FCC Advertising Issues
Product Placements and Media Consolidations on 2008 Agenda
The Federal Communications Commission is trying to promote joint ownership of newspapers and stations and is looking at the growing product placement business.
Two Federal Communications Commission (FCC) issues—media ownership and product placement—could have significant impact on advertisers in 2008.
- In 2008 the FCC will begin a controversial study of the growing product placement business. This is an alternative type of promotion in which companies pay to have their products placed as props or otherwise integrated into television show scripts and scenes. Consumer activists say the practice is a form of hidden advertising and should be prohibited. Advertisers want to protect the right to make such placements.
- In December 2007, the Commission voted 3-2 along party lines to drop its 32-year-old ban on cross-ownership of newspapers and broadcasters in the same market. However, opponents of such consolidations indicated they would challenge the FCC action in both Congress and the federal courts in 2008.
New FCC Rule Would Allow Newspapers to Acquire Stations
If the FCC ruling on cross ownership survives the Congressional and court challenges in 2008, newspaper publishers will be allowed to:
- Buy one television or radio station in the 20 largest markets, subject to what the FCC calls "strict criteria and limitations;"
- Acquire stations in smaller markets if they promise to increase news coverage in those stations by at least seven hours per week.
In announcing the change, the FCC said "permitting cross-ownership can preserve the viability of newspapers by allowing them to share their operational costs across multiple media platforms." The commission cited decreasing newspaper circulation and increasing newspaper operating costs as reasons to allow the consolidations.
Opponents Warn of Impact on Local Programming
However, according to Advertising Age, Senators and consumer groups say the consolidation proposal presents two dangers:
- Negative impact on local programming
- Fewer media ownership opportunities for minorities and women. (In the same meeting that it passed the cross-ownership proposal, the FCC approved a series of proposals that it said would help minorities to acquire stations. However, minority groups said the proposals would help small businesses rather than minority groups.)
Cross Ownership Could Affect Advertiser/Media Negotiations
The consolidation of newspapers and stations could also impact media/advertiser negotiations in local markets by forcing advertisers to deal with one media company instead of separate newspapers and stations.
In 2003 the U.S. Court of Appeals for the Third Circuit said "the blanket ban on newspaper/broadcast cross-ownership was no longer in the public interest," but it rejected a sweeping consolidation proposal made by the FCC at that time. The FCC majority hopes that its modified 2007 proposal will be approved by the courts.
The 2007 FCC rule would also provide waivers for some current media consolidations which are in apparent violation of the old ban on cross ownership.
According to Advertising Age, 25 U.S. Republican and Democratic senators have threatened to introduce legislation to revoke the new FCC rule. They expressed their concerns in a joint letter to the commission.
