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 TESTIMONY  OF  JONATHAN  S.  ADELSTEIN  Before  the  U.  S.  Senate  Committee  on  Commerce,  Science  & 
 Transportation 
 Full  Committee  Hearing:  S.  967,  Pre-  packaged  News  Stories 
 May  12,  2005 
 [As  prepared  for  delivery] 
 Mr.  Chairman,  Mr.  Co-  Chairman,  members  of  the  Committee,  thank  you  for  inviting  me  to  testify  on  a  matter  of  great  concern  to  me  and  to  the  FCC.  This  hearing  is  especially  timely, 
 because  it  can  help  combat  the  surprising  lack  of  awareness  that  the  law  and  FCC  rules  require  disclosure  of  who  is  behind  certain  paid,  political  or  controversial  programming. 


 Congress  has  maintained  the  principle  --  from  the  outset  of  broadcasting  --  that  consumers  have  a  right  to  know  who  is  trying  to  influence  them.  Sponsorship  ID  laws  date  back 
 to  the  Radio  Act  of  1927,  meaning  that  they’re  older  than  the  FCC  itself.  Congress  has  maintained  an  unwavering  requirement  that  broadcasters  must  announce  who  gave  them  valuable 
 consideration  to  air  anything. 
 In  the  case  of  controversial  issue  or  political  programming,  the  FCC’s  interpretation  of  the  law  has  always  required  that,  whenever  a  third  party  provides  material  to  induce  its 
 broadcast,  the  identity  of  the  source  must  also  be  disclosed  to  viewers. 
 So  the  seriousness  that  you  are  treating  this  matter  with  is  entirely  consistent  with  historical  concern  of  this  Committee,  and  of  Congress  as  a  whole. 


 Because  of  the  need  to  highlight  our  rules,  I  was  especially  pleased  that  last  month,  the  FCC  voted  unanimously  to  remind  the  industry  of  their  legal  obligations.  With  the  leadership  of 
 our  new  Chairman,  Kevin  Martin,  we  came  together  --  on  a  bipartisan  basis  --  to  alert  the  industry  that  we  take  our  responsibilities  seriously  --  and  plan  to  enforce  the  law  vigorously.  We 
 also  sought  comment  to  learn  more  about  how  VNRs  are  used,  and  whether  we  need  to  refine  our  rules  further. 


 Many  analysts  believe  the  urgency  of  this  issue  arises  in  large  measure  because  of  the  increasing  commercialization  of  the  media.  Pressures  on  the  bottom  line  are  forcing  reductions 
 in  resources  for  news  operations. 
 This  creates  a  void  that  PR  firms  are  happy  to  fill  with  VNRs.  They’re  cheaper  to  produce  than  ads,  free  to  get  on  the  air,  and  more  effective  because  they’re  designed  to  mimic 
 news  stories.  This  can  seriously  mislead  viewers,  and  has  probably  contributed  to  the  well-  documented  loss  of  public  confidence  in  today’s  media. 
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 Another  symptom  of  commercialization  is  seen  in  reports  of  a  rising  tide  of  undisclosed  product  placements  in  our  media.  I’m  concerned  that  there  seems  to  be  a  lack  of  awareness  of 
 the  need  for  disclosure  under  our  rules  in  this  area  as  well.  Everyone  in  the  industry  would  be  well-  served  to  review  our  public  notice  on  VNRs,  since  the  same  rules  can  apply  to  product 
 placements. 
 The  focus  of  today’s  hearing  is  on  the  use  of  VNRs  by  government  agencies.  As  recently  as  2002,  the  FCC  reiterated  that  disclosure  is  particularly  important  when  the  government 
 sponsors  the  broadcast  matter. 
 You’ve  heard  about  conflicting  interpretations  between  the  Justice  Department  and  GAO  about  whether  unidentified  government  VNRs  violate  laws  against  covert  propaganda.  The 
 Commission  has  no  jurisdiction  over  these  laws,  and  has  taken  no  position.  But  neither  Justice  nor  GAO  has  noted  that  the  failure  by  broadcasters  and  cable  companies  to  identify  the  source  of 
 VNRs  could  violate  the  FCC’s  sponsorship  ID  rules.  As  we  said  in  our  Public  Notice,  these  companies  do  have  an  obligation  to  disclose  the  source  of  political  or  controversial  issue  VNRs. 


 If  Congress  seeks  to  ensure  the  public  is  notified  about  the  source  of  government-sponsored  VNRS,  legislation  such  as  S.  967  is  necessary  to  bolster  our  existing  rules. 
 It  would  apply  whether  or  not  consideration  was  exchanged  --  and  whether  or  not  controversial  or  political  issues  were  involved  (it  would  also  prohibit  the  removal  of  the  announcement).  The 
 bill  doesn’t  specify  the  precise  nature  of  the  announcement,  but  instead  leaves  it  to  the  FCC  to  work  with  broadcasters  to  determine  how  to  achieve  the  right  balance  between  the  public’s  right 
 to  know  and  editorial  discretion. 
 The  bill  would  not  impose  any  new  burden  on  broadcasters  or  cable  companies.  In  fact,  it  would  simplify  compliance.  It  would  ensure  that  those  airing  these  VNRs  are  aware  of  the 
 government’s  role.  Most  importantly,  it  addresses  the  public’s  right  to  know  the  source  of  the  broadcasts  so  they  can  make  up  their  own  minds  about  the  information  being  presented. 


 Again,  Mr.  Chairman,  thank  you  for  inviting  me  to  testify.  I  am  happy  to  answer  any  questions  you  may  have. 
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