by Matt McCormick of Fletcher, Heald & Hildreth
One of the outcomes of the COVID-19 crisis – according to reports from many radio and televisions stations – has been a precipitous drop in spot sales and customers cancelling existing advertising contracts, leaving lots of airtime to fill. To fill that time, and to help other struggling businesses, some broadcasters have responded by offering advertisers free spot time.
There is a potential problem with doing this. Typically bonus spots have to be counted in calculating the lowest unit charge (LUC) for candidate advertising during the 45 days before a primary election and the 60 days before a general election.
Now the Federal Communications Commission (“FCC”) has offered guidance on how to give away spot time without impacting your LUC. In a Public Notice released March 25, the FCC’s Media Bureau instructs that broadcasters may exclude free time they provide to commercial advertisers when calculating their LUC — “provided the free time is not associated with an existing commercial contract for paid time or otherwise considered bonus spots.” To avoid being considered “bonus spots,” the free time can’t be tied in any way to an existing spot buy. That does not necessarily mean that the station cannot give free time to a current advertiser; it just means that free time can’t be an extension of or otherwise formally associated with (e.g. as part of a make-good for) the current buy.
While the FCC staff has informally indicated that they will try to provide appropriate flexibility to broadcasters, how this policy is to be applied in particular cases may vary based on the specific facts of your case. If you are unsure if the new policy fits what you have in mind, check with your communications attorney.
The FCC notes that because the pandemic is a rapidly evolving situation and market conditions are changing quickly, this guidance applies only to the current period and will not necessarily continue when more ordinary conditions are restored.