end of the program with additional disclosures at regular intervals of not less than one per hour.
Television stations must display the disclosure in text equal to or greater than 4 percent of the vertical picture height for at least four seconds.
Furthermore, the broadcaster must use the following disclosure language:
“The [following/preceding] programming was [sponsored, paid for or furnished], either in whole or in part, by [name of foreign governmental entity] on behalf of [name of foreign country].”
Broadcasters may alternatively use the FARA disclosure text so long as it is modified to include the country associated with the foreign governmental entity.
Finally, the disclosure must be made whether the programming is broadcast on the station’s primary or multicast streams. If the programming is broadcast primarily in a foreign language, a disclosure must be made in that language.
Stations must upload quarterly reports to their Online Public Inspection Files (OPIFs) concerning foreign sponsorship disclosures made by the station during the previous calendar quarter (i.e., Q1 – April 10, Q2 – July 10, Q3 – Oct. 10 and Q4 – Jan. 10 of the next year). Stations without OPIF requirements (e.g., LPFMs, LPTVs, TV/FM translators) must retain similar records at similar intervals in their stations’ files. These documents must include all of the following information:
- Text of the disclosure.
- The name of the program for which the disclosure was made.
- The date and time the program was aired (including any reruns).
These disclosure documents must be uploaded into a stand-alone folder in the OPIF marked as “Foreign Government-Provided Programming Disclosures.” These records must be retained for a period of two years. Unlike records for political programs provided through network affiliation agreements, all disclosures must be retained in the station’s OPIF and not at the network’s headquarters.
For foreign programming consisting of political matters or discussions of controversial issues, the FCC’s existing political file rules (requiring upload to the political file of lists of officers and directors of the entity purchasing the air time) will continue to apply in addition to the new requirements. Unlike normal political file reports, however, this report does not need to be uploaded within 24 hours of the broadcast of the program, and only one such report needs to be uploaded for each foreign governmental entity (rather than separate disclosures for each program aired).
Effective Date of New Rules
The Order’s provisions will generally be effective 30 days after publication of the Order in the Federal Register. Changes to Section 73.1212 of the Commission’s rules, including the requirements for on-air identification, public file documentation and reasonable diligence, require Office of Management and Budget approval prior to becoming effective. We will continue to monitor the Federal Register and will provide updates when the new disclosure rules become effective.