With the lowest unit charge window for the November elections kicking into effect tomorrow (September 5), we thought that it was a good idea to review the basics FCC rules and policies affecting those charges. With each election seemingly breaking spending records from prior cycles, your station needs to be ready to comply with all of the FCC’s political advertising rules. Essentially, lowest unit charges guarantee that, in the 45 days before a primary and the 60 days before a general election, candidates get the lowest rate for a spot that is then running on the station in any class of advertising time. Candidates get the benefit of all volume discounts without having to buy in volume – i.e. the candidate gets the same rate for buying one spot as your most favored advertiser gets for buying hundreds of spots of the same class. But there are many other aspects to the lowest unit rates, and stations need to be sure that they get these rules right.

It is a common misperception that a station has one lowest unit rate, when in fact almost every station will have several – if not dozens of lowest unit rates – one lowest unit rate for each class of time. Even on the smallest radio station, there are probably several different classes of spots. For instance, there will be different rates for spots that run in morning drive and spots that run in the middle of the night. Each of these time periods with differing rates is a class of time that has its own lowest unit rate. On television stations, there are often classes based not only on daypart, but on the individual program. Similarly, if a station sells different rotations, each rotation on the station is its own class, with its own lowest unit rates (e.g. a 6 AM to Noon rotation is a different class than a 6 AM to 6 PM rotation, and both are a different class from a 24 hour rotator – and each can have its own lowest unit rate). Even in the same time period, there can be preemptible and non-preemptible time, each forming a different class with its own lowest unit rate. Any class of spots that run in a unique time period, with a unique rotation or having different rights attached to it (e.g. different levels of preemptibility, different make-good rights, etc.), will have a different lowest unit rate.

One question that still comes up with surprising regularity is whether these rates apply to state and local candidates, as well as Federal candidates. Indeed they do – so if your station is running advertising for candidates for mayor or city council; or for governor or the state senate; or even for the board of education, municipal court judge, or state attorney general – they and any other candidate in any public election gets lowest unit rates. See our past articles on this topic here and here.

In modern political elections, where PACs, Super PACs and other non-candidate interest groups are buying much political advertising time, broadcasters need to remember that these spots don’t require lowest unit rates. Even if the picture or recognizable voice of the candidate that the PAC is supporting appears in the ad, spots that are sponsored by an independent organization not authorized by the candidate do not get lowest unit rates (note, however, that these spots purchased by independent groups featuring the voice or picture of the candidate may trigger public file and equal opportunities obligations for the station if the station decides to run those spots).  Stations can charge these advertisers anything that the station wants for non-candidate ads – no need to stick to lowest unit rates.

From time to time stations may face the one exception to the above paragraph, where political parties are requesting lowest unit charges. In some cases, parties may in fact be entitled to these rates – but only where the spot features the recognizable voice or picture of the candidate and the party is using specific types of donations to pay for the ad.  These donations are ones that are subject to political campaign donation limitations (known as “hard money”).  To get lowest unit rates, the advertising purchases must be authorized and “coordinated” with a candidate (and, in Federal races, the spots should make that coordination clear with the “I approved this message tag”). Not all party spots are entitled to this treatment – only this special class of coordinated expenditures – and stations are entitled to get written confirmation from the party or the candidate that the expenditures are coordinated under the election laws. If not coordinated, the parties get charged the same as any other third-party organization.

Various advertising sales packages, and how they are factored into lowest unit rate calculations, also seem to lead to many questions by broadcasters. Candidates cannot be forced to buy single station packages to get low unit rates. Instead, the package must be broken down by the station into a price per spot for each class of spot that is contained in the package. That is done by allocating the package price to the various spots of each class that are contained in the package. Then the allocated rates, on a unit basis, are compared to other spots of the same class that have been sold on the station either on their own or in other packages to determine if the spots from this package have any impact on the station’s lowest unit rates. This allocation is done in an internal station record, which does not need to go into the public file, and does not need to be revealed to the candidate. Other than the station, only the FCC will see this allocation should they do some sort of inspection. We wrote more about this process of allocating spots in a package here.

And these are just some of the myriad issues that arise in computing lowest unit rates. Stations need to be familiar with these rules, and apply them accurately through the lowest unit rate window