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Fall 2007 Bulletin
FCC Fines ‘Fake News’ Produced by Undisclosed Sponsors
For the first time ever, the Federal Communications Commission (FCC) has proposed fines against a cable television company for failing to disclose to viewers that segments it aired as news were actually produced by corporations. Some commentators have said the fines may signal a broader crackdown.
On Sept. 24, 2007, the FCC announced it had issued a Notice of Apparent Liability for Forfeiture, along with a proposed fine of $4,000, against Comcast Corporation for violating § 76.1615 of the Commission’s rules, which requires cable operators to make sponsorship identification announcements when they air “Video News Releases” (VNRs) in return for “money, service, or other valuable consideration.” VNRs are often created by corporations to gain publicity for products or by the government to garner support for policies. The Center for Media and Democracy, a media watchdog group, has dubbed VNRs “fake news.”
On September 26, the FCC issued a second notice alleging four more violations by Comcast, bringing the total in fines to $20,000.
The alleged violations were made by CN8, a regional cable network in the Eastern United States affiliated with Comcast, which in fall 2006 aired material from VNRs for “Nelson’s Rescue Sleep” sleep aid, the General Mills-sponsored “Wheaties Fit to Win Challenge,” Allstate Insurance, Trend Micro Software, and General Mills’ “Bisquick 75th Anniversary” without identifying the sponsors of the material.
According to the FCC’s September 26 notice, the agency’s sanction came in response to a joint complaint filed by two organizations: the Center for Media and Democracy and Free Press. Broadcasting & Cable magazine reports that there are over 100 such complaints currently pending before the FCC.
In August 2006, the FCC sent letters to 42 holders of 77 television broadcast licenses asking whether their stations had properly identified VNRs prior to broadcast as § 76.1615 requires. The letters followed a study released by the Center for Media and Democracy that identified the 77 violations over a 10-month period.
The Radio-Television News Directors Association (RTNDA) called the study flawed and asked the FCC to back off of the investigation. (See “FCC Investigates Video News Releases” in the Fall 2006 issue of the Silha Bulletin.)
Following the issuance of the Sept. 24, 2007 notice, FCC Commissioner Jonathan Adelstein said in a statement that he “applaud[ed] the [FCC] 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.”
Comcast is likely to appeal the notice and fines. A September 24 Associated Press (AP) story said the company had released a statement saying it was “perplexed” by the FCC’s action.
According to the AP, Comcast said it should not be subject to § 76.1615 because cable entities are not covered by the rule. Moreover, the company said, CN8 should not be subject to the notice or fines because it received no payment or benefit from using the VNRs.
Comcast spokeswoman Sena Fitzmaurice told The Washington Times on October 3, “The FCC’s preliminary findings are legally unfounded and factually distorted ... . We expect that our judgments will ultimately be vindicated.”
The Society of Professional Journalists (SPJ) has joined the Center for Media and Democracy and Free Press in condemning the use of VNRs without sponsorship identification, but it has cautioned against urging the FCC to act.
In a statement following the release of the August 2006 study, SPJ Ethics Committee co-chair Fred Brown said, “It’s never a good idea when government tells journalists what they can and cannot do. We would oppose any expansion of the FCC rule. Instead, we would call on television to clean up its own act.”
A year later, some have said the CN8 fine may only be the beginning of a broader crackdown.
Kevin Foley, who runs a video public relations company and is president of the National Association of Broadcast Communicators (NABC), which represents video news release companies, called the notice and fine of CN8 “a first step” toward investigations of other cable companies.
“We think the government should refrain from getting involved with TV news decision-making,” Foley said in an Oct. 1, 2007 story in Broadcasting & Cable magazine.
Brendan Holland, an associate at Davis Wright Tremaine LLP, said on the firm’s Broadcast Law blog that the notice and fine of CN8 “could very well signal the beginning of a number of forfeitures aimed at cracking down on” the practice of using VNRs without attribution.
“Given that the decision seems to cross into the territory of a cable operator’s or broadcaster’s editorial and journalistic discretion protected by the First Amendment, one can imagine that the cable operator (and any broadcasters fined in the future) will attack vigorously the FCC’s interpretation,” Holland said.
Adding to the pressure on the FCC to monitor television advertising, two members of the U.S. Congress have proposed stricter scrutiny of entertainment program sponsorship. House Telecommunications and Internet Subcommittee Chairman Ed Markey (D-Mass.) and Government Oversight Subcommittee Chairman Henry Waxman (D-Calif.) wrote to FCC Chairman Kevin Martin on September 26 encouraging a broad inquiry into product placement in entertainment programming.
Markey and Waxman’s letter cited a recent episode of the program “7th Heaven” which featured Kraft Foods Inc. Oreo cookies as a central plot point as an example of product placement.
According to Bloomberg news service, a spokesman for CW, the network on which “7th Heaven” appears, said the sponsorship was disclosed. The spokesman said it is CW’s policy to disclose product placements at the end of a show.
According to Davis Wright Tremaine’s Holland, the CN8 complaint is one of dozens of inquiries with similar facts pending before the FCC.
Craig Aaron, communications director for Free Press, told Broadcasting & Cable that his organization was “eager to see the FCC respond to all of the complaints.”
- Patrick File, Silha Fellow and Bulletin Editor
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