REC Advisory Letter #7: Rental of LPFM/NCE stations, time purchase, pay to play and foreign government programming
Revised April 22, 2021
This Advisory Letter is a reminder to LPFM (and for that matter, full-service noncommercial educational station [NCE]) licensees regarding various activities that can be considered an “advertisement” in respect to the language of the Communications Act.
Section §399b of the Communications Act (47 USC 399b) states:
(a) “Advertisement” defined
For purposes of this section, the term “advertisement” means any message or other programming material which is broadcast or otherwise transmitted in exchange for any remuneration, and which is intended—
(1) to promote any service, facility, or product offered by any person who is engaged in such offering for profit;
(2) to express the views of any person with respect to any matter of public importance or interest; or
(3) to support or oppose any candidate for political office.
(b) Offering of services, facilities, or products permitted; advertisements prohibited
(1) Except as provided in paragraph (2), each public broadcast station shall be authorized to engage in the offering of services, facilities, or products in exchange for remuneration.
(2) No public broadcast station may make its facilities available to any person for the broadcasting of any advertisement.
While most of us associate improper use of an LPFM or NCE station with the definition in paragraph (a)(1) in respect to carrying commercials for for-profit businesses, this Advisory Letter focuses on paragraph (a)(2) in respect to “selling airtime”. REC is aware of LPFM and full-service NCE stations that are operating in violation of this provision or are soliciting the “rental” of the station by other parties in exchange for compensation.
The bottom line, LPFM/NCE stations can’t sell their airtime to other parties (individuals, for-profit organizations or nonprofit organizations) in exchange of remuneration (compensation). Here are examples of types of situations that violate this law:
- Renting the station to a third party where the third party is operating the station on a part-time or full-time basis, similar to a time brokerage agreement.
- Allowing people to pay to have shows on the air, even if there are no for-profit commercials and even if the sponsorship is disclosed.
- Nonprofit organizations that require their air talent to be both members of the organization and then pay an additional amount in order to have a show on the station. (This is not necessarily an issue where the DJ must be a member of the organization but they pay the same amount to the organization as any other member who is not a DJ on the station)
- Permitting DJs to “plug” their other gigs for which they will receive personal benefit (this is more of a sponsorship identification/plugola issue than a 399b issue).
- Having a guest on the air where a for-profit venture is mentioned and that in exchange, the guest (or the for-profit venture) has provided some form of compensation to the station (informercials) or compensation to the producer of the program (plugola).
These activities may also violate the sponsorship identification (payola/plugola) laws.
Despite this, §73.503(c) permits LPFM stations to receive consideration in the form of the furnishing of the program as well as costs incidental to its production and broadcast. In other words, if a producer uses the station's studio facility, the station can charge a nominal amount for expenses incurred by the station for the use of the facilities. As well, the station can recoup costs related to the actual broadcast of the program (such as a small share of the electricity bill and other costs the station would normally have for broadcasting the program). A "profit" can't be made (over the actual costs) for the purpose of fundraising for the station or its underlying licensee.
Compensation, or remuneration is not always cash, but can include anything of value including merchandise, equipment, exchange for services, etc.If a different qualified nonprofit educational organization wishes to own and operate the station, then they must become the licensee, which requires vetting by the FCC through the Assignment of License process.
REC is aware of LPFM and NCE stations that have been offered online “for rent”. We have already discussed this with FCC staff in order to raise awareness that such activity is taking place. There is no rule or law prohibiting the mere solicitation (online or otherwise) of the rental or time purchase on a LPFM/NCE station, but the act of actually carrying out the transaction would violate the law.
Foreign government programming
Programming that is furnished to a station by a foreign government, foreign political party or any foreign mission or media organization (collectively referred to here as a "foreign agent") that has registered under the Foreign Agents Registration Act (FARA) must include a specific disclosure if either (1) the foreign agent has provided remuneration to the station in connection with the broadcast of the material (such as a time brokerage agreement, leased time) or (2) the programming includes material that can be construed as "political or controversial", regardless of remuneration. (See Sponsorship Identification Requirements for Foreign Government-Provided Programming, Report and Order, FCC 21-42 (2021)).
Since noncommercial educational stations, including LPFM are unable to enter into time brokerage agreements or lease their time to other entities, part (1) above would not necessarily impact LPFM stations. However, part (2) would apply to LPFM stations, even if the provider of the program has not given the station any compensation. The FCC interprets "political program" as "programming seeking to persuade or dissuade the American public on a given political candidate or policy issue.".
Any programming that falls under the disclosure requirements must include the following announcement:
"The [following/preceding] programming was [sponsored, paid for, or furnished], either in whole or in part by [name of foreign government entity] on behalf of [name of foreign country]."
This disclosure must air at the beginning and the conclusion of the programming. For programming that runs for more than 60 minutes, a disclosure must also be read every 60 minutes.
While we have not received an official clarification from the FCC, nor any specific legal advice on the contrary, REC is concerned about programming from non-foreign agent producers that includes excerpts from broadcasts of foreign agent broadcast entities, especially Russia's Radio Sputnik, China Radio International and Radio Habana Cuba, if such excerpts include material that would be deemed as political or controversial.
This advice was produced by a non-attorney and should not be considered as legal advice. For legal advice, please contact an attorney. The attorney may consult with REC for more information.