Glenn Beck's gold problem may soon be moot. The Federal Communications Commission (FCC) is considering rule amendments that will set a higher standard for disclosure of paid endorsements on broadcast and cable television. Beck is a poster child for the proposed amendments.
The Fox News commentator bullishly hypes gold as an investment, while serving as a paid endorser for Goldline International, a precious metals vendor that specializes in gold coins. Not only does he hawk gold coins on his website (in breach of Fox's standards), he paints a doomsday scenario on his television show, predicting the collapse of the U.S. dollar. What better way to drive fans to stockpile gold?
Advertising within a news or current events program is a conflict of interest that erodes objective reporting and principled commentary. Networks should curtail such promotions on ethical grounds. Should they fail to do so, the remedy for consumers is full disclosure. Once the audience is informed, it is up to the viewer to determine the credibility of the message and the messenger.
However, under current FCC rules, cable and satellite networks are not subject to disclosure requirements which apply to broadcast TV and radio -- a gap which is under investigation by the Commission. The Federal Trade Commission (FTC) requires disclosure of paid endorsements under its Truth in Advertising guidelines (newly revised), which may pertain.
Either way, this case illustrates why disclosure is necessary. Mr. Beck insists that his reporting on gold is not biased. Does he tell viewers that coins may not be the best way to buy gold? That too much gold can sink a portfolio? That gold may be the next bubble? Financial ties to Goldline might explain any such omissions. According to politico.com, "Gold retailers expect favorable coverage from commentators when they pay to advertise on their shows." Politico cites this stunning quote from Peter Epstein of Merit Financial Services, one of Beck's sponsors:
You pay anybody on any network and they say what you pay them to say. They're bought and sold.
Glenn Beck's gold promotions are part of a growing trend toward advernews and advercommentary. In comments filed at the FCC last year, the Center for Media and Democracy cited four types of stealth advertising in TV newscasts: product placement, sponsored segments, segments with promotional tone or content, and news framing of business (when a particular company or product is used to illustrate a news story). In an investigation of 294 network-affiliated news programs in 17 U.S. media markets conducted by the University of Oregon, 90 percent contained at least one instance of embedded advertising, and the source of the message was rarely disclosed.
In 2008, under complaint from consumer groups and members of Congress, the FCC proposed to extend its disclosure rules to cable and satellite programming and to make the disclosure notices more salient to the audience. The Commission will likely specify size, duration, wording and placement of disclosures, as with political ads. Of major importance is awareness of promotional intent at the time the material is processed and protecting children from the subtle influence of embedded advertising.
N. E. Marsden is the volunteer coordinator of FITMedia, a coalition of 50 organizations and professionals calling for FCC action on embedded advertising. For information, visit FITMedia.org.