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FCC Preps Product-Integration Inquiry

The Federal Communications Commission is preparing a possible crackdown on product integration in TV shows.

According to sources who have seen the tentative agenda for the FCC's December meeting, it includes a proposal seeking information on how and where to put on-air disclosures for products that advertisers have paid to be worked into the plot lines of shows.

Product integration is distinguished from product placement, where a product might be used as a prop. For example, Everybody Loves Raymond creator and executive producer Phil Rosenthal told a Hill hearing audience earlier this year about a Seventh Heaven episode in which Oreos were repeatedly mentioned by name and even featured in a marriage proposal in which the ring was embedded in Oreo cream filling.

The commission isn't proposing exactly what to do, the sources said, but the item -- which is expected to pass with the help of commission Democrats -- would signal that the FCC is serious about taking some action.

Democratic commissioner Jonathan Adelstein, in particular, has pushed hard for better disclosure of paid and outside material used in broadcasts, including video-news releases and paid product plugs, but Martin had also pledged to look into it. The issue was also raised in public hearings on media-ownership rules.

Industry lobbyists will be meeting with FCC officials about the issue over the next couple of weeks. They are looking to avoid disclosures that would break up the flow of a show, such as a crawl across the bottom of that Seventh Heaven episode pointing out that Nabisco had paid for the privilege.

Adonis Hoffman, senior vice president and counsel to the American Association of Advertising Agencies, said the FCC should not go in with the presumption that there is a problem or tar new forms of advertising with the payola brush.

"There is quite a bit of misinformation and misunderstanding surrounding the very term 'product placement,'" he told B&C. "Today, the opportunities for advertisers to advance brands in multiple media platforms and formats are not limited to what we all grew up with. But just because there are new forms does not mean there is something inherently sinister going on."

He continued, "It goes against logic for any advertiser to hide its message, no matter where or how it appears. The fact that a product appears embedded in noncommercial content should not be cause for alarm, provided that there is ample opportunity during the credits for acknowledgement and disclosure. What we do not want to see is the association and mischaracterization of today's branded content with the unlawful practice of 'payola,' which everyone acknowledges is wrong ... Our members would look forward to helping the commission understand current practices, terms and trends in the business."

Product integration was among a half-dozen media items circulated among the other FCC commissioners by chairman Kevin Martin. None is a lock to make the final cut, which is released publicly seven days before the Dec. 18 meeting, and items could be pulled after that, as well.

Also on the list are several media-ownership-related items the chairman would probably like to take care of all at once, including a vote on the newspaper-broadcast cross-ownership rules (although pressure from the Hill could still potentially foil that plan); proposals to boost minority braodcast ownership, including a Martin proposal to lease digital-TV spectrum to minorities, women and small business and address broadcast localism; and a vote to cap cable companies' subscriber count to 30% of multichannel-video providers.

The package of broadcast-related issues would be an attempt to bring the 18-month media-ownership-rule review to a close, although, again, that could depend on how much push-back there is from Hill Democrats, who are holding hearings and trying to pass a bill that would block a media-ownership vote.