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(LEGAL) Keeping Your Rates Straight

11-2-2012

It's election time and that means a boon for advertising. But be careful with those rates. Sometimes, even when you act with all good intentions, things can go awry and you're faced with a moral decision. Fortunately, we have our resident legal expert John Garziglia to help you sort through just such dilemmas.

Radio Ink asks:  We just discovered we did not charge the lowest unit rate to a candidate running for local mayor. We did charge lowest unit rate to the incumbent mayor who won the election. Neither candidate knows. What should we do?

John Garziglia says:  If a candidate was entitled to the lowest unit charge for a class of time and was overcharged, the overcharge must be promptly refunded. 

 The FCC requires that stations periodically review their political time buys during the election season to determine whether refunds are required, and to issue any refunds promptly. The FCC expects stations to issue refunds to candidates before the election in order to allow candidates to maximize their campaign funds.

While a candidate may not be aware of an overcharge, the FCC requires broadcast stations to keep political files for two years. Therefore, anyone reviewing a station’s political file may see that one candidate was charged one rate for a particular class of time, and the opposing candidate was charged a different rate for the same class of time.

No station should wish to take the risk that an inspection of its local public file, by a member of the public or by an FCC inspector, would reveal an apparent lowest unit charge violation. The dollar amount of the overcharge to be refunded likely pales in comparison to what the station might spend defending itself at the FCC for failing to review political time buys and refund any overcharges.

With the election being just days away, now is the time for stations to review their political files for any overcharges. Charges in excess of the lowest unit charge can and do happen for a variety of reasons. For stations that sell broadcast time on an auction or quasi-auction basis, the lowest unit charge for a particular class of time will always be a moving target. Even for stations that try to hold rates, there is always the possibility of a particular class of time clearing at a lower rate than anticipated.

The FCC will take a dim view of any radio station that waits until after the election to identify and refund charges in excess of the lowest unit charge. Conversely, a station that does its review of political charges now, prior to the election, and immediately rebates or refunds overcharges will be doing exactly what the FCC expects of stations. 
Overcharges will happen. Radio stations are required to periodically review political time buys and immediately issue refunds for overcharges where required.

John F. Garziglia is a Communications Law Attorney with Womble Carlyle Sandridge & Rice in Washington, DC and can be reached at (202) 857-4455 or jgarziglia@wcsr.com. Have a question for our "Ask The Attorney" feature? Send to edryan@radioink.com.



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