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Broadcast Advertising Nondiscrimination: A Victory for Civil Rights at the FCC

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Last month, the Federal Communications Commission (FCC) released a modest two-page Enforcement Advisory to remind broadcasters that they must certify in broadcast applications that their advertising contracts do not discriminate. The Advisory also designated a senior member of the FCC's Media Bureau to serve as a compliance officer for its Broadcast Advertising Nondiscrimination Rule. This represented the first formal steps to implement the rule, which had been adopted unanimously by the Commission in its 2007 Diversity Order.

What this Advisory lacked in length, it certainly made up for in tangible impact. As MMTC and 22 other national organizations observed in our letter praising the FCC's enforcement of the rule, the Advisory represented the first new federal civil rights mandate since 1977 and the only one ever adopted without opposition.

The Broadcast Advertising Nondiscrimination Rule puts the FCC on record that it will not tolerate broadcasters entering into contracts with advertisers that discriminate on the basis of race or ethnicity. As made clear by the FCC in its 2007 Order and underscored in its recent Advisory, there is a long history of discriminatory actions by some advertisers that seek to prevent their ads from reaching certain audiences. In particular, over the last several decades, many advertisers have implemented "no urban/no Spanish dictate" provisions in written or unwritten contracts with broadcasters. These "NUDs" and "NSDs" are intended to minimize the number of African American or Hispanic customers patronizing an advertiser's stores. Such schemes offend the public accommodations section of the 1964 Civil Rights Act, and their practical impact on minority media owners has been devastating.

Why This Matters

The FCC Advisory that begins enforcement of the Broadcast Advertising Nondiscrimination Rule is significant for several reasons. First, it addresses a pervasive, market-distorting practice in the industry. MMTC has estimated that NUDs and NSDs drain away over $200 million each year from minority broadcasters. Partly as a result, many minority broadcasters have been forced out of business, resulting in a less diverse media sector.

Second, if the FCC reverses this trend, minority media ownership should rapidly increase, diversifying an increasingly homogeneous media sector. Diversity is the heart of a vibrant media ecosystem. Without a robust contingent of minority broadcasters, the media sector slouches toward consolidation and homogeneity.

Finally, this action hopefully symbolizes a recommitment to minority issues by the FCC. As discussed previously on Broadband & Social Justice, over 70 minority ownership and civil rights enforcement proposals are pending before the FCC. The FCC is to be commended for moving forward with the advertising nondiscrimination rule, but its civil rights work is hardly done.

Addressing Critics of the Nondiscrimination Rule

Several critics of the Advisory have challenged various aspects of the rule, including whether the FCC possesses the legal authority to enforce it, whether the rule is a form of affirmative action, whether the rule bars demographic targeting, and whether enforcement of the rule might have negative economic consequences for stakeholders across the media sector.

FCC's Enforcement Authority
With regard to jurisdictional issues, the FCC has the ability to police the behavior of broadcasters since they are granted exclusive rights to control a valuable and scare public resource - spectrum. Moreover, in licensing spectrum to broadcasters, the 14th Amendment precludes the FCC from collecting regulatory fees derived from firms that operate with a discriminatory purpose. That's been the law since 1961. The FCC stands on firm grounds where it can and should assert jurisdiction over broadcasters when enforcing this rule.

This leads to the question of whether enforcement of such a rule would be effective. The short answer is that just like any other provision in an advertising sales contract, it can easily be enforced. Nondiscrimination clauses in housing and employment contracts have been with us for decades, and they are universally observed and respected. With effective enforcement to root out covert and overt schemes, most discrimination will stop. The history of the 1964 Civil Rights Act, the Fair Housing Act, and the Voting Rights Act proves this.

The rule will be effective because advertisers and broadcasters depend on each other. Their relationships are close. Neither side wants to harm the other by breaching an advertising sales contract.

To be sure, advertisers know NUDs and NSDs are morally wrong, which is why they're seldom written down. Over the past two years I've collected over 60 NUDs and NSDs, and only three were in writing. But that doesn't mean they're a secret. Broadcast airtime sales is a small world, and a NUD or NSD is almost never a secret.

When a broadcaster hears of a NUD or NSD, the broadcaster should do exactly what it would do if it were confronted with a breach of any other provision of the contract: require the advertiser to demonstrate that there was no breach, or to cure the breach. If there is no explanation and no cure, the broadcaster should terminate the contract - just as it would if the advertiser breached the provision requiring timely payment for spots, or breached the no-indecency provision - and just as the advertiser would if the broadcaster failed to air spots or provide make-goods.

If standard contract compliance procedures are followed, advertising discrimination will be dead within two years, and that won't be soon enough. Compliance would restore to minority broadcasters the more than $200 million per year that they earn - but never collect - because 5 to 10 percent of advertisers unfortunately go out of their way to try to ensure that few, if any, members of minority broadcast audiences will patronize their stores. Dedicated FCC enforcement of this rule will spell the end of advertising discrimination.

Affirmative Action
The contention that the rule is "affirmative action" is completely off the mark. On its face, the rule does not require preferential treatment. What the rule actually does is require broadcasters to refuse to participate in a scheme that diminishes minority broadcasters because of the race of their audiences rather than based on merit. The rule simply bans discrimination.

Prohibiting Demographic Targeting
Similarly, the rule does not bar demographic targeting of products and services for which race is a major factor affecting the use of the product or service (such as tanning salons and no-lye relaxers) or when the product or service is a political message (such as political or issue advertising, which is treated like political speech for First Amendment purposes). The regulation applies only to products and services that are commonly used by all people irrespective of race. Simply put, there is absolutely no reason for an advertiser to prevent ads for products of universal appeal - cars, furniture, amusement parks, hotel accommodations, housing, and countless other products and services - from reaching members of a particular race.

Economic Consequences
Some allege that an overly aggressive enforcement regime will drive ads to alternative platforms that are unregulated. According to this logic, the traditional broadcasting sector will suffer.

The exact opposite is true. Ultimately, it is in the economic interests of all broadcasters to stop discriminatory advertising practices. Minorities currently comprise about 40 percent of the total broadcast audience. As minority population growth accelerates in the coming years and decades, this audience share will grow rapidly. Alienating such a large segment of the audience will only motivate them to gravitate away from broadcasting to satellite and other audio delivery technologies - thus risking huge economic losses by all broadcasters.

A First Step on a Much Longer Journey

This is the time to show the world that the business of broadcasting has integrity, that the privilege of a broadcast license, the free and protected use of the public's spectrum, really means something to broadcasters. If the broadcasting industry seizes this opportunity to demonstrate how inclusive it is, how respectful of civil rights it is, how eager it is to fight race discrimination, the industry will attract more minority consumers and build their loyalty and patronage. Broadcasters can do good and do well at the same time.

The FCC's Enforcement Advisory was a cause for celebration, but there is still an enormous amount of work to be done. For example, the FCC still must clarify how it will enforce this rule and what constitutes a violation. The two-page Advisory provides little insight into how the Commission will apply this rule, the criteria it will use for assessing violations, and other practical information about actual implementation of the rule.

In addition, the FCC has yet to address MMTC's petition for a rulemaking to expand the rule to cover other media providers regulated by the Commission. In 2009, MMTC filed a petition to extend the nondiscrimination rule to cable, satellite, and telecommunications services. As outlined in the petition, "Extending the nondiscrimination rule to all FCC-regulated industries that provide content to consumers would fall squarely in line with the Commission's goals of platform neutrality and regulatory parity." Moreover, extending the rule would further signal a firm commitment by the FCC to civil rights.

We cannot and must not rest on our laurels. We must ensure that the nondiscrimination rule is aggressively enforced and that the Commission addresses the remaining 71 diversity proposals pending before the Commission.

Every journey begins with a first step. The Enforcement Advisory is that first step and a teachable moment - what it teaches us is that we are all interconnected. As Dr. King reminded us on the night before he was assassinated, when he told the congregation that he'd been to the mountaintop, "We must live together as brothers or perish as fools."

David Honig is the co-founder of the Minority Media and Telecommunications Council (MMTC), a national nonprofit organization dedicated to promoting and preserving equal opportunity and civil rights in the mass media, telecommunications and broadband industries, and closing the digital divide.