Cumulus Sponsorship ID Penalty

The Enforcement Bureau of the FCC has entered into a Consent Decree reached with Cumulus Radio Corporation (“Cumulus”), regarding the Commission’s investigation into whether Cumulus radio station WOKQ(FM), Dover, New Hampshire, aired announcements without adequate sponsorship disclosure in violation of the FCC’s Sponsorship ID rules. In the Consent Decree, Cumulus admits that it “violated the sponsorship identification laws” and agreed to pay a $540,000 civil penalty to the U.S. Treasury. Cumulus also agreed to institute a company-wide compliance plan to help ensure that its stations do not violate the Sponsorship ID rules going forward. The Enforcement Bureau issued a Press Release emphasizing the Cumulus penalty amount, and reminded licensees of the importance of disclosing the true sponsor of issue advertising.

The massive $540,000 Cumulus penalty is the largest payment in FCC history for a single-station violation of the Commission’s Sponsorship ID rule. According to the Consent Decree, the Cumulus station had broadcast 178 announcements in support of a hydro-electric energy project without properly identifying the sponsor of those announcements, in this case Northern Pass Transmission LLC — the company “positioned to own ‘[a]ll of the Northern Pass transmission lines and facilities in New Hampshire” if the billion dollar Northern Pass energy project were ultimately approved. Although the Consent Decree does not include the actual texts of the announcements, the Commission makes clear that it believes that the announcements supported the energy project and did not include the required language “paid for” or “sponsored by” the company with a significant financial interest in the project.

The FCC’s primary Sponsorship ID Rule (Section 73.1212) is mandated by Section 317 of the Communications Act of 1934, which requires that broadcasters identify whomever is paying for the broadcast of any matter. The FCC’s rules also establish the general obligation of a broadcast station to air sponsorship identification announcements whenever any “money, service or other valuable consideration” is paid or promised to the station for the broadcast of program material. The Consent Decree states that the FCC’s Sponsorship ID requirements are “grounded in the principle that listeners and viewers are entitled to know who seeks to persuade them.” To that end, Section 73.1212 requires stations to “fully and fairly disclose” the identity of a party paying to have their content broadcast. The Sponsorship ID rules distinguish between advertisements for “commercial products and services” and those which involve “controversial issues of public importance.” Commercial products and services do not need a clear statement indicating whether advertisement is “paid for” or “sponsored by” a particular company, if the company’s name, trade name or the name of the product is included in the advertisement itself, and it is clear to the public that the mention of the advertiser’s name identifies it as the sponsor of the advertisement.

In this case, Cumulus argued that the station’s employees were aware of the Sponsorship ID rules, and that the inclusion of Northern Pass project in the ads was sufficient to comply with the FCC’s rules because use of the term made it apparent to the public who was behind the advertisements. The Enforcement Bureau disagreed, and concluded that despite references to the “Northern Pass Project” and/or the “Northern Pass” in the announcements, the advertisements violated the Sponsorship ID rules because they did not specifically and clearly identify “Northern Pass Transmission LLC” as the entity sponsoring the announcements. According to Enforcement Bureau Chief Travis LeBlanc in the Press Release, broadcasters “that are paid to air any announcements or other content are required to clearly disclose the payer’s identity,” and “failure to disclose these identities generally misleads the public, [and] it is particularly concerning when consumers are duped into supporting controversial environmental projects.”

This case is the latest in a recent series of FCC Enforcement Bureau Sponsorship ID decisions, in the form of Consent Decrees, imposing significant penalties on broadcasters for a lack of full sponsorship identification for “paid for” advertisements during broadcast programming. The $540,000 penalty for the issue ad campaign in this case should serve as yet another reminder to all broadcasters to make full disclosures to comply with the Sponsorship ID rule, and that the Enforcement Bureau has been actively issuing significantly higher penalties to parties than we have seen in the past.

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Categories: Media