A NEW ADVERTISING MODEL DURING CORONAVIRUS (COVID-19) PANDEMIC

The COVID-19 pandemic has hit broadcasters hard. Characteristically, they have stepped up to meet the public interest need for vital information about how the pandemic has affected their local community, but advertiser economic support has been dwindling and cancellations are enormous. Yet local media is more important than ever, as listeners and viewers tune to their local stations for more vital, up-to-date information regarding shelter-in-place orders, and locating vital supplies and other critical information.

Creative broadcasters have proposed several ideas, including COVID-19 PSA programs, to bring advertisers back at special rates or even for free, to demonstrate their community support in this time of need. But that creates a problem. Lower rates or free spots for commercial advertisers could significantly affect their lowest unit rate calculation for legally qualified candidates in this important political year.

Taking the lead, the NAB and several broadcasters and communications lawyers have proposed different ideas to the Commission for COVID-19 public service message exceptions to the LUR provisions of §315 and FCC rules. The Media Bureau responded with guidance that provides some new opportunities.

Acknowledging that some broadcasters are seeking to offer free avails for coronavirus information to fill excess inventory and build goodwill in the face of commercial cancellations, the bureau recognized that the public interest requires a response. On March 25th, the staff advised broadcasters they could exclude free time provided to commercial advertisers when calculating lowest unit charges, provided that free time is not associated with an existing commercial advertiser or contract for paid time or otherwise could be considered a bonus spot.

It is important to be careful about this because under normal conditions, a bonus spot, i.e., one provided as incentive to buy a commercial package, must be averaged into the overall contract price, lowering the per-spot charge for lowest unit charge purposes. Note also that the Commission stated that because the pandemic situation is a rapidly evolving, information and market conditions are changing quickly, so this guidance is applicable only to the current period and not necessarily when more ordinary conditions are restored.

In a recent radio interview, NAB President Gordon Smith acknowledged that the cost for broadcasters stepping up to continue operations as first informers during this coronavirus crisis has brought viewership and listenership way up, but advertising revenue has fallen through the floor. Recognizing that broadcasters are a critical community voice, Smith acknowledged that the new COVID-19 Rescue Package would help smaller stations with tax changes and forgivable SBA loans tied to worker payroll, for businesses with 500 or fewer employees.

Note also that many broadcasters have expanded their creative response with some success. For example, one Indiana broadcaster has already focused advertising packages on the coronavirus. He had a cleaning service advertiser record a message that they have air cleaning sprays and have discounted duct cleaning by 50%. Restaurant and bar clients recorded updated hours or closings messages along with information on their take-out offerings. A local school director of transportation to visit the morning show to let students know where the WiFi buses are located for internet so they have access to “E-learning.” He brought in five new advertising clients with a specially priced package (careful here for LUR issues) and has sold messages on the station’s website and social media as well as scrolls on the station’s RBDS text stream.

Bottom line is that while times are difficult, there are opportunities to serve your community while bringing in some new business. Important, however, to remember that any free PSAs offered to existing advertising clients must not be tied in any way to a current paid-for advertising package.

This column is provided for general information purposes only and should not be relied upon as legal advice pertaining to any specific factual situation. Legal decisions should be made only after proper consultation with a legal professional of your choosing.