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Before the
Federal Communications Commission
Washington, D.C. 20554
)
)
) File No. EB-06-IH-3723
In the Matter of
) NAL/Acct. No. 200732080039
COMCAST CORPORATION
) FRN: 00063229247
)
)
NOTICE OF APPARENT LIABILITY FOR FORFEITURE
Adopted: September 26, 2007 Released: September 26, 2007
By the Chief, Enforcement Bureau:
I. Introduction
1. In this Notice of Apparent Liability for Forfeiture ("NAL"), we find
that Comcast Corporation ("Comcast"), which operates an affiliated
regional cable network, CN8, is apparently liable for a forfeiture in
the amount of sixteen thousand dollars ($16,000) for willfully and
repeatedly violating Section 76.1615 of the Commission's rules. This
rule generally requires cable operators engaged in origination
cablecasting to make sponsorship identification announcements when
presenting matter in return for money, service, or other valuable
consideration. We find that Comcast cablecast portions of four video
news releases ("VNRs") without also airing required sponsorship
identification announcements.
II. Background
2. Section 76.1615(a) of the Commission's rules states:
When a cable television system operator engaged in origination
cablecasting presents any matter for which money, service, or other
valuable consideration is either directly or indirectly paid or promised
to, or charged or accepted by such cable television system operator, the
cable television system operator, at the time of the cablecast, shall
announce that such matter is sponsored, paid for, or furnished, either in
whole or in part, and by whom or on whose behalf such consideration was
supplied: Provided, however, that "service or other valuable
consideration" shall not include any service or property furnished either
without or at a nominal charge for use on, or in connection with, a
cablecast unless it is so furnished in consideration for an identification
of any person, product, service, trademark, or brand name beyond an
identification reasonably related to the use of such service or property
on the cablecast.
3. On November 11, 2006, the Center for Media and Democracy ("CMD") and
Free Press jointly filed a complaint against Comcast alleging that CN8
transmitted VNRs without providing the sponsorship identification
required by Section 76.1615. Specifically, CMD alleged that on
September 26, 2006, CN8 transmitted two VNRs, one produced for General
Mills concerning the "Wheaties Fit to Win Challenge" and one produced
for Allstate concerning life insurance. CMD also alleged that on
September 28, 2006, CN8 transmitted a VNR produced for Trend Micro
Software concerning laptop computer security and that company's
security software, and on October 3, 2006, transmitted a VNR produced
for General Mills concerning the 75th anniversary of their product
"Bisquick."
4. On April 26, 2007, the Enforcement Bureau ("Bureau") issued a letter
of inquiry to Comcast to determine, among other things, whether the
VNRs were transmitted as alleged, and if so, whether Comcast disclosed
the sources of the VNRs in its cablecasts.
5. Comcast responded to the letter of inquiry on July 2, 2007. Comcast
admits that on September 26 and 28 and October 3, 2006, respectively,
CN8, transmitted portions of the VNRs produced on behalf of the
following entities without any sponsorship identification: General
Mills "Wheaties Fit to Win Challenge;" Allstate Insurance; Trend Micro
Software "Remote File Lock"; and General Mills "Bisquick 75th
Anniversary." Comcast argues as a threshold matter that Section
76.1615 appears to be invalid because the statutory provision
underlying that rule, Section 317 of the Communications Act, as
amended (the "Act"), applies only to broadcasting and not to
cablecasting. Comcast states that although it does not believe that
the Commission has the authority to apply Section 317 in the context
of cable programming or to enforce Section 76.1615 of the Commission's
rules, it nonetheless responded to the inquiries set forth in the LOI.
Comcast contends that even assuming the validity of the rule, CN8's
use of the VNR material did not violate Section 76.1615. Specifically,
Comcast argues that no sponsorship identification is required unless
consideration is received or promised as part of an express or implied
agreement in exchange for use of the VNR. Comcast further states that
CN8 and its employees did not receive and were not promised any
consideration from any source in exchange for cablecasting the VNR
material on September 26 and 28, and October 3, 2006.
III. Discussion
6. Under Section 503(b)(1) of the Act, any person who is determined by
the Commission to have willfully or repeatedly failed to comply with
any provision of the Act or any rule, regulation, or order issued by
the Commission shall be liable to the United States for a monetary
forfeiture penalty. To impose such a forfeiture penalty, the
Commission must issue a notice of apparent liability, and the person
against whom the notice has been issued must have an opportunity to
show, in writing, why no such forfeiture penalty should be imposed.
The Commission will then issue a forfeiture if it finds by a
preponderance of the evidence that the person has violated the Act or
a Commission rule. We conclude under this standard that Comcast is
apparently liable for a forfeiture for its apparent willful and
repeated violation of Section 76.1615 of the Commission's rules.
7. Section 76.1615(a) of the Commission's rules makes clear that when a
cable television system operator engages in origination cablecasting,
it must identify the sponsor of material whenever that operator
accepts "money, service or other valuable consideration" to carry that
material. The phrase "service or other valuable consideration,"
however, does not include "service or property furnished either
without or at a nominal charge for use on, or in connection with, a
cablecast," unless such service or property is "furnished in
consideration for an identification of any person, product, service,
trademark or brand name beyond an identification reasonably related to
the use of such service or property on the cablecast." Thus, while the
proviso to the rule exempts service or property furnished without
charge for use on or in connection with a cablecast from the duty to
announce the sponsor or source of such material, the exception to that
proviso preserves the duty when there is too much focus on a product
or brand name in the programming. We now turn to consideration of
Comcast's use of each of these VNRs without providing sponsorship
identification.
A. General Mills "Wheaties Fit to Win Challenge"
8. CN8's cablecast featuring the General Mills "Wheaties Fit to Win
Challenge" was part of a daily segment focusing on consumer issues
during the program "Art Fennell Reports" on September 26, 2006. The
segment, concerning health and fitness, featured the General Mills
"Wheaties Fit to Win Challenge," a program promoting nutrition and
exercise, and included portions of a VNR produced on behalf of General
Mills and its "Wheaties" brand. The VNR material used in this
consumer-issues segment contains both mentions of the "Wheaties" brand
name and extensive images of the product. Indeed, it is the only
product shown or mentioned during the segment. We do not believe that
this type of promotional material, furnished by a product
manufacturer, can or should be considered within the scope of the
proviso, which is directed to material that contains only fleeting or
transient references to products or brand names. We conclude that this
material falls within the exception specifically set forth in the
proviso to the rule and that a sponsorship announcement was required.
Because the VNR itself was the "valuable consideration" provided to
CN8 and because it was not within the scope of the proviso for
nonpromotional material, we reject Comcast's argument that it received
no consideration for the cablecast. We therefore find that Comcast
violated Section 76.1615(a) of the Commission's rules by willfully
airing the VNR material at issue without proper sponsorship
identification.
B. Allstate Insurance
9. CN8 cablecast a report concerning life insurance as part of a daily
segment focusing on consumer issues during the program "Art Fennell
Reports," on September 26, 2006. The segment, introduced with a
reference to September as "National Insurance Month," strongly
encourages consumers to have and to periodically review their life
insurance policies and included portions of a VNR produced on behalf
of Allstate Insurance. The VNR material used in this consumer-issues
segment includes two interview segments with an Allstate
representative, identified in the second segment by an on-screen
graphic, seated in front of the Allstate logo. We do not believe that
this type of promotional material, furnished by a product
manufacturer, can or should be considered within the scope of the
proviso, which is directed to material that contains only fleeting or
transient references to products or brand names. We conclude that this
material falls within the exception specifically set forth in the
proviso to the rule and that a sponsorship announcement was required.
Because the VNR itself was the "valuable consideration" provided to
CN8 and because it was not within the scope of the proviso for
nonpromotional material, we reject Comcast's argument that it received
no consideration for the cablecast. We therefore find that Comcast
violated Section 76.1615(a) of the Commission's rules by willfully
airing the VNR material at issue without proper sponsorship
identification.
C. Trend Micro Software
10. CN8's cablecast featuring Trend Micro Software was part of a daily
segment focusing on consumer issues during the program "Art Fennell
Reports," on September 28, 2006. The segment, concerning laptop
computer security and identity theft, included portions of a VNR
produced on behalf of Trend Micro. Specifically, the segment used a
portion of the VNR in which a Trend Micro spokesman, identified by an
on-screen graphic, promoted Trend Micro's "Remote File Lock" software
by explaining that it allows a consumer to move information to a
folder that Trend Micro will lock down, password protect and encrypt
upon notification by the consumer that their laptop has been stolen.
We do not believe that this type of promotional material, furnished by
a product manufacturer, can or should be considered within the scope
of the proviso, which is directed to material that contains only
fleeting or transient references to products or brand names. We
conclude that this material falls within the exception specifically
set forth in the proviso to the rule and that a sponsorship
announcement was required. Because the VNR itself was the "valuable
consideration" provided to CN8 and because it was not within the scope
of the proviso for nonpromotional material, we reject Comcast's
argument that it received no consideration for the cablecast. We
therefore find that Comcast violated Section 76.1615(a) of the
Commission's rules by willfully airing the VNR material at issue
without proper sponsorship identification.
D. General Mills "Bisquick 75th Anniversary"
11. CN8's cablecast featuring General Mills "Bisquick 75th Anniversary"
was part of a daily segment focusing on consumer issues during the
program "Art Fennell Reports," on October 3, 2006. The segment,
celebrating the 75th anniversary of "Bisquick" baking mix, touted the
convenience of "Bisquick" and included portions of a VNR produced on
behalf of General Mills and its "Bisquick" brand. The VNR material
used in this consumer-issues segment contains extensive images and
mentions of "Bisquick," including excerpts from old advertisements for
the product. "Bisquick" is the only product mentioned or shown during
the segment. We do not believe that this type of promotional material,
furnished by a product manufacturer, can or should be considered
within the scope of the proviso, which is directed to material that
contains only fleeting or transient references to products or brand
names. We conclude that this material falls within the exception
specifically set forth in the proviso to the rule and that a
sponsorship announcement was required. Because the VNR itself was the
"valuable consideration" provided to CN8 and because it was not within
the scope of the proviso for nonpromotional material, we reject
Comcast's argument that it received no consideration for the
cablecast. We therefore find that Comcast violated Section 76.1615(a)
of the Commission's rules by willfully airing the VNR material at
issue without proper sponsorship identification.
12. The Commission's Forfeiture Policy Statement sets a base forfeiture
amount of $4,000 for sponsorship identification violations. After
considering the record and all of the factors contained in Section
503(b)(2)(D) of the Act, 47 U.S.C. S: 503(b)(2)(D), and the Forfeiture
Policy Statement, we believe that it is appropriate to propose the
base forfeiture amount of $4,000 for each of the four apparent
violations of Section 76.1615. Consequently, we propose a forfeiture
in the amount of $16,000 for the cablecasts transmitted by CN8 on
September 26 and 28, and October 3, 2006.
IV. ORDERING CLAUSES
13. ACCORDINGLY, IT IS ORDERED THAT, pursuant to Section 503(b) of the
Communications Act of 1934, as amended, and Sections 0.111, 0.311 and
1.80 of the Commission's rules, Comcast Corporation is hereby NOTIFIED
of its APPARENT LIABILITY FOR FORFEITURE in the amount of Sixteen
Thousand Dollars ($16,000) for willfully and repeatedly violating
Section 76.1615 of the Commission's rules.
14. IT IS FURTHER ORDERED, pursuant to Section 1.80 of the Commission's
rules, that within thirty days of the release of this Notice, Comcast
Corporation SHALL PAY the full amount of the proposed forfeiture or
SHALL FILE a written statement seeking reduction or cancellation of
the proposed forfeiture.
15. Payment of the forfeiture must be made by check or similar instrument,
payable to the order of the Federal Communications Commission. The
payment must include the NAL/Acct. No. and FRN No. referenced above.
Payment by check or money order may be mailed to Federal
Communications Commission, P.O. Box 358340, Pittsburgh, PA 15251-8340.
Payment by overnight mail may be sent to Mellon Bank/LB 358340, 500
Ross Street, Room 1540670, Pittsburgh, PA 15251. Payment by wire
transfer may be made to ABA Number 043000261, receiving bank Mellon
Bank, and account number 911-6229.
16. The response, if any, must be mailed to the Office of the Secretary,
Federal Communications Commission, 445 12th Street, S.W., Washington,
D.C. 20554, to the Attention of: Hillary S. DeNigro, Chief,
Investigations and Hearings Division, Enforcement Bureau, Room 4-C330,
and must include the NAL/Acct. No. referenced above.
17. The Commission will not consider reducing or canceling a forfeiture in
response to a claim of inability to pay unless the petitioner submits:
(1) federal tax returns for the most recent three-year period; (2)
financial statements prepared according to generally accepted
accounting practices; or (3) some other reliable and objective
documentation that accurately reflects the petitioner's current
financial status. Any claim of inability to pay must specifically
identify the basis for the claim by reference to the financial
documentation submitted.
18. Requests for payment of the full amount of the NAL under an
installment plan should be sent to: Associate Managing Director -
Financial Operations, 445 12th Street, S.W., Room 1-A625, Washington,
D.C. 20554.
19. IT IS FURTHER ORDERED that a copy of this Notice shall be sent, by
Certified Mail/Return Receipt Requested, to Peter H. Feinberg,
Associate General Counsel, Comcast Corporation, 1500 Market Street,
Philadelphia, Pennsylvania, 19102, and to its counsel, James L.
Casserly, Esquire, and Megan Anne Stull, Esquire, Willkie Farr and
Gallagher LLP, 1875 K Street, N.W., Washington, D.C. 20006.
FEDERAL COMMUNICATIONS COMMISSION
Kris Anne Monteith
Chief, Enforcement Bureau
See 47 C.F.R. S: 76.1615.
CN8, a regional cable network affiliated with and owned by Comcast,
produces and supplies programming to Comcast cable systems from Maine to
Virginia. Comcast does not contest that the programming at issue here was
carried on its cable systems.
47 C.F.R. S: 76.1615. The rule also contains additional requirements for
cable operators under certain circumstances.
See Complaint of Timothy Karr, Campaign Director, Free Press, and Diane
Farsetta, Senior Researcher, Center for Media and Democracy, dated
November 14, 2006 (File No. EB-06-IH-5669) ("Complaint"). The Complaint
also cited a cablecast carried by Comcast on September 21, 2006, which
allegedly failed to provide the required sponsorship identification. On
September 21, 2007, we issued an NAL to Comcast finding that its cablecast
of portions of a VNR produced on behalf of "Nelson's Rescue Sleep"
apparently violated the sponsorship identification requirements of Section
76.1615. Comcast Corporation, Notice of Apparent Liability for Forfeiture,
DA 07-4005 (EB rel. Sept. 21, 2006).
See Letter from Hillary S. DeNigro, Chief, Investigations & Hearings
Division, Enforcement Bureau, to Comcast Corporation, dated April 26, 2007
("LOI").
See Letter from Megan Anne Stull, Esquire, Willkie, Farr & Gallagher LLP,
Counsel for Comcast Corporation, dated July 2, 2007 ("Response").
See id. at 4-7. Portions of the General Mills "Wheaties Fit to Win
Challenge" and the Allstate Insurance VNRs were cablecast on September 26,
2006. Portions of the Trend Micro Software "Remote File Lock" VNR were
cablecast on September 28, 2006. Portions of the General Mills "Bisquick
75th Anniversary" VNR were cablecast on October 3, 2006.
See Response at 1-2. The Commission has previously concluded that the
sponsorship identification requirements also apply to origination
programming by cable operators. See Commission Reminds Broadcast
Licensees, Cable Operators and Others of Requirements Applicable to Video
News Releases, Public Notice, 20 FCC Rcd 8593, 8594, n.6 (2005); Amendment
of the Commission's Sponsorship Identification Rules (Sections
73.119, 73.289, 73.654, 73.789 and 76.221), Report and Order, 52 FCC
2d 701 (1975), P: 37 ("We see no reason why the rules for such
cablecasting should be different from those for broadcasting, for the
consideration of keeping the public informed about those who try to
persuade it would appear to be the same in both cases."). We will not
revisit that conclusion here.
See Response at 3.
See id.
See id. at 3-4, 5, 7. In addition, Comcast notes that it paid CNN
Newsource a licensing fee for access to the VNR material. See id. at 5.
See 47 U.S.C. S: 503(b)(1)(B); 47 C.F.R. S: 1.80(a)(1); see also 47 U.S.C.
S: 503(b)(1)(D) (forfeitures for violation of 14 U.S.C. S: 1464). Section
312(f)(1) of the Act defines willful as "the conscious and deliberate
commission or omission of [any] act, irrespective of any intent to
violate" the law. See 47 U.S.C. S: 312(f)(1). The legislative history to
Section 312(f)(1) of the Act clarifies that this definition of willful
applies to both Sections 312 and 503(b) of the Act, H.R. Rep. No. 97-765,
97th Cong. 2d Sess. 51 (1982), and the Commission has so interpreted the
term in the Section 503(b) context. See, e.g., Southern California
Broadcasting Co., Memorandum Opinion and Order, 6 FCC Rcd 4387, 4388
(1991) ("Southern California Broadcasting Co."). The Commission may also
assess a forfeiture for violations that are merely repeated, and not
willful. See, e.g., Callais Cablevision, Inc., Notice of Apparent
Liability for Monetary Forfeiture, 16 FCC Rcd 1359 (2001) (issuing a
Notice of Apparent Liability for, inter alia, a cable television
operator's repeated signal leakage). "Repeated" merely means that the act
was committed or omitted more than once, or lasts more than one day.
Southern California Broadcasting Co., 6 FCC Rcd at 4388, P: 5; Callais
Cablevision, Inc., 16 FCC Rcd at 1362, P:9.
See 47 U.S.C. S: 503(b); 47 C.F.R. S: 1.80(f).
See, e.g., SBC Communications, Inc., Forfeiture Order, 17 FCC Rcd 7589,
7591, P: 4 (2002) (forfeiture paid).
47 C.F.R. S:76.1615(a).
See Response at 4-5.
See id. at 5-6 & Declaration of Janet Zappala.
Response at 6 and Exhibits 2 & 17. We note that the VNR material used
during the segment was edited, but that the editing did not alter the
product and brand-name focus of the material.
See Applicability of Sponsorship Identification Rules, Public Notice, 40
FCC 141, 148, illustrative interpretation 26(b) (1963) ("1963 Public
Notice").
We note that there may be other bases for requiring sponsorship
identification but we do not reach these in this Notice of Apparent
Liability.
See Response at 4-5.
See id. at 5-6 & Declaration of Janet Zappala.
See Response at 6 and Exhibits 4 & 19. We note that the VNR material used
during the segment was edited, but that the editing did not alter the
product and brand-name focus of the material.
See 1963 Public Notice, 40 FCC at 148, illustrative interpretation 26(b).
We note that there may be other bases for requiring sponsorship
identification but we do not reach these in this Notice of Apparent
Liability.
See Response at 4-5.
See id. at 5-6 & Declaration of Janet Zappala.
See id. at 6 and Exhibits 3 & 18. We note that the VNR material used
during the segment was edited, but that the editing did not alter the
product and brand-name focus of the material. In addition, the VNR
apparently was edited to remove an on-screen graphic, "Video provided by
Trend Micro." Compare clip of the Trend Micro VNR associated with the
November 2006 study referenced in the Complaint, available at
http://www.prwatch.org/files/vnrs/vnr59/059_VNR.mov (last visited
September 25, 2007) and Exhibit 18.
See 1963 Public Notice, 40 FCC at 148, illustrative interpretation 26(b).
We note that there may be other bases for requiring sponsorship
identification but we do not reach these in this Notice of Apparent
Liability.
See Response at 4-5.
See id. at 5-6 & Declaration of Janet Zappala.
See id. at 6 and Exhibits 5 & 20. We note that the VNR material used
during the segment was edited, but that the editing did not alter the
product and brand-name focus of the material.
See 1963 Public Notice, 40 FCC at 148, illustrative interpretation 26(b).
We note that there may be other bases for requiring sponsorship
identification but we do not reach these in this Notice of Apparent
Liability.
See The Commission's Forfeiture Policy Statement and Amendment of Section
1.80 of the Commission's Rules, 12 FCC Rcd 17087, 17114 (1997), recon.
denied 15 FCC Rcd 303 (1999); see also 47 C.F.R. S: 1.80(b).
See 47 C.F.R. S: 1.1914.
(Continued from previous page)
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Federal Communications Commission DA 07-4075
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Federal Communications Commission DA 07-4075