In Re Application by WAVI BROADCASTING CORP., DAYTON, OHIO
For Review of Dismissal of Complaint
Versus Group One Broadcasting Co.
FEDERAL COMMUNICATIONS COMMISSION
32 F.C.C.2d 421
RELEASE-NUMBER: FCC 71-986
SEPTEMBER 24, 1971
OPINION:
[*421] GENTLEMEN: This
is in reference to your Application for Review, filed April 22, 1971,
requesting reversal of the Broadcast Bureau's action in dismissing your
complaint directed against the use of promotional material based on Pulse
audience rating surveys by Group One Broadcasting Co., licensee of Station
WONE, Dayton, Ohio. Also before us are Group One's Opposition to
Application for Review, your Reply to the Opposition, and the various
correspondence originally entered into by the parties and the Chief, Renewal
and Transfer Division. n1
n1 On June 11, 1971, Group One filed
a "Request for Permission to File Additional Pleading" and "Comments
on Reply to Opposition to Application for Review."
Briefly summarized, the record
before us discloses the following chronology of events. By letter dated
October 15, 1970, you requested an investigation into Group One's use of
certain Pulse survey materials. In substance, you claimed that the
promotional materials used by Group One were misleading in that Stations WAVI
and WDAO (FM) did not appear thereon thus creating the impression that neither
station had a reportable audience. More specifically, you stated in
pertinent part as follows:
Station WONE... is in direct
competition with [Stations] WAVI and WDAO [licensed to WAVI Broadcasting
Corporation] for advertising in the Dayton market. Despite its natural
competitive advantages [i.e. power and frequency], Station WONE has recently
used broadcast ratings in a manner which is clearly false and misleading and
contrary to the Commission's announced policy statement. n2 On September 14, 1970, Station WONE issued a release
based upon a [*422] July/August, 1970 Pulse, a copy of which is
attached hereto. No mention was made of Stations WAVI and WDAO, which
clearly signified to potential advertisers that neither station had a
reportable audience. Moreover, WAVI Broadcasting Corporation has now been
advised that during some time periods, Station WDAO had a greater share of the
audience than any of the three stations listed in the release, and in many
cases, had a larger share than one or more of the stations listed. n3 It is submitted that the omission of Station WDAO
and its share of the audience was clearly intended to mislead potential
advertisers.
An earlier release by Station WONE
was based upon the April/May, 1970
n2 WAVI relied upon our Public
Notice of June 13, 1963, and the Federal Trade Commission News Release of July
8, 1965 which state, respectively, in pertinent part:
"In using audience research...
the licensee must act responsibly. He therefore, has an obligation to
take reasonable precautions to insure that a survey which he uses in an
advertising campaign is valid (e.g. that it is properly conceived, reasonably
free from bias, has an adequate sample). He also has an obligation to act
responsibly in the use he makes of the survey. He may not, for example,
quote a portion of the survey out of context so as to leave a false and
misleading impression of the relative ranking of his station in the market.
"A person (or firm) making a
claim concerning the size, composition or other important characteristics of a
listening or viewing audience is responsible for seeing to it that the claim is
truthful and not deceptive. If he bases his claim on the results of an
audience survey, he assumes the responsibility for interpreting the data
accurately... It is also improper to cite or quote from a survey report
or survey data in such a way as to create a misleading impression of the
results of the survey, as by unfairly basing audience claims on results
achieved only during certain periods of the broadcast day or on a survey of
only a segment of the total potential audience."
n3 The three stations listed were
WONE, WING, and WHIO.
An earlier release by Station WONE
was based upon the April/May, 1970 Pulse. In this case, four stations
were listed, including one FM station. n4 Again, no mention was made of Stations WAVI and WDAO even though each
had a reportable audience during that period and in some periods WDAO had a
greater share of the audience than some of the four stations reported.
n4 The stations listed for the April-May
survey were WONE, WING, WHIO and WHIO-FM.
In accordance with usual procedures
when complaints such as yours are received, the Broadcast Bureau, by letter
dated November 9, 1970, requested Group One's comments on the matters raised in
your letter of October 15, 1970. In its response of November 24, 1970,
Group One stated in pertinent part as follows:
The research material in question
was presented for specific advertisers in accord with common industry practice
in presenting audience information only on stations that are considered
competitive. Only rarely would information on all stations rated in a
survey be included in an advertiser pitch as this would be meaningless to an
advertiser and in effect would require a station to reproduce an entire survey
each time a sales presentation was made. Radio stations throughout the
country regularly present advertisers comparative audience information for as
few as 2 stations in a given market. The omission of some stations is in
no way meant to be misleading, but rather indicates that the sales presentation
contains information on only those stations that are being considered for a
share of the advertiser's budget.
In the specific instance, WAVI and
WDAO(FM) were excluded from research prepared independently by WONE and the
McGaveren-Guild-PGW research director because these stations were not
considered competitive factors by either WONE or its national sales
representative. WAVI was not included because of low audience levels, in
fact so low that this station was not even rated in the July-August 1970
Dayton, Ohio 4 County Metro Area Radio-Pulse. WDAO is an ethnic, FM
station, and is generally considered for separate budgets by advertisers.
In support of its position that
"general industry practice" dictates the inclusion in such
promotional material of a limited number of competing stations, Group One
submitted letters from various advertising agencies confirming its statements,
and further submitted promotional sheets distributed by stations in large markets
where as few as one-fourth of the stations are included. In addition, the
staff requested of Group One copies of the surveys upon which its promotional
material was based. This information was furnished with a request that,
because of contractual obligations between the survey organization and Group
One, the contents be kept confidential. n5
n5 The pertinent clause reads:
"It is understood and agreed
that the report will be kept strictly confidential, that the property therein
remains in THE PULSE, INC., that neither the whole nor any part thereof may be
disclosed to anyone but the purchaser, its clients or bona-fide prospective
clients and that physical possession of the report shall not be released by the
purchaser or its representative... Violation of these privileges may
result in immediate cancellation of the subscription to PULSE, and may subject
the subscriber to claims for damages which may be sustained by PULSE or
others."
[*423] In a subsequent
letter dated January 5, 1971, you suggested that this Commission should
undertake a thorough review of what you claim may be "widespread or
nationwide deceptive practices" in this area. You also took issue
with Group One's supporting evidence as set forth in its response of November
24, 1971, claiming that practices in the larger markets cited "have little
relevance to the Dayton market." You further stated that Group One failed
to answer the charge that "... the omission of the reportable, and perhaps
larger ratings, of Stations WAVI and WDAO-FM in certain time periods is a
misleading and deceptive practice." n6
You also stated: "Moreover, it is understood that at least fifty percent
(50%) or more of WDAO-FM's audience, as measured by Pulse, must be assumed to
be non-ethnic, based upon the survey techniques used." Finally, you again
insisted that your stations are in direct competition with WONE, that your
stations were arbitrarily omitted from the Group One promotional releases, and
that the omission was unfair and tended to mislead and deceive potential
advertisers.
n6 In its letters and subsequent
pleadings, WAVI Broadcasting concedes that it has not actually examined the
survey reports in question.
By letter dated February 10, 1971,
Group One responded to your additional charges. First, it emphasizes that
"... WAVI reported low audience levels in both Pulse surveys... so low in
fact that the station was not even rated in the July/August survey..."
Group One also emphasized that WDAO (FM) is indeed a black-oriented station
and, therefore, not directly competitive with WONE; that its stationery
promotes its "Solid Soul" format; and that, as shown in a letter from
The Pulse, Inc., WDAO (FM)'s audience was, respectively, 89.4% and 97%
black. Group One also submitted additional promotional material employed
by Dayton Stations WING and WHIO, pointing out that, although the two surveys
upon which they were based rated fourteen stations in one case and twelve in
the other, each release listed but four stations. Group One concluded:
The WING and WHIO materials further
attest to the fact that it is accepted industry practice for stations to show
comparisons of ratings for only those stations considered to be competitors for
the audience the particular advertisers seek to reach, even though more stations
are rated in a given survey from which the comparisons are obtained.
Finally, Group One notes that in one
of these promotions
... for every age group and in every
time period that the station was on the air, WAVI is shown either as having an
audience too small to measure, or of being in last place. It would
appear, therefore, that WAVI would be injured more by including its ratings in
such material, than by not mentioning it at all.
By letter of March 22, 1971, the
Chief, Renewal and Transfer Division, informed WAVI Broadcasting that:
We have carefully examined the
correspondence and material submitted in this matter, and we conclude that
there has been no obvious abuse of the Pulse surveys by Station WONE.
Accordingly, we believe that no further Commission action is warranted.
[*424] The Bureau
further stated that "... questions dealing with the propriety of the use
of such audience rating surveys by broadcast licensees are primarily within the
jurisdiction of the Federal Trade Commission." The Bureau pointed out that
absent any obvious abuse of a survey by a licensee, the FTC, not this
Commission, is the proper body to consider such questions as were raised by the
complaint. n7 The Bureau described an obvious
abuse as "failure to include a disclaimer, the distortion or exaggeration
of survey, results, or the use of outdated or otherwise unreliable data."
n7 As we stated in our Public Notice
of June 13, 1963, "The Commission intends ordinarily to refer complaints
dealing with questionable use of broadcast ratings to the Federal Trade
Commission for that agency's consideration."
Thereafter, the subject Application
for Review, requesting review and reversal of the Broadcast Bureau's
disposition of your complaint, was filed on April 22, 1971. In addition
to the arguments advanced in your original complaint, you plead for reversal
stating:
(a) The action of the Broadcast
Bureau establishes a policy as to the use of rating surveys in promotional
material which is contrary to prior Commission decisions, policy statements,
and the public interest; and
(b) The action presents new and
important matters of law and policy in interpretations of standards adopted by
the Commission concerning the use of rating surveys.
Before considering the substantive
matters raised in your Application for Review, several procedural matters
raised by the pleadings will be discussed. First, the respondent, Group
One Broadcasting Co., challenged the timeliness of the Application for Review,
which was filed thirty-one (31) calendar days after the mailing of the
Broadcast Bureau's letter initially disposing of this matter. Section
1.115(d) of our Rules requires such applications to be filed within thirty (30)
days from the date of release of the document containing the full text of the
action in question, or if such a document is not released, after release of a
public notice announcing the action.
As the Bureau's action was taken in
a letter directed to the complainant (which could not have been received until
at least the next day), and no public notice regarding this matter was
released, there is no merit to the challenge of the Application's
timeliness. Nor do we believe that the Application raises any new matter,
as alleged by Group One, which would at this time preclude our review of the
Bureau's action (Section 1.115[c] of the Rules).
Also, in your reply, you demand that
Group One's Opposition be returned as unacceptable for filing, for alleged
violation of the Commission's ex parte rules (citing Sections 1.1201[f] and
1.1201[g]). You protest the forwarding to the Commission, without service
on WAVI Broadcasting, of copies of the Pulse surveys in question.
Contrary to your assertion, the instant proceeding is clearly not a
"restricted proceeding" as defined by our rules; and, accordingly,
your argument is without merit.
[*425] As to your
substantive allegations, we believe it is an acceptable practice to exclude
from such a presentation stations which may have a higher ranking in a number
of subcategories than one or more of those stations actually included. n8 The station using such survey results may compare
itself with any other stations it chooses, so long as it does not misrepresent
the actual ranking of those listed, and does not, for example, claim to be
"number 1" when the survey results are otherwise. We feel it is
appropriate in selecting stations from the survey for inclusion in promotional
material, to consider such factors as competitiveness; and, contrary to your
position, we further believe that a licensee may make a subjective, good faith
determination as to which stations are its competitors for audience and
advertising dollars. n9 The
promotional material submitted with the complaint does not on its face reveal
any such misuse, nor have you offered any evidence that, in its verbal
presentations, WONE misrepresented actual rankings of the listed
stations. And while it may be true that in a small number of
subcategories the audience estimates for WDAO (FM) exceeded those for one or
more of the stations listed on WONE's promotional sheets (although WONE states
that, overall, WAVI and WDAO (FM) ranked well below the listed stations) we do
not find it necessary to reach this factual question in responding to your
Application for Review.
n8 In this regard we would note the
relative complexity of audience surveys, which are broken down into many
subcategories of time period, sex and age groups. In addition, we note
that, in their promotional material, many stations list competitors only by
such designations as "Stations X, Y and Z."
n9 We further note that, in your
initial complaint, you stated that "WDAO... programs independently for the
black community in Dayton..."
Moreover, we do not concur with your
suggestion that the recipients of such promotional materials are "unwary
consumers." Instead we believe that the advertisers and agencies at which
these presentations are directed are sophisticated, discerning businessmen who
are exposed to them on a continual basis, are fully cognizant of the make-up of
markets with which they are concerned, and are capable of properly interpreting
and employing the promotions. Nor, in the last analysis, can we perceive
any real injury to Stations WAVI and WDAO (FM) resulting from their omission
from the WONE promotions, and we reject your conclusion that their "...
exclusion... is equally as serious an abuse as erroneously reporting a
station's ratings."
It is our position that the
licensee's obligation in these matters is to act responsibly, i.e., to refrain
from engaging in an abuse such as "hypoing" or quoting a portion of a
survey out of context so as to [*426] create a false and misleading
impression of his station's ranking in the market. n10 As the Broadcast Bureau indicated, in the absence of
such obvious abuse this Commission cannot act. Unless an adverse
determination is made by the Federal Trade Commission, whose jurisdiction in
these matters, is primary, we will not take punitive action against a licensee
based on a complaint such as WAVI Broadcasting has filed.
n10 In this connection we also note
that the promotional material used by Group One included the following
disclaimer: "Figures cited or quoted are estimates only or are based upon
estimates, and are not accurate to any precise mathematical degree."
Accordingly, your Application for
Review is DENIED, and we affirm the Broadcast Bureau's disposition of your
complaint.
Commissioner Bartley concurring in
the result, Commissioner Johnson dissenting and issuing
a statement, Commissioners H. Rex Lee, Wells, and Houser absent.
BY
DIRECTION OF THE COMMISSION, BEN F. WAPLE, Secretary.
DISSENT:
DISSENTING OPINION OF COMMISSIONER
NICHOLAS JOHNSON
RATINGS PROMOTIONS
(Application for Review of staff
action filed by WAVI Broadcasting Corporation, licensee of WAVI and WDAO (FM),
Dayton, Ohio, regarding allegedly misleading use of ratings in promotional
materials by WONE.)
The nub of this case is this: should
we somewhat blithely dismiss a complaint by one licensee against another
pertaining to the allegedly deceptive and misleading use of stations' ratings
in promotional materials? That's what the majority has done.
In the past, we have stated quite
forcefully our concern with the misuses of ratings, which are the life-blood of
commercial broadcasting operations. For example, in a Public Notice: n1
n1 Public Notice, FCC 63-544 (June
13, 1963).
[Audience] research is an important
selling tool in efforts to obtain advertiser support. It is not the
intention of the Commission to discourage valid audience research or its proper
use by broadcast licensees in their selling campaigns.
In using audience research, however,
the licensee must act responsibly... in the use he makes of the survey.
He may not, for example, quote a portion of the survey out of context so as to
leave a false and misleading impression of the relative ranking of his station
in the market.
In 1964, we granted a short-term,
one-year license renewal to a licensee who we found to have "hypoed"
his ratings in violation of [*427] the 1963 Public Notice quoted
above. n2 Why this sudden abandonment of
concern?
n2 Star Stations of Indiana, Inc., 3
R.R. 2d 745 (1964).
Assuming for the purposes of
argument that the ratings reveal an accurate picture of who is listening to
what stations at what time, I think all would agree that it is important that
stations and advertisers using the ratings use them in a fair and honest
manner. If the ratings system is in any way corrupted by false or
deceptive use, then the integrity and validity of the whole process of paying
for shows through mass-audience-based advertising becomes open to great doubt.
In this case WDAO (FM) complains
that WONE published promotional material containing portions of a Pulse rating
without listing WDAO (FM), despite the fact that WDAO (FM) scored higher
ratings in various sub-categories of listeners than did some of the stations
listed by WONE as competing with WONE.
WONE attempts to explain its failure
to include WDAO (FM) by stating that WDAO (FM) caters to a black audience, and
thus is not truly competitive with WONE. It is apparently true that WDAO
(FM) is a "soul" station. Yet it seems to me that black
listeners are as good purchasers of soap and tooth paste as white listeners.
Agencies like the FCC are often
charged with being simply the handmaidens of the very industries they are set
up to regulate. That may or may not be a fair conclusion. Certainly
I have often been disappointed with the Commission's failure to take action I
felt compelled by any reasonable interpretation of the "public
interest."
But even if one is to conceive of a
Commissioner's role in the what's-best-for-business sense, it seems to me this
decision is wrong. The prosperity of the broadcasting industry -- like
any other -- is dependent upon its maintaining some minimal standards of
business ethics for those with whom it deals. Broadcasters are in the
business of selling audience to advertisers. Misrepresentations as to the
size of that audience -- or as to comparisons with competitors' audiences --
constitute a measure of fraud that strikes at the heart of the
broadcaster-advertiser bargain. There are other media available to
advertisers. Their support of broadcasting is dependent, at least in
part, on their getting their money's worth and their not being deceived,
intentionally or otherwise.
When this agency sanctions fraud of
advertisers, as it did in the WIFE n3
and Cocoa Beach n4 cases, when it winks at the kind of
misuse [*428] of ratings represented by WDAO's complaints here, it
is serving neither the broadcasting industry nor the public. I am at a
loss to explain its rationale for non-action. I would instead instruct
the Broadcast Bureau to conduct further investigation of this complaint so that
we would be able to evaluate this complaint more properly -- perhaps leading to
a forfeiture or hearing.
n3 Star Stations of Indiana, Inc.,
19 F.C.C. 2d 991 (1969).
n4 WKKO, Inc., 24 F.C.C. 2d 889
(1970).
In any event, I cannot support this
decision, and therefore dissent.