Group to FCC: Lay Off Product Plugs

The FCC is considering imposing new regulations on product placement disclosure just as broadcasters and advertisers say they need innovative new marketing tools to remain competitive in a multiplatform universe.

Dubbing themselves National Media Providers (NPM), the broadcast networks, advertisers and some station groups essentially told the FCC two weeks ago to butt out. The coalition says new rules are unnecessary, could prove economically harmful as the economy is tanking, and might violate the First Amendment.

The FCC has been collecting comment on proposed changes to its 70-plus-year-old sponsorship-identification rules to reflect the rise of video-news releases, product placement and product integration.

Broadcasters and advertisers argue that in a TiVo world of hundreds of channels, the 30-second commercial just doesn't cut it anymore.

The FCC confined its proposal to the size and duration of the disclosures, but asked several other questions. They included whether there should be on-screen identification of product placements while the product is actually on the screen and whether plugs in feature films aired on TV should have to identify the sponsors, as TV shows have to do.


The commission also asked for comment on whether it should clarify its rules governing advertising in children's programming to expressly prohibit embedded advertising.

Advertisers, networks and broadcast groups argued that the rules are fine as they are.

Part of that argument is that advertising-supported media face greater economic challenges “in light of increasing competition and rapid technological change.” That was written for comments filed Sept. 22, before the financial meltdown went into overdrive, so add the rapid change in the stock market to the factors impacting ad-supported media.

It's not just an economic argument, says Sam Jaffe, executive VP of the Association of National Advertisers. “The kind of restrictions they talk about would have very serious First Amendment consequences.”

But the economic meltdown has put an exclamation point on the need for product placement.

“The FCC is supposed to be seeing to it that the media is healthy under its jurisdiction. It will have to be aware that there are more pressures on broadcasters and cable than in any recent time,” he says. “This is a very tough time and advertising is going down as a part of that.”

With time running out for the Kevin Martin-shepherded FCC to take action, and FCC commissioners scheduled to make numerous road trips to talk about the DTV transition, is there really a chance the commission could weigh in on product placement?

Jaffe thinks so, but he hopes advertisers and networks have made their case why existing rules are adequate and the proposed rules are “not only bad policy but unconstitutional.”

“There are two votes. Both of the Democratic commissioners have taken pretty strong stands on this issue in the past,” he points out. That means if FCC Chairman Kevin Martin wanted to frame the issue in terms of helping kids, he could team with the Democrats, as he has several times in the past.

Democrat Michael Copps, who could be a chairman or acting chairman if the Democrats win in November, says it will be tough for the FCC to tackle product placement with the dwindling number of days in an ambitious agenda, but he also says that the financial meltdown argues for doing so. “One of the lessons we should be learning from the plight of the country right now, is if you let problems go unattended, things start to get worse.

“This is all stuff that has been teed up and needs to be followed through on,” he told B&C.

A spokesman for Martin declined to comment on the timing of FCC proceedings.


One on-air disclosure issue the FCC appears to be dealing with is a Department of Defense program to provide talking points to former military officers used by TV networks as analysts on the Iraq war.

The FCC last week confirmed that it had sent out letters to 19 military analysts and five TV networks seeking information on allegations the analysts were essentially placing a product—that being the Pentagon's handling of the war in Iraq.

The FCC had been asked by various legislators, including Sens. Barack Obama and Hillary Clinton, whether the news outlets that used the analysts violated the FCC's sponsorship-identification rules by not informing viewers of the analysts' ties to the White House or companies that do business with the Defense Department.

FCC Chairman Martin had said back in May that the commission would look into the allegations.

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John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.