Two television stations discovered the pitfalls of broadcasting video news releases (“VNR”) when the Federal Communications Commission fined each station $4,000 for broadcasting a VNR without the proper sponsorship identification.  VNRs are prepackaged news stories that may use actors to play reporters and may include suggested scripts to introduce the stories.  The FCC believes that listeners and viewers are entitled to know who seeks to persuade them with VNRs.  In April 2005 the FCC released a public notice warning broadcasters of the risks of running VNRs produced by third parties without appropriate sponsorship identification and reminded broadcasters that the FCC will take appropriate enforcement action where necessary. 

According to the FCC, the apparent violations date back to 2006, when Stations WMGM-TV and KMSP-TV broadcast VNRs during their news programs.  WMGM aired a VNR on common cold remedies produced by Matrixx Initiatives, the makers of Zicam cold remedy.  KMSP broadcast a VNR on new car designs produced by General Motors.  Free Press and the Center for Media and Democracy filed complaints with the FCC, claiming the stations did not include the requisite sponsorship identification for Matrixx and General Motors in the VNRs.  The stations disagreed, arguing that the references to any products were fleeting, that neither station received any consideration for broadcasting the VNRs and that action by the FCC violated the broadcasters’ First Amendment rights. 

The FCC concluded that WMGM and KMSP should have included sponsorship identification because product discussion and placement in the VNRs were more than fleeting and were disproportionate to the subject matter discussed.  Among the contributing factors: 

• Each VNR showed only the sponsor’s products, not those of any competitors.  The Matrixx VNR showed four different shots of Zicam and mentioned a health survey sponsored by Zicam. The General Motors VNR included 12 different shots of three different General Motors convertibles. Neither VNR mentioned the products of any competitors. 
• Each VNR included expert testimony supporting the featured product. The Matrixx VNR included testimony from a physician recommending Zicam, while the General Motors VNR included an interview with the head of product development for General Motors and a trade magazine mentioning favorably the new General Motors convertibles. 
• The FCC’s 2004 Public Notice announced its concerns about VNRs and proper sponsorship identification. 

The FCC rejected arguments that sponsorship identification was not required.  Instead, the FCC determined that sponsorship identification was required because the products were shown to an extent that was disproportionate to the subject matter of the VNR, rejecting arguments that station employees received no consideration for the broadcast and that the references to the sponsors were fleeting. 

The FCC also rejected arguments that the fines violate the broadcasters’ First Amendment rights.  The FCC noted that the Communications Act grants the FCC broad authority to investigate complaints about VNRs and sponsorship identification.  Further, the sponsorship identification rules are disclosure requirements that do not restrict free speech.  According to the FCC, broadcasters remain free to exercise their newsgathering and editorial functions with regard to news.  All broadcasters need do is provide the proper sponsorship identification. 

It is understandable for broadcasters to consider airing VNRs, both as a service to the public and to help control costs.  The recent fines should serve as a reminder to broadcasters that before accepting a VNR, it is important to consider the relationship between the producer and the product or service and whether the product placement is fleeting or disproportionate to the news story.