FCC Requests Comments Regarding Application to Political Candidates of “Last In, First Out” Method of Managing Advertising Inventory

The FCC recently released a Public Notice requesting comments on whether a common practice broadcast stations employ in selling advertising – the use of “Last In, First Out (LIFO)” pricing to determine the order in which preemptible advertisements can be bumped – violates the provision of the Communications Act that requires broadcasters to provide political candidates with the lowest unit charge for the same class and amount of time.

The Communications Act and the FCC’s rules require that during the 45 days before a primary election and the 60 days before a general election, broadcast stations must charge political candidates the lowest unit charge of the station for the same class and amount of time for the same period of time (such as by program or daypart). The FCC’s lowest unit charge rule provides specifically that “a candidate shall be charged no more per unit than the station charges its most favored commercial advertisers for the same classes and amounts of time for the same periods.”

In September 2014, Canal Partners Media, a media buying firm for political candidates and issue advertisers, filed a petition requesting the FCC to conclude that a broadcast station’s use of the LIFO method to preempt political candidate spots in favor of commercial advertiser spots violates the lowest unit charge requirement. According to Canal Partners, when a station using the LIFO method has more advertising spots than avails in a particular program or daypart, the station will preempt the spots purchased most recently – the spots purchased last in time are the first to be preempted. Canal Partners states that this practice discriminates against political candidates because their spots are often the last purchased because the candidate’s advertising needs change based on the flow of a campaign, the availability of funds, and the desire to purchase time close to election day. Canal Partners submits that this policy results in political spots always being preempted before commercial spots purchased earlier and that political candidates are therefore treated worse than a station’s most favored advertiser, contrary to the FCC’s rules.

The Petition also asserts that the LIFO method is used by stations to “force” candidates to purchase more expensive classes of time because, in managing the station’s inventory, the station knows how many spots in a particular class of preemptible time are available in a particular program, and once those spots have been sold, the station considers that class of time sold out. A political candidate that wants to purchase a spot in the program after all of the available preemptible spots have been purchased by commercial advertisers would be required to buy a more expensive non-preemptible class of time to bump a preemptible spot.

Canal Partners requests the FCC to declare that if a station uses a LIFO method to decide when to preempt spots, the candidate should receive the same priority against preemption as the first-in commercial advertiser because that is the only way the political candidate could be treated as well as the station’s most favored commercial advertiser.

If the FCC provides the ruling that Canal Partners has requested, it will make it more difficult for stations to sell time and manage inventory during political campaign periods.

Comments with regard to the Canal Partners Petition are due by March 2 and Reply Comments must be filed by March 17. If you would like to file Comments or Reply Comments, or would like other information concerning this Petition, please contact any of the attorneys in our office.

Categories: Media