Lowest Unit Charge Exemption Remains in Effect

On March 25, the FCC's Media Bureau announced extremely helpful and responsive guidance regarding the calculation of the lowest unit rate (LUR) for political advertising given the dire economic circumstances created by the COVID-19 pandemic. Federal law requires broadcasters to charge political candidates no more than the LUR for the same class and time of advertising offered to commercial advertisers. NAB and individual broadcasters have informed the FCC that financial difficulties arising from COVID-19 have caused many commercial advertisers to cancel their advertising commitments, and to build goodwill, broadcasters would like to offer free time to commercial clients. However, under normal circumstances, doing so could potentially dramatically lower a station's LUR.

The Public Notice states that, given the current circumstances, the public interest would be served by allowing broadcasters to exclude such free time when calculating the LUR, provided the free time is "not associated with an existing commercial contract for paid time or otherwise considered bonus spots." Although the Bureau does not further explain this condition, NAB understands that advertisers offered free time may include advertisers that are already running paid schedules, however, there may not be any contractual connection or quid pro quo between the free and paid schedules. The offer of free time must stand alone. NAB recommends that broadcasters keep careful documentation of the terms of their offers of free time and the schedules of free time aired, just in case they receive any inquiries or complaints from political candidates. We also suggest that broadcasters consult their own attorney before implementing this guidance.

This guidance is only applicable "to the current period and not necessarily...when more ordinary conditions are restored."