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Jun 26, 2007 -- Legal Center Debunks Broadcaster Claims, Urges Support for Media Voucher System
The Honorable Dianne Feinstein
The Honorable Robert Bennett
Senate Committee on Rules and Administration
SR-305 Russell Senate Office Building
Washington, DC 20510
Dear Chair Feinstein and Ranking Member Bennett:
The Campaign Legal Center commends the Senate Rules Committee for holding a hearing on S.1285, the Fair Elections Now Act, which includes provisions to provide candidates reduced-cost access to the publicly-owned airwaves. A serious discussion of election media policy is long overdue, and the media proposals in S.1285 are a good place for the dialogue to begin. We also wanted to take issue with the preposterous claims made by broadcasters in recent correspondence to your Committee. Despite enviable profit margins, broadcasters are once again crying poor, attempting to avoid meeting their public interest obligations and in this latest instance even misrepresenting Supreme Court precedent on the matter of those obligations.
Advertising on television has become an increasingly vital component of successful campaigns for federal office. By 2000, candidates for elected federal office were spending more than half of their campaign budgets on broadcast media. This trend has continued through recent election cycles. According to figures from the Television Bureau of Advertising, campaigns spent more than $1.6 billion on television ads alone during the 2004 election year—more than double the 2000 total.
This research also revealed that advertising on cable television was much less important to political campaigns, which spent only four percent of campaign dollars raised on ads for cable—a comparatively small $64.5 million. Even in a world of expanding technology and information resources, broadcast television is still the primary forum for candidates to deliver their message to voters.
It is interesting to note that broadcasters sometimes increase the cost of commercial slots in the weeks preceding elections, gouging candidates and escalating election spending. According to one study by the Center for the Study of Elections and Democracy at Brigham Young University, during the 2000 election cycle the average cost of a 30-second political spot tripled from the end of August through the end of October.
Television and radio broadcasters have a unique licensing agreement with the federal government whereby they receive exclusive licenses to use the publicly-owned airwaves in exchange for obligations to act as "public trustees" who promise to use the airwaves to benefit the public interest. In case after case, the courts have made clear that the broadcast licensees do not own the airwaves; they simply are given the rights to exclusive use of a portion of the electromagnetic spectrum in a specific demographic area. Their payment for the use of those airwaves is supposed to be their fulfillment of public interest obligations.
The truth is broadcasters make huge profits from their free licenses to use the publicly-owned airwaves. One respected Wall Street analyst estimated the value of these free licenses to be $367 billion.
Modeled after proposals which were introduced in the 108th Congress, S.1285 proposes two ways to address the vital role that broadcast television plays in our nation's democratic discourse and to ensure that licensees fulfill their public interest obligations when it comes to elections. The first is to require stations to provide participating candidates and political parties advertising rates at 20 percent below the lowest unit charge (LUC) during the 45 days before a primary and 60 days before a general election. Current law requires broadcasters to offer all legally qualified candidates lowest advertising rates for the same class, amount of time, and daypart that a broadcast station, cable system or DBS provider offers to its commercial advertisers. In addition, the airtime purchase by a federal candidate could not be preempted.
On the day of the hearing, the National Association of Broadcasters' wrote to the Committee, claiming that "[I]t is unfair for government to single out broadcasters to shoulder these burdens." This is a ludicrous claim on its face. The Supreme Court has made clear that in fact broadcasters do have a special role and a special responsibility, especially when it comes to our nation's political discourse. The courts have stated that the editorial rights of broadcasters must be balanced with the public's right to be informed about elections and the right of candidates to speak.
The NAB also argued that providing a discounted, non-preemptable rate to candidates and political parties would constitute "favoritism towards specific political speech" and would give "federal candidates a special benefit unavailable to anyone else." That may well be true, but the Supreme Court has already established the principle providing federal candidates with special rights when it comes to broadcast. In CBS, Inc. v FCC (1981), the Supreme Court held that the statute guaranteeing reasonable access to candidates did not merely codify the existing public interest standard, but also granted to legally qualified candidates a special right of access to broadcasting on an individual basis. The "favoritism toward specific political speech" and the "special benefit" for federal candidates are already the law of the land. The Supreme Court has continually upheld the principle that when the government regulates access to the public airwaves, it must balance the First Amendment rights of broadcasters against the First Amendment rights of the public, and when these rights come into conflict, the rights of the public are "paramount."
The second proposal in S.1285 is to create a communications voucher system financed by a two percent user fee on the gross advertising revenues of broadcast license holders. The voucher system would help relieve some of the enormous fundraising burdens on candidates who must continuously raise contributions in order to buy TV airtime. This is a step in the right direction towards making elections a competition of ideas rather than a competition for dollars. Despite the protests coming from the broadcast industry, a voucher system for candidates is reasonable, especially considering the avenue in question—the publicly-owned airwaves. Those airwaves are a public asset and should be respected as such, especially in matters that are so central to our democracy. Certainly, as the entity issuing the license, the government, through the Federal Communications Commission, has a right to impose a spectrum user fee, just as it does for grazing rights, mining rights and other private uses of publicly owned resources.
The broadcast industry's argument that a voucher system, subsidized by a two percent tax on gross revenue, would unfairly hinder broadcasters, simply does not hold up under scrutiny. Such a fee need not "take away resources from [their] continued efforts to serve the public" as the broadcasters claim. While the voucher system may minimally decrease the broadcasters' profit margins, a 2002 Federal Communications Commission study, Survivor in a Sea of Competition, found that the typical local television station in a large city earned a profit margin of 46.2 percent, nearly seven times more than the profit margin of the typical Fortune 500 Company. Even smaller market stations had profit margins near 20 percent. Broadcasters are certainly facing new competition, including cable and the internet, yet they are also highly anticipating their own new bonuses in technology with the switch to digital. Just because their business model is changing does not mean they are less lucrative; nor that they should have their statutory responsibilities lessened.
As the Rules Committee continues its hearings this Congress on a range of issues central to how our nation selects its leaders, the Legal Center urges you to give the role of the media special attention. Television, especially broadcasting, is our nation's agenda setter and new town square where so much of our country's democratic discourse occurs. Yet, infotainment is growing, and crowding out more and more substantive programming. The old news maxim, "if it bleeds, it leads," is being replaced by "all blood (and celebrities), all the time."
The ability of our country to have a serious conversation about important national issues is eroding at the same time candidates for Senate and President are being forced to spend more and more of their time raising money, so they can buy airtime for ads. It's a system out of balance and reflects a failure of public policy and of policy makers.
The Legal Center strongly urges you to hold additional hearings on the role of media in elections and to move forward on legislation to provide qualified candidates with reduced-cost access to the publicly owned airwaves. Please let us know if we can be helpful in any way. Thank you for your consideration of this important matter.
Sincerely,
Meredith McGehee
Policy Director
cc: Senate Rules Committee
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