AO 2016-01: Website’s distribution of news content to users qualifies for media exemption

The costs Ethiq corporation incurs to distribute political news stories, commentary, and editorials through its website and app qualify for the Federal Election Campaign Act's (the Act)"media exemption." As a result, these expenses are neither contributions nor expenditures under the Act.

Background
Ethiq is a for-profit corporation that maintains a website and markets an app through which it proposes to distribute various political news and commentary to its users. These users may submit information about their preferences and opinions on various topics (both political and non-political) that Ethiq will then analyze via an algorithm that will help Ethiq tailor the content that is ultimately provided to each user. The information sent to each user may include news and commentary on political candidates and various businesses that may share the user's views, and issues in which the user is interested. Since Ethiq proposes to tailor the content based on user opinion and interest, different users may receive different content. The news content that Ethiq provides may include political commentary, including references to clearly identified federal candidates, pending legislation, and coverage of candidate speeches and campaigns. Ethiq states that it will not work with any candidates to produce, edit or provide content to its users, nor will it support or oppose any candidates or political parties. Ethiq asks whether its proposed activities may be considered to be exempt from the Act's definition of "contribution" or "expenditure" because the proposed activities fall under the Act's so-called "media exemption" or "press exemption."

Analysis
The Act and Commission regulations generally define the term "contribution" and "expenditure" to include money or anything of value given or paid by any person for the purpose of influencing a federal election. 11 CFR 100.52 and 11 CFR 100.111. However, both the Act and Commission regulations specifically exempt "[a]ny cost incurred in covering or carrying a news story, commentary, or editorial by any...Web site, newspaper, magazine, or other periodical publication, including any Internet or electronic publication" from the definition of "contribution" or "expenditure" unless "the facility is owned or controlled by any political party, political committee, or candidate" 11 CFR 100.73, 100.32; see, also, 52 U.S.C. §30101(9)(B)(i).

The Commission conducts a two-step analysis to determine whether this so-called "media exemption" or "press exemption" applies. First, the Commission asks whether the entity engaging in the proposed activity is a press entity. Assuming it is, the Commission then considers whether the entity is owned or controlled by a political party, committee, or candidate, and also whether the entity is acting as a true press entity in conducting the activity at issue (i.e., whether the entity is acting in its legitimate press function). In applying this standard, the Commission considers whether the entity's materials are available to the general public and whether they are comparable in form to those ordinarily issued by the entity. See, for example, AOs 2005-16 (Fired Up) and 2000-13 (iNEXTV).

Ethiq's website and app will provide news and information about candidates and businesses through both curated and original content. Ethiq will employ journalists to produce original content and will retain ultimate editorial control of that content, similar to the way newspaper and magazine editors manage the content of their respective publications. Based on these facts, the Commission concluded that Ethiq is a bona fide press entity.

Since Ethiq is not owned or controlled by any political party, political committee, or candidate and because it will make its news material available to the general public and distribution of such content will be consistent with its ordinary business operation, the Commission concluded that Ethiq meets the second part of the analysis to determine whether the media exemption applies. The fact that information will be based on a user's stated preferences does not change the journalistic nature of the news content provided.

Since Ethiq qualifies as a press entity and is neither owned nor controlled by any candidate, political party or political committee, and will be engaged in typical press activities by providing news-related content to its users, the Commission concluded that Ethiq's proposed activities are within the scope of the Act's media exemption.

Date Issued: April 14, 2016; 5 pages

Resources:

• Advisory opinion 2016-01 [PDF]
• Commission discussion of AO 2016-01 [mp3]