FCC looks into ads run on TV as news

Disclosure warning ignored, study says

May 26, 2006|By NEIL ROLAND | NEIL ROLAND,BLOOMBERG NEWS

Federal Communications Commission Chairman Kevin J. Martin has ordered an investigation into whether dozens of television stations have aired advertisements as if they were news reports, people familiar with the inquiry said.

The sources said Martin acted after a study by the nonprofit Center for Media and Democracy found at least 77 stations - including seven each owned by Hunt Valley-based Sinclair Broadcast Group Inc. and Tribune Co., owner of The Sun - have ignored an FCC warning to disclose sponsors.

"If the investigation leads to significant fines, the FCC could cause stations to put disclosures in place that make clearer the corporate role in local news," said analyst Blair Levin of Stifel Nicolaus & Co. in Washington.

"It depends how hard Martin wants to push it."

The FCC warned TV stations in April 2005 that they may be fined for airing news stories provided by governments and companies without disclosing who made them. The agency had received complaints about the use of videos provided by the Bush administration about topics including military success in Iraq.

Since then, 69 stations have aired so-called video news releases and eight showed satellite media tours, which involve a scripted interview with an author or expert promoting a product such as a book, the Madison, Wis.-based research group found.

News Corp.'s Fox News and CBS Corp. each own six of the stations that aired the ads without disclosure. Twenty-three are affiliates of Walt Disney Co.'s ABC network, the report stated.

Sinclair, which owns 60 local stations, said its policy is to disclose the sources of any corporate promotions.

"It's clearly stated, and our news directors know this," Sinclair Chief Financial Officer David B. Amy said in an interview.

In one example cited by the study, a Fox-owned station in St. Louis and a Sinclair station in Milwaukee aired a Halloween promotion as news. The footage was financed by candy-maker Mars Inc., based in McLean, Va.

The October 2005 segment on how to plan a safe Halloween mentioned Mars' Snickers, M&Ms and Starburst brands by name and showed images of them, according to the Center for Media's Web site.

The tape included a proper disclosure of Mars' sponsorship, which was removed by the stations before the broadcast.

Spencer Koch, general manager at Fox station KTVI in St. Louis, referred questions to Fox spokeswoman Erica Keane, who said Fox is "taking the appropriate steps to reiterate this policy to our entire stations group." WVTV-18 general manager David Ford in Milwaukee didn't immediately respond to a request for comment.

Alice Nathanson, a spokeswoman for Mars unit Masterfood USA, didn't immediately respond to a request for comment.

Other companies that sponsored promotions include General Motors Corp., Intel Corp. and Pfizer Inc., the nonprofit group said.

As with the Mars tape, the companies' disclosures were stripped before airing, the report said.

Tribune spokesman Gary Weitman and CBS spokeswoman Shannon Jacobs had no immediate comment.

"Our affiliates are independently owned and operated," ABC spokeswoman Susan Sewell said. "We don't control their news policies."

General Motors spokesman Mike Meyerand, Pfizer spokeswoman Alison Lehanski and Intel spokesman Chuck Mulloy all said their companies provide full disclosure in video footage they release.

"We in no way attempt to hide that we are providing the video," Mulloy said. "In fact, we bend over backward to make this disclosure."

The FCC's enforcement unit asked the Center for Media and Democracy last week for its report and some research materials, center senior researcher Diane Farsetta said.

TV stations are using promotions as news reports because they are strapped for resources at the same time that they are being asked to air more programs to keep up with cable TV news networks, Farsetta said.

"Stations managers have said they are turning to provided media because they can't afford to do all the news on their own," she said.

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