Underwriting Quiz

Underwriting Quiz - Are these legal, or illegal? (Answers are below.)

(1) We wish to thank Becky Borden, Oakwood’s Realtor of the Year and member of the Million Dollar Roundtable, for supporting WANY’s programs. Put her many years of experience in selling commercial property to work for you.

(2) WANY wishes to thank Bright Smile Dental Care for its support. Bright Smile is located on Main Street and provides a full range of dental services for adults and children. Their phone number is 999-555-9999. Bright Smile encourages you to join them in worship each Sunday morning at First Community Church. 

(3) Caring Arms provides the most comprehensive programs for your aging family member. We are the only facility available 24 hours a day – 7 days a week. Our goal is to give you peace of mind for your loved one. Our phone number is 777-555-8989.

(4) Joe’s Car Repair has been a faithful underwriter at WANY for many years, and we wish to thank them for their support. They offer complete car repair as well as warranty for all repairs. Their website is joescarrepair.com (don't go there, it's fictious).

(5) Evangelist Danny Doe is coming to the Civic Center on June 20^th and invites you to attend. Evangelist Doe has preached to millions and will be an inspiration to anyone who attends. Call 999-555-9999 to get tickets to attend this exciting event.

(6) Welcome to WANY’s Praise-a-Thon. We have raised $100,000 to support our ministry, and now ask that you pledge your support. If you receive encouragement from our programming, we ask that you pick up the phone and call us at 777-777-7777.

(7) First Church’s annual fundraising supports five missionary families in the middle east and an orphanage in Singapore. Your contribution of $25 can provide assistance for three people for a month. Call 777-777-7777 to make your pledge.

(8) WANY wishes to express our sadness at the loss of Officer Mack Wyman Tuesday when he responded to a domestic dispute and received a fatal gunshot. Big Bank has established a trust fund for Officer Mack’s family, and we will take your pledges on his behalf during the next 30 minutes as we highlight his life and accomplishments.

(9) Join WANY and many top family speakers as we cruise to the Caribbean in June. Send $99 to reserve your spot aboard the Paradise, one of the finest ships on the water. You will be blessed with some of the most inspiring musical talent in the industry.

(10) WANY wishes to thank the many businesses who have made anonymous donations to our station.

Answers

1. Illegal.  Qualitative statements like “Realtor of the Year,” “Million Dollar Roundtable,” and “many years of experience” are forbidden.

2. Legal.  ”Bright Smile” is the name of the practice and thus is permitted as would underwriting from “Great American Cookie Company.”  “Full range of services” properly describes the scope of the practice.   Also, it is totally legal to promote a non-profit organization by urging listeners to attend a particular church or donate to the Red Cross.

3. Illegal.  “Most comprehensive” and “only facility” are not permitted.  (However, if “Caring Arms” were 501c3 it would be legal.)

4. Legal. It is OK to thank a business for being “faithful for many years” as a supporter.  “Complete car care,” indicates the scope of services, not that the company is superior to another.

5. Legal.  Assuming that Evangelist Doe’s organization is non-profit, it is legal to encourage listeners to support non-profit 501c3 organizations by attendance or in other ways.

6. Legal. It is expected that non-profit broadcasters will devote hours – even days – to raise money over the air for the station’s operating expenses.

7. Illegal.  The wording “annual fund-raising” and “call to make a pledge” implies that the “station is interrupting regular programs” to raise money for the missionaries.  If a church-owned NCE station has a fund-raising drive to build a new studio it is legal; but it is illegal to use the  funds to enlarge the church’s sanctuary, or for missionaries.  If you were raising money for radio equipment so the missionaries could give “field reports” to the station that would be OK. 

8. Illegal.  Same situation as above.  However, a 30-second announcement about the trust fund would be legal.  Underwriting guidelines can get quite confusing.

9. Legal.  This a promotional and fund-raising project of the station.  This is similar to a PBS station offering “Barney” videotapes to donors.  Of course, to encourage the public to take a cruise not sponsored by the station would be illegal.

10. Illegal.  Neither non-commercial nor commercial stations may accept money or “items of value” from businesses without on-air acknowledgement.  This is a felony called “payola.”  Of course, individuals can make anonymous donations to NCE stations.

The FCC forbids NCE stations from making "announcements which encourage or invite business patronage, make prohibited price references, or depict the underwriters in a comparative and qualitative manner."  Twenty years ago the FCC relaxed its non-commercial policy to allow public broadcasters to expand or enhance the scope of donor and underwriter acknowledgements to include:

(1) logograms or slogans which identify and do not promote 

(2) location information, or 

(3) value-neutral description of a product line or service.  

For more guidance go to the FCC website at: http://www.fcc.gov/mb/audio/nature.html

Recently the Chairman of a “cluster” full-power accused an LPFM in its market of airing commercials.  Cited spots included:  "SMC offers one-hour (mortgage) pre-approval."  S&T: "You'll be surprised by the quality and the price on meats, such as pork chops, fish, hot wings and all cuts of chicken."  EHQ: "The Fresh Air combines natural environmental processes with state-of-the-art technology to create a more efficient way to keep you free of smoke and odor."  Based on the information we have shared, do you think the announcements were legal?  We will let you know when and if the FCC rules.

IN SUMMARY

Underwriting is divided into two catagories concerning length  spot announcements, typically 60 seconds or less (and preferably 30 seconds or less) and programs.  There are three types of underwriters:  businesses, non-profit organizations, and political candidates.  For purposes of classification, an individual who wants an NCE station to air a particular program or spot is classified as a "business" even if not incorporated.  "Non-profit organizations" included religious and secular organizations recognized by IRS and goverment entities.

BUSINESSES may contribute money or "anything of value" to an NCE. Acknowledging support from businesses is not optional, it is required by law - the so-called "payola law" which will not be discussed in detail here.  Originally support by businesses could be acknowledged only by name, address, and telephone number.  Many years ago the FCC relaxed the requirement to also allow non-persuasive or "fanciful" corporate slogans, and brief value-neutral description of an underwriter's products or services) "Call to action," "prices," and qualitative or comparative descriptions are still forbidden.  Thus, a live remote from a business is legal IF the public is not directly or indirectly encouraged to patronize the business.

NON-PROFIT organizations may air virtually anything (including "call to action" and "suggested donations") that is related to the non-profit’s authorized purposes in an underwriting announcement.  Thus, to ask the public to donate to get a book or tape from a church or the Red Cross is OK.  A church cannot encourage the public to "patronize Granny's Hot Wings" (a real business owned by a church in Atlanta).  Obviously this is different from a "chicken dinner" at a "family night" at the church.

The same rules apply to programs produced by non-profit groups such as churches so long as "financial appeals" are limited to 10 percent of the program time.  Thus, a "prayer line" number can be listed on the bottom of a screen throughout a program on an NCE TV station but an "offer of the pastor's book for a donation" cannot be left on the screen. (II) NCEs are permitted and encouraged to air "pledge drives" to raise money for their operations for hours or days at a time, but an NCE cannot "interupt regular programming to raise money for other organizations, no matter how worthy, without prior FCC approval."  For example, after 9-11, NCE’s could not air Red Cross drives to benefit the victim’s families without FCC approval.  

POLITICAL RULES are lengthy and contradictory:  Since a politician's spots have a "call to action / vote" they  “should” be illegal, but all stations including NCEs must air anything they are asked to by candidates for Federal office (Congress, President, Vice President.)  Since censoring their ads is absolutely forbidden, pray that a candidate does not wish to air the "seven dirty words" in their spot.   An NCE cannot charge a fee to air a political spot but can require the candidate to "reimburse its expenses" for airing it.   More confusion. 

No LPFM station existed during the last Presidential election and few in the elections two years ago.  Conflicts in the law have not been tested in the Courts .... and until a politician is desperate to get air time on a LPFM, these regulations will not be challenged. 

(Examples are used to demonstrate possible scenarios encountered running an LPFM station - they are not real events or people.)