FCC Faces Tight Time Frame to End Product Placement Inquiry
The FCC faces a tight time frame to wrap up a just- started product placement inquiry and resolve questions in a related rulemaking notice before the end of the current presidential administration, said three broadcast and advertising industry officials. FCC Chairman Kevin Martin can’t circulate an order until the end of a 90-day comment period, which begins when the notices of inquiry and rulemaking are published in the Federal Register, they said. Publication generally happens a few weeks after the FCC releases items, so Martin may not be able to seek a vote until October at the earliest, said a broadcast lawyer. “We're coming up against a pretty short time frame,” said American Association of Advertising Agencies Senior Vice President Adonis Hoffman. “If they move quickly, they could get it done during this period, but it could easily go into the next administration.”
Sign up for a free preview to unlock the rest of this article
Export Compliance Daily combines U.S. export control news, foreign border import regulation and policy developments into a single daily information service that reliably informs its trade professional readers about important current issues affecting their operations.
Commissioner discussions on any proposed order could take additional time because regulators would have to carefully consider whether further disclosure rules ran afoul of the First Amendment, said an attorney. “It’s certainly going to run it out towards the end of this commission or beyond,” said Association of National Advertisers Executive Vice President Dan Jaffe. The ad industry and the two Republican commissioners have had constitutional concerns, one reason the order first circulated in September by Martin was reformulated and not issued until late Thursday, said agency and industry officials. Commissioners Deborah Tate and Robert McDowell wouldn’t vote for an initial rulemaking notice, spurring the chairman to revise it to also contain an inquiry and taking some time, said FCC officials. After the revised item was circulated in 2008, all the commissioners agreed to support it, they said.
Martin could push the inquiry to conclusion in 2008 if he deems it a high priority, but it’s unclear how high product placement ranks on his radar screen, said a broadcast lawyer. An FCC spokesman said the agency “may be able to accomplish this in the next six months to a year.” Martin first publicly floated the idea of the notice at a September FCC hearing on media ownership in Chicago. “I am pleased that the Commission has finally and unanimously voted to approve this item,” he said last week. Networks’ use of “more subtle and sophisticated means of incorporating commercial messages into traditional programming” may be rising, since viewers can more easily skip ads using TiVos and PVRs, he said. “There is a growing concern that our sponsorship identification rules might fall short of their ultimate goal” of flagging “the commercial nature of any programming, as well as its source.”
Embedded ads should have been addressed in a rulemaking notice, Commissioner Michael Copps said in a written statement. “Unfortunately, that position did not command a majority at the Commission. In the end, I supported the proposal to split the docket” into an inquiry and notice, he added. “While this means more time than I would like to reach final rules in some areas,” it’s important to get things started, said Copps. The rulemaking notice asked whether sponsor disclosures should have letters of a “particular size” and “air for a particular amount of time.” It asked whether disclosure, often airing at the end of broadcast TV shows, should also be required to air at the start. The agency asked how embedded ads in kids’ shows comport with the Children’s TV Act: “We note that embedded advertising in children’s programming would run afoul of our separation policy because there would be no bumper between programming content and advertising.”
Commissioner Jonathan Adelstein said he “pushed for many years” for clarifying such rules, citing a 40 percent increase in product placement on broadcast TV in last quarter compared with a year ago. “Despite longstanding majority support, including Chairman Martin’s commendable leadership, the release of this Notice has suffered from almost unprecedented delays,” he said. “I would have liked to have gone further in asking more questions in the NPRM, rather than shunting them off to a Notice of Inquiry.” The inquiry asks whether current rules address embedded techniques and whether viewers are aware of product integration. It asks whether disclosure of sponsorship simultaneous to the placement airing “infringe[s] on the artistic integrity of entertainment programming.” Comment also is sought on First Amendment “implications” of any rule changes. The Writers Guild of America West said Friday that the agency should require “'real time’ disclosure.”
That would violate the First Amendment, if broadcasters also had to air disclaimers before or after shows -- as they do now -- said Jaffe and Hoffman in interviews. “That would go too far,” said Jaffe. Screen crawls and information pop- ups “are clearly more extensive than necessary and would be violative of the first amendment,” he said. “There are really limits as to what the FCC can do appropriately here.”