PUBLIC NOTICE FEDERAL COMMUNICATIONS COMMISSION 1919 M STREET, N.W. WASHINGTON, D.C. 20554 DA 98-950 News media information 202/418-0500 Fax-On-Demand 202/418-2830 Internet: http://www.fcc.gov ftp.fcc.gov Released: May 20, 1998 MASS MEDIA BUREAU ADVISES COMMERCIAL TELEVISION LICENSEES REGARDING CHILDREN'S TELEVISION COMMERCIAL LIMITS In the Children's Television Act of 1990, Pub. L. No. 101-437, 104 Stat. 996-1000, codified at 47 U.S.C. Sections 303a, 303b and 394, Congress directed the Commission to adopt rules, inter alia, limiting the amount of commercial matter that television stations may air during children's programming, and to consider in its review of television license renewals the extent to which the licensee has complied with such commercial limits. Accordingly, the Commission adopted Section 73.670 of the Rules, 47 C.F.R. 73.670, which limits the amount of commercial matter which may be aired during children's programming to 10.5 minutes on weekends and 12 minutes on weekdays. The Commission also reaffirmed and clarified its long-standing policy that a program associated with a product, in which commercials for that product are aired, would cause the entire program to be counted as commercial time (a "program-length commercial"). Children's Television Programming, 6 FCC Rcd 2111, 2118, recon. granted in part, 6 FCC Rcd 5093, 5098 (1991). These commercial limitations became effective on January 1, 1992. Implementation of Audit Program A review of the current renewal cycle to date reveals that 26 percent of commercial television broadcast station licensees could not certify to full compliance with the children's television commercial limitations. This level of noncompliance is unacceptable and must be remedied to achieve the objectives sought by Congress in enacting the Children's Television Act of 1990. Accordingly, the Commission concludes that implementation of an ongoing audit program would be conducive to ensuring a better level of compliance with the children's television commercial limitations. Effective the date of this Public Notice, all commercial television licensees will be subject to an auditing process, which will include unannounced, off-air monitoring of commercial television stations and counts of commercial matter contained in programming originally produced and broadcast for an audience of children 12 years old and under. As part of this auditing program, moreover, licensees found in violation of the commercial limits can expect substantial forfeitures. Reasons for Noncompliance To further ensure compliance, we are providing information to alert television licensees to the most frequent causes for overcommercialization cited by broadcasters in their renewal applications. We are hopeful that this information will assist all licensees in avoiding these pitfalls and thus improve the commercialization compliance rate. The reasons most frequently cited by broadcasters for such noncompliance include: (1) human error; (2) inadvertence; (3) scheduling changes or errors; (4) mechanical errors; (5) the broadcast of special news and weather reports; (6) the inability of the station to prescreen satellite-delivered programming; (7) the inclusion of commercials in programming provided by the source or producer of the programming; (8) misunderstanding of the Commission's rules and policies by lower-level station employees; and (9) commercial "make goods." Commercial Matter, Proration and Product-Length Commercials Some of these reasons for noncompliance involve a misunderstanding of what constitutes commercial matter, as well as our policies concerning proration of the commercial limits and product-length commercials. We remind television licensees, first, that commercial matter is defined as airtime sold for the purposes of selling a product. More specifically, we deem broadcast and cablecast material to be commercial matter if the station or cable operator received consideration directly or indirectly for airing the material, and the material was used to sell a product or service. See, e.g., SuperStation, Inc., 8 FCC Rcd 490 (1993). Commercial matter is not restricted to material of any particular length, and includes advertising for services, as well as promotions by stations that contain certain sponsor-related references. Second, in counting commercial minutes, television licensees are not restricted on how commercials within the Commission's limits are configured within an hour's block of children's programming. Licensees should, however, prorate application of the commercial limits to program segments of five minutes or longer duration, i.e., an "island" of children's programming, which is otherwise not part of an hour-long block of children's programming. See, e.g., Channel 39 Licensee, Inc. (WDZL(TV)), 12 FCC Rcd 14012 (1997); Quincy Jones Broadcasting Inc. (WNOL-TV), DA 97-1535 ( Sept. 27, 1997); Post-Newsweek Stations, Florida, Inc. (WJXT(TV)), 12 FCC Rcd 4178 (1997). Third, a program will be considered a program-length commercial if a product associated with the program appears in commercial spots within the program, or if such commercial spots are not separated from the start or close of the program by intervening and unrelated program material. See, e.g., Post-Newsweek Stations, id.; Sullivan Broadcasting License Corporation (WTAT-TV), 12 FCC Rcd 2390 (1997); Paramount Stations Group of Washington, Inc. (WDCA(TV)), 12 FCC Rcd 14890 (1997). The determination as to whether a particular program is a program-length commercial is not dependent on the duration of the appearance of the program-related product in the commercial announcement. Where a commercial announcement includes a product related to the program in which the commercial is broadcast, then the program is a program-length commercial regardless of the duration of the appearance of the program- related product in the commercial. UTV of San Francisco, Inc. (KBHK-TV), 10 FCC Rcd 10986, 10988 (1995); see also Act III Broadcasting License Corp. (WUTV(TV)), 10 FCC Rcd 4957 (1995), aff'd, DA 97-2534 (released Dec. 4, 1997) (commercial for a fast food restaurant promoting a trip to Disney World as a contest prize contained a brief image of Goofy and aired during the program "Goof Troop"). We note, moreover, that Congress was particularly concerned about program-length commercials because young children often have difficulty distinguishing between commercials and programs. S. Rep. No. 227, 101st Cong., 1st Sess. 24 (1989). In light of this Congressional concern, the Commission made it clear that program-length commercials, by their very nature, are extremely serious violations of the children's television commercial limits, stating that the program-length commercial policy "directly addresses a fundamental regulatory concern, that children who have difficulty enough distinguishing program content from unrelated commercial matter, not be all the more confused by a show that interweaves program content and commercial matter." Children's Television Programming, supra, 6 FCC Rcd at 2118. To this end, the Commission has repeatedly held that, "where a commercial announcement is primarily for a product otherwise unrelated to a program . . . but that announcement also includes references to or offers of products which are related to the program, the broadcast of that commercial announcement during the program to which the included products relate will render that program a program-length commercial." KCOP Television, Inc. (KCOP-TV), DA 97-324 (released Feb. 12, 1997) (commercial for Honey Nut Cheerios featuring the Sega Genesis game "Sonic the Hedgehog," and Sega Genesis products in general, aired during the "Sonic the Hedgehog" program); see also Scripps Howard (KNVX-TV), 9 FCC Rcd 2547 (1994), aff'd, DA 97-2419 (released Nov. 19, 1997) (a commercial for Kelloggs Frosted Flakes containing an offer for a free character from the show "Ducktales" aired during the "Ducktales" program, and a commercial for toys based on the movie "Hook" aired during the program "Peter Pan and the Pirates"); North Carolina Broadcasting Partners (WCCB(TV)), FCC 97-327 (released Sept. 22, 1997) (broadcast of commercials for a "Kids Fair," featuring appearances by an "X-Men" character and a "Mighty Morphin Power Rangers" (MMPR) comic book illustrator, contained video clips from the programs "X-Men" and "MMPR," aired during, or adjacent to, those programs). We advise television licensees that, generally, the reasons frequently cited for noncompliance with the Commission's rules limiting the amount of commercial matter in children's programs fail to excuse or mitigate such noncompliance. Compliance with the children's programming commercial limitations is required, and we expect that commercial television licensees, now alerted to these common errors, will carefully review their current practices and promptly implement additional measures, if necessary, to ensure such compliance on a continuing basis. Imposition of Forfeitures Those licensees who fail to comply with the commercial limits will continue to be subject to the Commission's full panoply of sanctions, including the imposition of forfeitures, short-term renewals and reporting requirements. In this regard, Section 503 of the Communications Act affords the Commission a great deal of discretion in determining forfeiture amounts. Triple X Broadcasting Co., Inc., 46 RR2d 788, 789 (B/C Bur. 1979), citing Brennan Broadcasting Co., 25 FCC 2d 400 (1970); Southern California Broadcasting Co. (KIEV(AM)), 6 FCC Rcd 4387, 4388 (1991). Such discretionary authority holds particular relevance given the different factors involved in compliance with the children's television commercial limits (e.g., number, type and duration of overages, period of time over which the violations occurred, extent of compliance program, etc.) which make it impossible to devise a precise formula to calculate forfeiture amounts. We note, however, that the Commission has routinely assessed higher forfeitures for program-length commercials than for a greater number of conventional overages. See, e.g., Independent Television Co. (WDRB-TV), DA 97-2158 (released Oct. 8, 1997) ($17,500 forfeiture assessed for 68 overages, including two program-length commercials), as compared to Channel 39 Licensee, Inc., supra, 12 FCC Rcd 14012 ($27,500 forfeiture for 56 overages, including 22 program-length commercials). The Commission has also considered the sanctions imposed in previous cases, comparing the circumstances involved, to determine the appropriate forfeiture amount in a given case. To date, forfeitures ranging from $7,500 to $125,000 have been assessed against at least 85 television licensees for their violations of the commercial limits. Of those 85 cases, several involved the additional imposition of short-term renewals and/or reporting conditions. See, e.g., Clear Channel Television, Inc. (KTTU(TV)), 10 FCC Rcd 3773 (1995) ($125,000 forfeiture, short term renewal and reporting conditions imposed for 581 violations); Stainless Broadcasting Co. (WICZ-TV), 10 FCC Rcd 9961 (1995) ($110,000 forfeiture and reporting conditions imposed for 376 violations); Northstar Television of Erie, Inc. (WSEE-TV), 10 FCC Rcd 3779 (1995) ($100,000 forfeiture, short term renewal and reporting conditions for 204 violations, including 33 program-length commercials); Paramount Stations of Houston, Inc. (KTXH(TV)), 9 FCC Rcd 140 (1993) ($80,000 forfeiture and reporting conditions imposed for 132 violations, including 73 program-length commercials). Many fines have been of a substantial nature. See, e.g., Jasas Corp. (WBDC-TV), 12 FCC Rcd 7815 (1997) ($115,000 forfeiture for 450 violations, including two program-length commercials); UTV of San Francisco, supra, 10 FCC Rcd 10986 ($40,000 forfeiture for 218 violations, including two program-length commercials); Press Broadcasting Co., Inc. (WKCF(TV)), 12 FCC Rcd 15491 (1997) ($30,000 forfeiture for 200 violations); Koplar Communications Licensee (KPLR-TV), 8 FCC Rcd 7884 (1993) ($30,000 forfeiture for 197 violations); LeSea Broadcasting Corp. (WHMB-TV), 13 FCC Rcd 2751 (1998) ($27,500 forfeiture for 109 violations). Cf. Jefferson-Pilot Communications Co. (WBTV(TV)), 12 FCC Rcd 2526 (1997) ($20,000 forfeiture for 79 overages); Rollins Telecasting, Inc. (WPTZ(TV)), 10 FCC Rcd 8795 (1995) ($17,500 forfeiture for 77 overages); Mississippi Broadcasting Partners (WABG-TV), 12 FCC Rcd 9863 (1997) ($15,000 forfeiture for 59 overages). The Mass Media Bureau will continue its close scrutiny of individual commercial television license renewals, and may take, as necessary, additional enforcement measures for noncompliance with the Commission's rule limiting the amount of commercial matter in children's programming, such as the imposition of more substantial forfeitures in appropriate cases. For additional information, please contact Laura Gallo (202-418-1600) of the Video Services Division, Mass Media Bureau.