AO 2010-05: Sale of ad time on a foreign-owned television station

Starchannel Communications, Inc. (Starchannel), the domestic representative of Televisa, a Mexican broadcasting corporation, may sell advertising time on Televisa television stations to federal candidates. A prohibited contribution would not result from offering federal candidates the “Lowest Unit Charge” (LUC) for time slots on Televisa since it is the usual and normal charge for similar federal candidate advertisements in the market in which the advertisements will be aired. 

Background 

Starchannel is a Delaware corporation that sells advertising time slots on television broadcast stations in Mexico that are owned by Televisa. The broadcast stations that carry these ads broadcast into markets in areas of Texas that are located on the border between the United States and Mexico (“U.S. border market”). Through a contractual agreement, Starchannel acts as the exclusive representative of Televisa in the sale of advertising time in the U.S. border market. The contract states that Starchannel may not negotiate a price with a buyer for an advertising time slot that is lower than the Televisa-established minimum price, but it may negotiate higher prices. The two corporations are independent of each other and Televisa does not exercise any ownership or control over Starchannel. 

Starchannel wishes to expand its business by selling advertising time slots on Televisa’s broadcasting stations to federal candidates. Starchannel plans to offer federal candidates the LUC for time slots on Televisa. Starchannel does not believe it is required to offer federal candidates the LUC because Televisa is a Mexican corporation.[FN1] Nevertheless, Starchannel plans to offer the LUC because, in its business judgment, it could not otherwise compete with American television stations that offer advertising time to federal candidates at the LUC. Starchannel plans to require federal candidates to comply with all paperwork, disclaimer and other requirements of the Communications Act and Federal Communications Commission regulations, just as if the ads were being run on a U.S. station. 

Analysis 

The Federal Election Campaign Act (the Act) and Commission regulations prohibit foreign nationals, including foreign principals such as partnerships, associations, corporations, organizations or other combination of persons, from making a contribution or donation of money or other things in connection with a federal, state or local election. 2 U.S.C. § 441e(a)(1)(A) and 22 U.S.C § 611(b)(3); see also 11 CFR 110.20(b). The Act also prohibits corporations from making contributions in connection with any federal election. 2 U.S.C. § 441b(a). 

Any gift, subscription, loan, advance or deposit of money or “anything of value” made by any person for the purpose of influencing a federal election is a “contribution.” 2 U.S.C. § 431(8)(A)(i) and 11 CFR 100.52(a); see also 2 U.S.C. § 441b(b)(2) and 11 CFR 114.2(b)(1). “Anything of value” includes goods or services provided without charge or at less than the “usual and normal charge.” 11 CFR 100.52(d)(1). “Usual and normal charge” means the price of goods in the market from which they ordinarily would have been purchased at the time of the contribution, or the commercially reasonable rate prevailing at the time the services were rendered. 11 CFR 100.52(d)(2). 

Based on the information provided by Starchannel, the Commission concluded that it does not appear that Televisa would be providing any goods or services at less than the usual and normal charge. Under Televisa’s contract with Starchannel, Televisa establishes a minimum price for advertising time that does not depend upon the identity of the buyer. Because Televisa’s role in the sale of advertising time remains the same and conforms to its usual and normal business practices regardless of the buyer’s identity, Televisa would not be making a contribution under the plan.

With respect to Starchannel, the Commission noted that Starchannel plans to offer advertising time to federal candidates using the same business practices in which it customarily engages when offering advertising time to other customers, except that it plans to offer federal candidates the LUC even if it is not required to do so under 47 U.S.C. § 315(b) and 47 CFR 73.1942. 

The Commission concluded that Starchannel may sell advertising time on Televisa stations to federal candidates at the LUC, consistent with the Act and Commission regulations, under the specific facts present here. Because Starchannel plans to offer the LUC only to federal candidates who comply with all relevant requirements of the Communications Act, these federal candidates would be entitled to receive the LUC from a U.S. broadcaster for advertisements airing in the U.S. border market, even if Starchannel is not required to offer them the LUC. Thus, the LUC reflects the usual and normal charge for Communications Act-compliant candidate advertising in the U.S. border market. 11 CFR 100.52(d). Further, the LUC represents the commercially reasonable rate prevailing for ads complying with the Communications Act at the time the ads are broadcast. 11 CFR 100.52(d)(2). Thus, Starchannel also would not be making a contribution under the plan by charging the LUC. 

Accordingly, the Commission ruled that no contribution would result from the sale of advertising time to federal candidates on behalf of Televisa at the LUC rate for ads that comply with the Communications Act. 

AO 2010-05: Date issued: May 27, 2010; Length: 6 pages

FOOTNOTES 

1 The Communications Act sets certain requirements for U.S. broadcasters providing advertising time to federal candidates. See 47 U.S.C. §315 and 47 CFR 73.1942.