Gouging Democracy: Background on Lowest Unit Charge

 

Gouging Democracy in Wisconsin

Background on Lowest Unit Charge

February 7, 2002

The "Lowest Unit Charge" rule enacted as part of the Federal Election Campaign Act of 1971 directs broadcasters (including cable systems), during the 45 days preceding a primary election and the 60 days preceding a general election, to charge legally qualified candidates for public office "the lowest charge of the station for the same class and amount of time for the same period." Congress enacted the lowest unit charge (LUC) requirement "to ensure that candidates are treated as favorably as the most favored commercial advertisers during the pre-election period." Under this provision, all candidates - federal, state, and local - are entitled to the lowest unit charge.

The Federal Communications Commission has said that "class" of time refers to a station’s rate categories - the two most significant being fixed (nonpreemptible) and preemptible; "amount of time" refers to the length of the time purchased (such as 30 seconds or 60 seconds); and "same period" refers to classifications of time within a broadcast day established by a station, such as prime time or drive time.

According to a 1997 Congressional Research Service report, the FCC’s interpretations of the lowest unit charge provision over the years have followed the sales practices of the broadcasting industry. For example, in 1972 the FCC determined that rate changes during the pre-election periods that occurred as a result of a station’s normal business practices - such as changes based on audience ratings or seasonal variations - were valid reasons for price differentials within the same class of time.

In 1988, the FCC recognized that commercial advertisers typically buy preemptible time offered at price levels that change frequently, even weekly, according to supply and demand. Under the circumstances, the commission said, the lowest unit charge for a preemptible class of time was to be calculated according to the lowest price any advertiser paid for a spot which "cleared" a particular time period or "daypart" (for example, radio drive time or "morning news" time) during the particular week in question.

By the end of the 1980s, however, questions had arisen as to whether the LUC provision was proving effective in making the most favorable commercial advertising rates available to candidates. In July 1990, the FCC initiated an audit of 30 television and radio stations to ascertain compliance with political programming laws, particularly the LUC provision. It found that 80 percent of the TV stations and 40 percent of the radio broadcasters audited failed to give political candidates the lowest available rates as required by the LUC statute.

The audit’s most significant finding, the commission said, was that "at a majority of the stations, political candidates have paid higher prices than commercial advertisers because sales techniques encouraged them to buy higher-priced classes of time." The FCC fined two television stations $25,000 each for LUC violations.

In late 1991 and again in 1992, new FCC policy statements were issued underscoring the commission’s interest in preventing "abuse by a station taking undue advantage of candidates’ special needs," particularly in the form of special premium-priced classes of nonpreemptible time sold only to candidates.

A Committee on House Administration report in November 1993 concluded there was a need for legislation to "clarify and simplify the rules in order to make them more easily understood, implemented and enforced." In a December 1995 speech, FCC chairman Reed Hundt expressed frustration with the lowest unit charge provision, saying the "rule takes a lot of work to apply and doesn’t work well in practice."