9th Circuit Overturns FCC Political Ad Ban on Pubcasters

The case by Minority Television Project, owner of KMTP-TV San Francisco, stemmed from an FCC order in 2002 that fined it $10,000 for running ads for State Farm, Chevrolet and other companies, said the opinion by Judge Carlos Bea. On appeal, Minority contended the statute is “an unconstitutional content-based restriction on speech, because it bans all paid public issue and political speech while permitting paid promotional message by non-profits."

The U.S. claimed that “if public television and radio stations became financially dependent on advertising, such stations would replace their niche educational programs with more popular programs” that have greater mass market appeal, Bea said. “It stands to reason that both public issue and political advertisers and nonprofits seeking to advertise for their goods and services … would generally seek the largest audience possible.” The court found “no reason to think that public issue and political advertisers have any greater propensity to seek large audiences than do nonprofit advertisers.” But public TV stations can broadcast one type of advertising but not the other, he said. “That’s the kind of picking and choosing among different types of speech that Congress may not do, absent evidence to show that Congress’s favoritism is necessary to serve its substantial interest."

Bea called the rule “content-based.” It prohibits a public station from broadcasting any ad that expresses views on behalf of a political candidate, but it allows a public broadcast station to transmit a paid promotional message from a nonprofit, “so long as that message does not express views on public issues or political candidates,” he said. This is a further content-based restriction on speech, and “it burdens speech on issues of public importance and political speech,” Bea added. The FCC referred a request for comment to the Justice Department, which had no immediate response.

Some media professionals said the decision could raise concerns for the mission of public broadcasting. It strikes at the core difference between commercial and noncommercial broadcasting, said Craig Parshall, National Religious Broadcasters general counsel. “Sources of revenue and the nature of programming are the distinction between” these categories of broadcasters, he said. The reason for the noncommercial educational category is to create “a protective harbor for the advancement of high-value public information and entertainment,” Parshall said. Noncommercial broadcasters “want to do everything possible to retain the noncommercial nature of what they do,” Parshall said: “They don’t want a blending or start merging into programming that looks and sounds like commercial stations.” The commission and Congress “have the job of accumulating the evidence on the effect that airing these ads could have on public broadcasting,” Parshall said.

The opinion is disturbing to Andy Schwartzman, Media Access Project senior vice president. “It threatens the core mission of noncommercial broadcasting,” he said. The ruling could change the very character of the service and “it opens the door for special interest influence which could sway even the most well-meaning public broadcasters,” he said. While it seems this could change the nature of public TV and the way it looks and feels, “at the same time it could be a way to provide more funding for public TV stations,” said Matt Wood, Free Press policy director. The decision doesn’t mean that TV stations would have to accept political ads, he said. “It’s not clear whether most stations would decide to do it."

Bea said the government must show that allowing ads to run will cause substantial harm and that stations will change their programming content as a result. The government can’t point to evidence that its fear of harm to public TV “that would come from allowing stations to air public issue and political advertisements is ‘real, not merely conjectural,’ much less that the portions of the statute which ban such political and public issue advertisements ‘alleviate those harms in a direct and material way,'” Bea said. PBS is reviewing the decision “to determine its potential impact,” a spokeswoman said.

The ruling likely won’t affect the demand for political ads on commercial stations, said Bill Hillsman, president of political-ad agency North Woods Advertising. “There’s so much money that’s going to be spent in this election cycle, the problem is going to be too little inventory, not too much inventory.” At public stations, there’s no ad inventory to speak of so far, he said. And for candidates seeking federal offices, who are entitled to buy time at the same rate the station gives its best advertiser, calculating that “lowest unit cost could prove difficult,” Hillsman said. If public stations decide to accept political spots, “the pricing issue will be an interesting one to watch,” he said.

The opinion was supported by Judge John Noonan, and Judge Richard Paez drafted the dissent. For more than 60 years, public broadcasters “have been effectively insulated from the lure of paid advertising,” Paez wrote. The ruling “will disrupt this policy and could jeopardize the future of public broadcasting.” Minority produced just one instance “in which a non-profit entity purchased an announcement on a public broadcast station,” he said: “Advertisements by non-profit organizations do not appear to foster the market failure problem of public broadcasting that Congress sought to avoid” in enacting the law. The government produced evidence that political advertising “presents a greater harm to public broadcasting than non-profit advertising,” he added.

The division on the panel leaves the decision open to be challenged, Schwartzman said. “This is a split decision of a three-judge panel, so the government has the option to go to full circuit,” he said. “It wouldn’t surprise me for them to do that and go to the Supreme Court if necessary.” This isn’t over, Parshall said: “My guess is they'll ask for a hearing for the entire 9th Circuit panel, which may change the decision entirely.”