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Lowest Unit Rate and Internet Streaming

By Frank Montero on December 21, 2011
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[Blogmeister Note: The following piece, in a more compact form, appeared in Radio Ink magazine. We thank our friends at Radio Ink for allowing us to post this here as well.]

As we enter the political season, radio stations are being bombarded with reminders about the FCC’s political broadcasting rules – including, of course,  the lowest unit rate (“LUR”) requirement for many, but not necessarily all, political spots. 

LUR, of course, means that stations must provide all political candidates (federal, state and local) with the LUR for advertising bought during a statutorily-specified pre-election windows.  Those windows include the periods: (a) 45 days before a primary election, and (b) 60 days before a general election. 

In general terms, the LUR is the lowest rate of the station for a particular class and amount of time during a particular period.  “Lowest” means lowest.  Thus, candidates must get the benefit of all discounts, including those offered to the station’s most favored commercial advertisers for the same class and amount of time for the same period as that purchased by the candidate.  Note that only ads bought by candidates are entitled to receive LUR. Also, federal candidates must provide the “stand by your ad” certification in order to be entitled to receive the LUR. 

A spot “class” is one that has particular rights and characteristics, such as morning drive,  afternoon drive, fixed position, ROS, etc.  In many instances calculating the LUR for different classes of time can be relatively simple. But in other instances – particularly when different classes are bundled into packages for non-political advertisers, the calculation can get tricky fast.  Unlike state and local candidates, federal candidates cannot be denied “reasonable access” to a station, which means that they are effectively entitled to any and all commercial opportunities as a standard advertiser. (State and local candidates can be limited to certain classes.) So for federal candidates, stations must determine the per-class LUR for each component of the package and make that rate available to the political advertiser, whether or not he/she buys the whole package

That process is already confusing enough – and it has gotten increasingly so as stations have expanded their streamed content on the Internet. How does Internet streaming of content – including political spots – affect LUR calculations?

First, you should know that the LUR requirement does not apply to Internet-only advertising time.  However, broadcasters operating websites should be careful to distinguish sales of Internet-only advertising time from sales of over-the-air advertising time. This is especially so if an advertising package includes broadcast spots as well as Internet-only advertising. Example: a candidate buying over-the-air spots receives, as part of a package, a banner ad on the station’s website.  Such packages may impose obligations on a station with respect to political advertising sales and the value of the Internet component may impact the station’s LUR. 

If a station offers a combined package of broadcast and Internet advertising, LUR rules will apply to the broadcast component.  Also, remember that the equal time requirements apply so if the station sells a package with broadcast spot time and Internet spots to one candidate, then the same should be made available to competing candidates for the same office. In short, be careful when selling combined broadcast and Internet advertising packages and be aware of how such bundling may impact the LUR and your bottom-line.

Photo of Frank Montero Frank Montero

Francisco “Frank” Montero specializes in telecommunications, broadcasting, media and technology. Mr. Montero’s practice includes FCC regulatory counseling, corporate finance, asset and securities acquisitions, intellectual property, and real estate and commercial transactions.

Mr. Montero was an appointed member of the Federal Advisory Committee on…

Francisco “Frank” Montero specializes in telecommunications, broadcasting, media and technology. Mr. Montero’s practice includes FCC regulatory counseling, corporate finance, asset and securities acquisitions, intellectual property, and real estate and commercial transactions.

Mr. Montero was an appointed member of the Federal Advisory Committee on Diversity for Communications in the Digital Age. He served as Director of the FCC’s Office of Communications Business Opportunities during the Clinton Administration. While at the FCC, Frank worked extensively with industry, trade associations, financial institutions and governmental agencies to create business opportunities for entrepreneurs, and technology and telecommunications start-ups and was recognized by the Chairman of the FCC for “dedication to bridging the digital divide”.

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  • Posted in:
    Administrative and Regulatory, Communications, Media & Entertainment
  • Blog:
    CommLawBlog
  • Organization:
    Fletcher, Heald & Hildreth, PLC
  • Article: View Original Source

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