the advertisements. Sponsorship Identification Requirements Are Manageable, but FCC Guidance Could Be Clarified

As previously stated, sponsorship identification statutes and regulations  require broadcasters and cablecasters to identify commercial content— usually an advertisement, an embedded advertisement, or a video news  release (VNR) that has been broadcast in exchange for money or  payment in-kind. FCC does not require an announcement  when an obvious connection exists between the content and sponsor,  such as with a standard commercial advertisement. In addition, whenever an individual,  such as a deejay, receives money or payment in-kind for airing specific  content or favorably discussing a specific product a sponsorship  announcement must be made. Reporting Political Advertising Financing

In addition to monitoring compliance with these disclaimer requirements,  FEC serves as a repository for campaign finance data for candidates for  political office. Once  payments for electioneering communications, including television or radio  advertisements, exceeds $10,000 in any calendar year, those responsible  for them must report payments and the sources of funds used to FEC  within 24 hours of each broadcast.things, identify:   Each report must, among other  the person or organization that made the payments, including their  principal place of business; any person sharing or exercising direction or control over the activities  of the person who made the payments;  the amount of each payment in excess of $200, the payment dates,  and the payee; all candidates referred to in the advertisements and the elections in  which they are candidates; and  the name and address of each person who donated $1,000 or more  since the first day of the preceding calendar year to those responsible  for the advertisement. However, some broadcasters indicated that FCC could clarify how the  guidance applies in specific situations, such as when a VNR or product is  used but the broadcaster was not paid. FCC and FEC Follow Standard Procedures When Addressing All Complaints, but FCC Does Not Update Broadcasters Named in the Complaint

		FCC Investigation and Enforcement Process

FCC’s investigation and enforcement process generally begins with a  complaint to the agency that will be reviewed by the CGB and may be  forwarded to the Enforcement Bureau if the complaint is complete. As shown in table 2, according to FCC, it opened 369 sponsorship  identification cases from the beginning of 2000 through 2011,  representing just over 1 percent of the total cases the Investigation and  Hearings Division opened during that time period. Since 2000, FCC has  issued enforcement actions in 22 sponsorship identification cases with  varying types of violations and enforcement actions. However,  broadcasters we spoke with confirmed that FCC does not inform them of  the status of investigations, and some indicated they currently do not  know the status of several investigations. They reported the lack of  information about cases and FCC decisions creates uncertainty about the  propriety of their past actions. As a result, broadcasters might not  have sufficient information to determine whether they should modify their  practices. This could result in stations unnecessarily editing content  because of unwritten regulatory policy or what they assume the policy to  be. According to FCC officials, they do not communicate with the broadcaster  named in the complaint because, among other reasons, FCC has no legal  obligation to do so. FCC sponsorship identification investigations can be lengthy, according to  FCC data, taking from 10 months to over 5 years to complete. FEC receives most disclaimer complaints from the  public. From 2000 through May 15, 2012,  FEC opened 301 cases based on complaints alleging violations of  disclaimer statement requirements. Unlike FCC, FEC provides status updates to those involved in  investigations and issues reports explaining investigation findings. Also unlike FCC, FEC issues reports explaining its resolution of  enforcement cases, including case dismissals. These reports can clarify  acceptable and unacceptable practices for the regulated community. In cases where a letter of inquiry has  been sent, the broadcaster or cablecaster must fulfill its responsibility and  provide FCC with the requested information. Recommendations

We recommend that the Chairman of the FCC take the following three  actions:
To provide clarity on how sponsorship identification requirements  apply to activities not directly addressed by FCC’s current guidance,  such as the use of video news releases, and to update its guidance to  reflect current technologies and recent FCC decisions about video  news releases, FCC should initiate a process to update its  sponsorship identification guidance and consider providing additional  examples relevant to more modern practices. Overall, FCC indicated that it will consider  our recommendations and how to address the concerns discussed in our  report. Both FCC and FEC provided technical comments that were incorporated  as appropriate. At that time, we will send copies of this report to the  Chairman of the Federal Communications Commission, and the Chair of  the Federal Election Commission. Specifically, we (1)  describe the sponsorship identification requirements and guidance for  commercial and political content, the federal election disclaimer  requirements, as well as stakeholders’ views of these requirements and  guidance and (2) assess how and to what extent FCC and FEC address  sponsorship complaints through each agency’s enforcement process.
Why GAO Did This Study

The FCC is responsible for ensuring that the public knows when and by whom it is being persuaded. Requirements direct broadcasters to disclose when a group or individual has paid to broadcast commercial or political programming. Political advertising must also comply with requirements overseen by the FEC. Recognition of sponsored programming has become increasingly difficult because of new technologies and increased access to sponsored programming such as video news releases. GAO (1) describes requirements for sponsorship identification and federal election disclaimers and stakeholders' views of the requirements and (2) assesses how and to what extent FCC and FEC address complaints. To conduct the work, GAO reviewed relevant laws, guidance, and enforcement procedures, and interviewed agency officials and stakeholders about enforcement processes and actions.

What GAO Found

Sponsorship identification statutes and regulations, overseen by the Federal Communications Commission (FCC), require broadcasters to identify commercial content--usually an advertisement, an embedded advertisement, or a video news release--that has been broadcast in exchange for payment or other consideration. A written or verbal sponsorship announcement must be made at least once during any sponsored commercial content except when the sponsor is obvious. For content considered political or that discusses a controversial issue, broadcasters must follow all requirements for commercial content and additional requirements, such as identifying officials associated with the entity paying for an advertisement. In addition, the Federal Election Commission (FEC) enforces federal election law that requires all political communications for a federal election, including television and radio advertisements, to include a disclaimer statement. FEC also oversees requirements to report campaign funding and expenditures, including funding for political advertising. FCC has guidance that helps broadcasters determine when a sponsorship announcement is needed, such as when a deejay receives a payment for airing specific content. While broadcasters consider this guidance useful, it addresses older technology that in some cases is no longer used. Furthermore, some broadcasters indicated that it would be helpful for FCC to clarify how the guidance applies in some situations, such as when a video news release or product is used during programming.
According to FCC, it opened 369 sponsorship identification cases representing just over 1 percent of the Investigations and Hearings Division's total cases opened from the beginning of 2000 through 2011. In 22 of these cases, FCC issued enforcement actions with varying types of violations and enforcement actions. While FCC follows standard procedures when addressing complaints, it does not inform the broadcaster named in the complaint of the outcome of the investigation in many cases. Most broadcasters we spoke with confirmed that FCC does not inform them of the status of investigations, and some indicated they currently do not know the status of several investigations. According to FCC, it does not communicate status with broadcasters named in complaints because, among other reasons, it has no legal obligation to do so. Broadcasters reported the lack of information about cases and FCC decisions creates uncertainty about the propriety of their past actions. As a result broadcasters might not have sufficient information to determine whether they should modify their practices. This can result in stations' editing content because of unwritten regulatory policy or what they assume the policy to be. Moreover, these investigations can be lengthy, taking from 10 months to over 5 years to complete when an enforcement action is involved. From 2000 through May 2012, FEC opened 301 cases based on complaints alleging violations of political advertisement disclaimer requirements. FEC assessed civil penalties in 29 cases, 7 of which were related to television or radio advertisement disclaimers. Unlike FCC, FEC provides status updates to those involved in investigations and issues reports explaining investigation findings. FEC also issues reports explaining case dismissals. These reports can clarify acceptable and unacceptable practices for the regulated community.

What GAO Recommends

FCC should, among other things, update its sponsorship identification guidance and consider providing additional examples relevant to more modern issues and communicate the resolution of an investigation to the target of the investigation when a letter of inquiry has been sent, and develop goals for resolving all sponsorship identification cases within a specified time frame. GAO provided FCC and FEC with a draft of this report. FCC indicated it will consider the recommended actions and how to address the concerns discussed in the report. Both FCC and FEC provided technical comments.