AO 2011-11: Costs of independent expenditures fall within press exemption when aired during TV show

Stephen Colbert, host of The Colbert Report (the Show), may establish and operate an independent expenditure-only committee (the Committee) which may solicit and accept unlimited contributions from individuals, political committees, corporations and labor organizations (but not foreign nationals, federal contractors, national banks or corporations organized by authority of any law of Congress). Costs incurred by Viacom (the Show’s owner, producer and distributor) to cover the Committee on the Show and to produce and air independent expenditure advertisements during that coverage fall under the “press exemption” of the Federal Election Campaign Act (the Act) and do not need to be reported by the Committee as in-kind contributions. However, if independent expenditure ads were provided to the Committee to be distributed outside of the Show, the associated costs would not be covered under the press exemption and would thus constitute reportable in-kind contributions from Viacom to the Committee. Similarly, if Viacom were to pay administrative costs associated with running the Committee, these costs would also be considered in-kind contributions from Viacom to the Committee.

Background

Mr. Colbert hosts The Colbert Report, which is a half-hour program that is owned, distributed and produced by Viacom. Viacom is neither owned nor controlled by any political party, political committee or candidate. Mr. Colbert has discussed on the Show the idea of creating his own political committee. The idea of this Committee had been a vehicle for Mr. Colbert to discuss campaign finance rules and new developments in politics. Now, Mr. Colbert plans to establish the Committee, the activities of which will be covered on the Show and used by Mr. Colbert as an on-air premise for discussing campaign finance rules and other aspects of American politics.

Mr. Colbert states that the proposed committee will file with the Commission as a nonconnected committee, will make only independent expenditures, [FN1] and will not make monetary or in-kind contributions to any candidate or political committee, and will not coordinate its efforts with any candidate or political party. The Committee plans to solicit and accept unlimited contributions from individuals, political committees, corporations and labor organizations. It will also comply with all disclaimer and reporting requirements.

The Committee will pay for its own website, as well as the Committee’s solicitation costs and some of its other expenses, including the cost of Mr. Colbert’s Committee-related travel. However, Viacom would like to incur much of the cost of operating the Committee—including costs to produce some of its independent expenditure ads and prepare and file the Committee’s FEC reports—either directly or indirectly, through payments to its vendors.

During the Show, Mr. Colbert plans to refer to the Committee’s website and air independent expenditure ads, which will be part of the Show’s coverage of the Committee. Some of the independent expenditure ads may be provided to the Committee to air as paid ads on other shows and other networks. The Show’s production resources and staff may also prepare and file the Committee’s reports with the Commission.

Analysis

Establishing the committee. Political committees that make only independent expenditures may solicit and accept unlimited contributions from individuals, corporations, labor organizations and other political committees (but not foreign nationals, federal contractors, national banks or corporations organized by authority of any law of Congress). See AO 2010-11 (Commonsense Ten). Such committees must register with the Commission and comply with all applicable reporting requirements of the Act. See also Citizens United v. FEC, 130 S. Ct. 876, 913 (2010) and SpeechNow.org v. FEC, 599 F. 3d 686 (D.C. Cir. 2010).

Mr. Colbert may establish the Committee, which may accept unlimited contributions from individuals, corporations and labor organizations (but not foreign nationals, federal contractors, national banks or corporations organized by authority of any law of Congress).

Press exemption. The Act and Commission regulations exempt from the terms “contribution” and “expenditure” any “news story, commentary, or editorial distributed through the facilities of any broadcasting station, newspaper, magazine, or other periodical publication, unless such facilities are owned or controlled by any political party, political committee, or candidate.” 2 U.S.C. § 431(9)(B)(i); 11 CFR 100.73 and 100.132. These exclusions are known as the “press exemption.”

In determining whether the press exemption applies to an entity, the Commission has conducted a two-step analysis. First, the Commission asks whether the entity engaging in the activity is a press entity. See, e.g., AOs 2005-16 (Fired Up) and 1996-16 (Bloomberg). Second, the Commission applies the two-part analysis in Readers’ Digest Ass’n v. FEC, 509 F. Supp. 1210, 1215 (S.D.N.Y., 1981), which requires it to determine: 1) Whether the entity is owned or controlled by a political party, political committee or candidate, and 2) whether the entity is acting as a press entity in conducting the activity at issue (i.e., whether the press entity is acting in its “legitimate press function”).The Commission has previously determined through the advisory opinion process that Viacom is a press entity and that Viacom is not owned or controlled by a political party, political committee or candidate. See AO 2004-07 (MTV).

To determine whether a press entity is acting in its legitimate press function, the Commission considers two factors: 1) whether the press entity’s materials are available to the general public, and 2) whether the materials are comparable in form to those ordinarily issued by the press entity. See AOs 2005-16 (Fired UP) and 2000-13 (OPHTHPAC). In examining these two factors, the Commission is mindful that a press entity’s press function is “distinguishable from active participation in core campaign or electioneeringfunctions.” AO 2008-14 (Melothe, Inc.).

Costs to cover the committee on the show. The Commission concluded that Viacom’s coverage of the Committee on the Show, which includes producing and airing segments of the Show that discuss the Committee’s operations, the Committee’s support for or opposition to federal candidates, the Committee’s website, audience participation opportunities and the Committee’s independent expenditure ads, would be part of Viacom’s legitimate press function. Segments of the Show featuring discussions of the Committee and the Committee’s independent expenditure ads are comparable in form to previously produced segments appearing on the Show.

Furthermore, the staff that produces these segments will be the same staff that produces other segments of the Show, and the segments will be distributed on the same cable television channel, Comedy Central. Since Viacom will be acting within its legitimate press function, the press exemption applies to costs of covering the Committee on the Show and such costs incurred by Viacom will not be in-kind contributions from Viacom to the Committee.

Costs to distribute independent expenditures outside of the show. The Commission concluded that Viacom would not be acting within its legitimate press function by providing independent expenditure ads to the Show and also providing the independent expenditure ads to the Committee, or providing independent expenditure ads produced directly for the Committee to distribute outside of the Show (including airing as paid ads on other shows and networks or as content for its website). Thus, costs incurred by Viacom for this activity would need to be reported by the Committee as in-kind contributions from Viacom to the Committee.

Committee’s administration costs. The Commission concluded that the administration of the Committee by Viacom would similarly constitute “active participation [by Viacom] in core campaign or electioneering functions,” which would fall outside of the scope of the press exemption. Accordingly, any costs incurred by Viacom associated with administering the Committee would need to be reported by the Committee as in-kind contributions by Viacom.

Contributions from the general public. The Commission concluded that even if the Committee were to receive in-kind contributions from Viacom, it could also solicit and accept contributions in unlimited amounts from individuals, political committees, corporations and labor organizations. It cannot solicit contributions from foreign nationals, federal contractors, national banks or corporations organized by authority of any law of Congress.

Date Issued: June 30, 2011; Length: 10 pages.

FOOTNOTE:

1 The Act and Commission regulations define an “independent expenditure” as an expenditure by any person for a communication expressly advocating the election or defeat of a clearly identified federal candidate that is not made in concert or cooperation with or at the request or suggestion of such candidate, the candidate’s authorized committee, or their agents, or a political party committee or its agents. 2 U.S.C. § 431(17) and  11 CFR 100.16.