FCC Media Bureau's Political Ad Rate Policy Could Trigger Legal Battle

The Media Bureau's public notice earlier this month expanded LUC rules to include political committees that coordinate with candidates. That could interact with an anticipated ruling in a pending U.S. Supreme Court case to lead to a massive increase in entities claiming eligibility for the LUC rate, said Covington attorney Matt DelNero. “This will be appealed by somebody, we don’t know who,” said former FCC Commissioner Robert McDowell, now a partner at Cooley. “Only a certain kind of advertiser gets this discount, and it happens to be politicians who write the statute. So there will be litigation for this.”

The FCC’s LUC rules require stations to charge candidates who are buying broadcast political ads during the final months before an election the lowest rate that the station charged commercial advertisers for the same class of time. The Media Bureau’s expansion of eligibility is likely to cause a decrease in revenue for broadcasters, which could drop even more after expanded by an expected SCOTUS ruling in National Republican Senatorial Committee v. Federal Election Commission, said DelNero and McDowell. The court is expected to side with the NRSC and overturn limitations on the amount that campaigns can spend on advertising in coordination with political candidates, they said.

BIA Advisory Services political ad expert Steve Passwaiter has said a ruling for the NRSC could lead to losses for broadcasters of $500 million to $1 billion (see 2507210054). DelNero said Sunday that such a ruling, combined with the FCC’s notice, would likely lead most political broadcast ad spending to shift to committees coordinating with candidates. "To kind of paraphrase Oprah [Winfrey], 'You get a discount! You get a discount!'," McDowell said.

In a brief filed in the SCOTUS case in October on behalf of the FEC, the U.S. solicitor general said a finding for the NRSC won’t lead to more claims that ads are eligible for LUC. The rules are focused on candidate spending, the filing said. “Parties could spend more money on advertisements, but broadcasters still would not be required to charge parties special low rates.” Multiple broadcast attorneys told us they believe the FCC’s notice was issued in response to the solicitor general's filing to make it clear that committees will be able to benefit from a SCOTUS decision in the NRSC’s favor. Vice President JD Vance is one of the NRSC plaintiffs, and attorneys told us that congressional Republicans are supportive of the NRSC position. Asked about the motivation for and origins of the FCC notice during Sunday’s panel, Media Bureau Deputy Chief Evan Morris declined to comment.

McDowell said the LUC rules explicitly state that the discount applies only to candidates, and the rule doesn’t appear to comport with the First Amendment. “This section of the statute is probably itself unconstitutional, giving preferred speech a discount, right?” There's no other expenditure by political candidates that's required to be discounted, noted longtime broadcast attorney Jack Goodman.

A legal challenge against LUC could also provide a vehicle for a court ruling to eliminate other FCC political rules, like the equal-access and equal-opportunity requirements, because they're all contained within Section 315 of the Communications Act, broadcast attorneys told us. The FCC is investigating a Disney-owned TV station over a possible violation of equal-opportunity rules involving The View, and agency Chairman Brendan Carr has indicated that he could similarly target late-night programming. However, such a challenge could run into the same difficulties facing opponents of the Nexstar/Tegna deal, one broadcast attorney told us, since the LUC notice is a Media Bureau order and thus not a final agency action. The litigation would also likely take awhile. “It might take years to get through the appellate process,” McDowell said.