Just what we need-- more political ads.

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The FCC Is Considering a Petition That Could Put More Political Ads on the Air
Broadcasters say idea would cost them money.
By Kaveh Waddell, March 9, 2015

Love political ads? You're in luck: A petition filed with the Federal Communications Commission could make it easier for candidates to secure TV and radio airtime for their campaign spots.

Candidates who want to run campaign ads already get special treatment by law. But now, a Democratic political-advertising buyer wants to change the rules to make it easier for campaigns to buy cheap airtime at the last minute—which is often when candidates need it most.

The petitioners, a group called Canal Partners Media, are asking the FCC to make broadcasters and cable, including networks, give political ads precedence over commercial ads. If the FCC rules their way, political ads would be able to bump non-campaign ads from certain slots, even if the commercial spots were bought in advance.

The existing special rules and the petition only apply to political ads that are paid for by campaigns—not by outside groups like nonprofits or super PACs.

The final deadline for filings is next week; then the FCC goes into deliberations. If it decides in CPM's favor, get ready for more campaign ads. "You hear in every election cycle, 'Oh my gosh, I'm so tired of all this political advertising!'" said David Oxenford, a partner at Wilkinson Barker Knauer who represents broadcasters. "All this is going to end up doing is putting more political spots on the air."

The flood of political ads before elections routinely brings big money to broadcasters. In the 22 months before the 2014 midterm elections, candidates and outside groups paid more than $1 billion to air 2.2 million ads about federal and gubernatorial races, according to the Wesleyan Media Project. But more than a quarter of those ads were paid for by outside groups, which aren't eligible for special treatment the way ads paid for by campaigns are.

CPM's quibble with the FCC is over the way broadcasters schedule ads. Many use a "last in, first out" system, which helps them decide which ads to run if they overbook an ad slot, much in the way an airline overbooks flights and has to kick passengers off. Generally, the last buyer of a particular time slot will be the first to be booted if that slot is overbooked.

Broadcasters say this is a fair way to decide how to schedule ads: It rewards buyers who schedule a spot way ahead of time. But when political ads come into play, things get a little more complicated.

Under federal law, broadcasters must offer candidates the same conditions and prices they offer the commercial advertiser—like Walmart or a local car dealership—that gets the best deal. But CPM says the way that political ads are currently handled doesn't meet this requirement.

Some of this has to do with the short timetable of political campaigns. The law prevents candidates from spending campaign money until they're formally in a race—but sometimes that's so late in the game that the relevant advertising spots are all gone, says Bobby Kahn, a CPM partner and author of the FCC petition. "So you have a policy that punishes your most favored advertiser," he said.

Kahn gave an example: "We placed for Michelle Nunn," he said, referring to the 2014 Democratic Senate candidate in Georgia, who ultimately lost to Republican David Perdue. "She became the nominee on May 20. There's a Republican runoff—not that I'm looking out for the Republicans—but David Perdue didn't become the nominee until July 22. So Michelle Nunn had a nine-week head start."

The petitioners claim that using the last-in, first-out system to kick out political advertisers who bought spots late is illegal, because it means other advertisers are getting a better deal than the candidate.

Kahn wants the FCC to allow candidates to both jump the line and preempt a spot's original buyer—and do it for the same lower price they would pay for a normal spot. But broadcasters say it would be illegal to let candidates skip to the front of the line, because then they would get better treatment than commercial advertisers.

"That's simply not fair to local businesses," said Dennis Wharton, vice president for communications at the National Association of Broadcasters. The NAB submitted a filing to the FCC opposing the CPM petition last week.

CPM "wants preferential treatment—essentially, Last-In-Never-Out (LINO) protections—for candidate spots, regardless of stations' normal preemption policies," the NAB opposition reads.

That goes above and beyond the rule that candidates should be treated exactly like the commercial advertiser that gets the best deal, says Oxenford.

When it comes to money, both sides point fingers. Broadcasters "make so much money off of this," Kahn says. "I would estimate that when stations use [last-in, first-out], it can drive up the candidate's cost by as much as 50 percent."

The NAB's Wharton fires back at the idea that "political ads are a huge gravy train for broadcasters." Third-party ads from groups like the Sierra Club, the National Rifle Association, or Americans for Prosperity can bring in the big bucks—they're subject to the same rules as commercial advertisers and don't get the special treatment candidates do—but candidates' ads aren't so lucrative, he says.

In fact, when a political ad uses the preemption rules to bump a commercial ad from its spot, it can harm a broadcaster's relationship with the buyer, Wharton said. The special rules "sometimes tick off a commercial customer," he said.

Both sides have until March 17 to file a reply with the FCC. Once those documents are in, the FCC has everything it needs to make a decision—but don't expect one immediately. At best, Kahn says, the ruling will come "in fairly short order, because we have elections this year and because we're coming into a big election cycle."
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