Issue
Advertising revenue is critical to local TV and radio stations that rely on those dollars to deliver vital news, emergency information and high-quality entertainment to their communities. As Congress considers initiatives that impact advertising, it should avoid legislation that burdens free speech and unduly restricts advertising on which local stations rely.
History
Food Advertising
On September 13, the U.S. House of Representatives approved a six month Continuing Resolution (CR) to fund the federal government until the end of March 2013. The CR included a provision extending restrictions on the Interagency Working Group (IWG) until the group completes a cost-benefit analysis on the impact its report, ''Interagency Working Group on Food Marketed to Children: Preliminary Proposed Nutrition Principles to Guide Industry Self-Regulatory Efforts,'' would have on affected industries. The four agency group is comprised of the Food and Drug Administration, U.S. Department of Agriculture, Centers for Disease Control and Prevention, and the Federal Trade Commission.
Last year, NAB and a coalition of advertisers, food companies and media were successful in defeating attempts by the IWG to restrict food advertising on any medium to youth under the age of 17. Out of the top 100 foods produced in the U.S., only 10 to 20 likely would have made the cut, and those products would largely be fresh fruits or vegetables. The Working Group principles would have banned ads for foods such as yogurt, cereals, vegetable soups, most breads, peanut butter and jelly. Marketing under these guidelines would have included every form of communication – television and radio advertising, mobile devices, video games, movie theater presentations, celebrity or cartoon figures and endorsements.
In recent years, concern has grown about the advertisement of food products and its potential contribution to childhood obesity. However, no study has established that television advertising affects the diets of adolescents. With an increased focus on obesity, the IWG will likely continue to explore new ways to restrict food advertising to children.
Advertising Deductibility
In preparation for a potential overhaul of the tax code, broadcasters, advertisers and advertising agencies are currently meeting with members of Congress to educate them on advertising deductibility and how disallowing the cost of advertising negatively impacts businesses. It is likely that Congress could disallow part or all of the cost of advertising as an ordinary and necessary business expense in order to pay for budget priorities or in their efforts to restructure the tax code.
Limiting the deduction for the cost of advertising would be the same as imposing a tax on advertising, making it more expensive and reducing the amount of advertising that businesses can purchase.
This will not be the first time Congress has considered limiting the tax deductibility of advertising as a revenue source. During the congressional debate over health care reform, the House Ways and Means Committee voted to deny the business expense deduction for pharmaceutical advertising. This measure was withdrawn after media and advertising groups objected.
Prescription Drug Advertising
On June 26, the Senate passed The Food and Drug Administration (FDA) Safety and Innovation Act, S. 3187– the bill reauthorizing the Prescription Drug User Fee Act (PDUFA) for another five years – by a vote of 92 to 4. The bill was signed into law in July.
While direct-to-consumer (DTC) advertising is not addressed in the current PDUFA renewal, the bill does include a section requiring the FDA to issue guidance within two years on social media marketing of medical products, which includes drugs.
Past PDUFA legislation included restrictions on DTC advertising of prescription medications. In years past, there have been congressional efforts, led by Rep. Henry Waxman (CA-30), to allow the FDA to ban television commercials for a new medicine for up to three years if officials decided it was necessary to protect the public health. Following objections by some lawmakers that it would infringe the constitutional protections of free speech, these efforts failed.
Waxman and other congressional members also indicated a willingness to move legislation that would impose moratoriums on DTC advertising of new prescription drugs, pre-clearance for all other DTC ads and a requirement that ads contain a symbol indicating that a drug is new to the market.
NAB Position
NAB will continue to oppose any proposal that threatens and restricts advertising. Concerns about advertising should not be addressed through legislation inconsistent with the First Amendment.
Action Needed
Congress should not enact constitutionally questionable legislation that would restrict advertising and impose unique burdens on advertiser-supported, free, local broadcasting.
