Valley Broadcasting-owned KVBC TV Las Vegas has asked the FCC to investigate three of its competitors, alleging they agreed to supply news coverage of a liquidation sale at an auto dealership as part of an ad buy but did not disclose that per FCC rules.
Auto dealers are one of local stations', and particularly local news', largest advertisers.
Representatives from two of the stations and the media buyer cited in the complaint, which handled the buy on all three stations, vigorously denied the allegations. The other stations could not be reached for comment at press time.
In the complaint, a copy of which was supplied to B&C by the station's lawyer, KVBC alleged that back in May and June, when a local Dodge dealer, United Dodge Chrysler Jeep, was advertising liquidation sales related to the closing of dealership, network affiliate competitors KLAS (CBS), KTNV (ABC) and KVVU (Fox) inserted ads that looked like interviews into their newscasts--paid for by United--without any notification to viewers that they were paid placements.
If so, that would violate FCC sponsorship identification rules.
A KVBC account executive, whose affidavit was included in the complaint, says that she was contacted by a media buyer with Arrowhead Advertising, which wanted to buy spots for the dealer liquidation. The buyer said that ad buy was contingent on a guarantee of news coverage of the event, according to the sworn statement. The account executive refused, saying that would violate station policies on payola/plugola. She said she would give a copy of the press release to the news department, but could not guarantee they would get the coverage.
KVBC decided to file the complaint after noting that the three competitors cited in the complaint all got the Arrowhead ad buy and all had on-site dealer interviews in their newscasts showing the cars being sold at discount prices. Following that campaign, said KVBC in its complaint, the Arrowhead media buyer approached KVBC again for a similar buy, pointing out that it did not get the first buy "because of the news coverage stipulation."
The complaint includes a copy of an e-mail allegedly from the media buyer that does use that language to explain why the station did not get the ads.
"For stations to purposely contract and agree to include lengthy promotional clips and pass it off as legitimate news is an egregious breach of their obligation to the viewing public as well as a blatant violation of the sponsorship identification law and rules," read the complaint, which asks the FCC for an investigation and "immediate corrective action."
"It's just a straightforward allegation that they have violated sponsorship ID by carrying stories within their news programming that were part of a commercial buy," says KVBC lawyer Dom Monahan.
"That's why we asked the commission to open up the investigation," he said. "Our evidence is [that] we were offered the same package."
Arrowhead President Kyle Eng told B&C that the allegations were "completely false and without merit." He said that all the media buys it put together for the dealership were about one thing: ratings. "That is why KVBC was left out of the buy, not some grassy knoll theory."
"Given the closing of 788 Dodge dealerships, it was already a big news story," said Eng. "I had news directors calling me left and right asking me if someone from the dealership would comment on the closures. There was no need to look for coverage."
He also "categorically denied" there was any understanding with the stations there would be an interview as part of a spot buy. "We buy based on ratings."
Emily Nielson, the GM of KLAS, one of the stations named in the complaint, also said the complaint was baseless. "News coverage on channel eight is determined solely by news management. Our agreements with advertisers never include guarantees of news coverage despite what an overzealous media buyer seemed to imply."
"Our sales department knows very clearly that if anybody ever tries to get compensation for news coverage that that is a major violation of our ethics policy and its a violation of FCC rules," she said, adding that every employee of the station gets a copy of the FCC's payola rules on their first day on the job and has to sign it.
"We have a very strict policy, None of our [sales] agreements include news coverage, ever. If they do, [the salesperson] faces termination. We have zero tolerance. we are the strictest in the market."
She said the station interviewed representatives of three of the four local dealerships and tried to interview the fourth. She also told B&C she has talked to the reporter and photojournalist who did the interview and the manager who approved the story. "None of them had any contact with anybody about the story from any other part of the building."
Nielson said the station intended "to vigorously fight these false claims," calling the charges "extraordinarily damaging to a reputation of journalistic excellence we have built over 50 years."
A spokeswoman for KVVU parent Meredith Broadcasting said the allegations were baseless.
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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.
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