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Why are broadcasters battling online disclosure of political advertising?

Justin ElliottProPublica

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The Federal Communications Commission is scheduled to vote April 27 on whether to require broadcast TV stations to post online public information about political ad buys. Some form of the rule seems likely to pass — but we’re now in an intense period of lobbying in which the industry and others are pressing the FCC to alter the shape of the final rule.

(With the help of readers around the country, ProPublica is collecting the stations’ public paper files containing the political ad buy data and posting them online because information is not generally available elsewhere. See “Free the Files.”)

Right now we only know the broad thrust the proposed FCC rule: That broadcasters would have to electronically send the commission updates to its political file — in other words, information about what political ads are being purchased, by whom, and for how much money — instead of merely maintaining paper files at the stations, the current practice. The information would be made public on an FCC website.

The rule would apply initially to affiliates of the four major networks — ABC, CBS, NBC, and FOX — in the top 50 markets. All other stations would have another two years before they must begin filing electronically.

But the FCC won’t release the exact text of the rule until after the panel votes to finalize it later this month. And the wording is subject to change in the meantime based on input from interested parties.

That’s why the National Association of Broadcasters has been paying visits to key officials at the FCC this month. A group of influential Republican senators has also told the FCC they oppose the proposed rule.

On April 3 and April 10, National Association of Broadcasters President Gordon Smith met officials, including all three FCC commissioners, to make his case against required online disclosure of the public political ad information.

Smith is not just another Washington lobbyist. He’s a former two-term Republican senator from Oregon who sat on the Senate Committee on Commerce, Science and Transportation, which oversees broadcast-related legislation.  He was hired less than a year after losing his Senate seat in a close race in 2008, reportedly in part because of "the Wow! factor" a former senator could offer the NAB.

It’s been a lucrative career change for Smith, who was paid $1.4 million by the NAB in 2010, more than eight times a senator’s salary of $174,000. (Smith, a lawyer and businessman, is used to making millions. His Oregon frozen food businesses paid him millions of dollars in 2008, according to his final Senate financial disclosure.)

Also lobbying the commission was Jane Mago, executive vice president and general counsel of the NAB. She’s a familiar face at the FCC. Before joining the broadcasters’ group in 2004, Mago spent more than 26 years at the commission, holding top positions including general counsel.

The broadcasters have often complained about the clerical burden they say the rule would impose, even bringing the FCC pictures of the size of the paper files earlier this month.

According to public filings describing the NAB’s visits to the commission, Smith and his colleagues told the commissioners Tuesday that the broadcast industry remains fully opposed to placing the public political ad data online. They also floated a couple options for watering down the proposed rule.

One was to begin with a “pilot project” before imposing the online disclosure requirement. Another would limit information posted online to aggregate data — rather than detailed information about specific ad rates and purchases that is reported in the paper versions of the files. Under this plan, stations would continue to keep the full itemized data in a paper file for public inspection.

The NAB has raised the specter of “the market-distorting effects of creating anonymous accessibility to the commercially sensitive information included in the political file.”

In meetings with FCC members this week, Smith emphasized “that the potential harm to TVbroadcasters of placing specific rate information, including the lowest unit rate information that stations must, by law, afford to political candidates, in an anonymously accessible database was real and could place broadcasters at a significant competitive disadvantage versus other video providers that would not have a similar requirement.”

The law states that broadcasters must give political candidates the lowest rates for the same class and length of ad that they offer other buyers. (This does not apply to outside groups like super PACs.)

"Sure all this is a public record, and you can come to the station and get it,” said David Oxenford, a Washington attorney who represents various broadcasters, told ProPublica. “But you're not publishing it in such a way that everybody in the world can find out what your lowest rate is.”

Oxenford offered a hypothetical case in which an ad buyer for Coca-Cola in New York wants to buy ad time at a station in South Dakota. The ad buyer could theoretically send an agent to check the paper political file at the station for the lowest rates, but in practice would not, he argued.

“Once [the political ad prices] are online and can be searched anywhere in the country, the broadcaster has essentially told everyone in the world what their lowest rate is for a spot on the station,” he said.

Advocates of putting the political files online don’t buy it.

"I would be more willing to take that argument at face value if this material hadn’t been public for so long," said Corie Wright, senior policy counsel at the pro-disclosure group Free Press. Wright said that Free Press volunteers visiting stations have been told of broadcasters going to competitors’ offices to get copies of the public political files and thus the rate information.

The dispute has attracted attention in Congress. Senate Minority Leader Mitch McConnell and several other Senate Republicans sent a letter to FCC Chairman Julius Genachowski earlier this month complaining of the "imposition of burdensome new rules on broadcasters,” Communications Daily reported.

The letter also pointed to the concern that “providing data on the availability and pricing of airtime will provide their competitors with real time access to proprietary information and could potentially lead to anticompetitive practices." 

Advocates for online disclosure say the resistance to the new rule is in line with the industry’s longstanding anti-regulation posture.

"Over the last 20 to 25 years broadcasters have been very successful in deregulating their industry,” said Wright. “They are nervous any time the trajectory goes in the opposite direction. It's kind of like the camel's nose under the tent."

We know about the NAB’s closed-door meetings at the FCC because of commission rules requiring prompt public disclosure filings that detail what is said when lobbyists come calling. The filings, which must summarize the lobbyists’ pitches, are designed to assure that "FCC decisions are not influenced by impermissible off-the-record communications between decision-makers and others."

This report was originally published by ProPublica and is republished here with permission.