What If Your Advertiser Discriminates? "Leave The Money on The Table And Walk Away."

story by Radio Ink
written by Ed Ryan

As you know by now all stations will soon be required to include a non-discrimination clause on all advertising contracts. Those clauses will have to be certified and the new rule is coming down from the Feds. FCC Chairman Julius Genechowski has said the Commission will vigorously enforce its rules against discrimination in advertising sales contracts. However, just last week at the NAB, Peter Doyle, Audio Division Chief from the Media Bureau at the FCC said "whether this is an effective way to get at the real problem, which is, or could be, advertiser misconduct, I think is an open question."

David Honig is the President and Executive Director of the Minority Media and Telecommunications Council. Honig recently sent a letter to FCC Chairman Julius Genechowski thanking the commission for implementing the new rule. He believes if broadcasters follow the rules and explain them clearly to advertisers, this problem will go away. "I look at this through the lens of broadcast ownership. In addition to being an advocacy and training organization, MMTC owns five radio stations. On one of them, in Augusta, GA, we air conservative talk, and we might encounter some no-urban dictates. We would probably make more money if we accepted racially discriminatory advertising. But we don’t want dirty money and we won’t accept that kind of business. I’m very confident that most of our fellow broadcasters feel the same way.

Can a nondiscrimination clause be enforced?

Of course it can - just like any other provision in a sales contract can be enforced. Nondiscrimination clauses in housing and employment contracts have been with us for decades, and they are universally observed and respected. Advertisers and broadcasters depend on each other. Their relationships are close. Neither side wants to harm the other by breaching an advertising sales contract.

I’ve seen several examples of good nondiscrimination clauses. Here’s the best one I’ve seen:

“This station does not discriminate in the sale of advertising time, and will accept no advertising which is placed with an intent to discriminate on the basis of race or ethnicity. Advertiser hereby certifies that it is not buying broadcasting air time under this advertising sales contract for a discriminatory purpose, including but not limited to decisions not to place advertising on particular stations on the basis of race, national origin, or ancestry.” It's perfect!

In addition to requiring nondiscrimination clauses in sales contracts, the rule requires us as broadcasters to practice nondiscrimination. Here’s how and why broadcasters will do that.

No-urban or No-Spanish dictates (“NUDs” and “NSDs”) are instructions by advertisers or agencies to rep firms or broadcasters whose purpose is to discourage minorities from patronizing the advertisers’ stores. Advertisers know NUDs and NSDs are morally wrong, which is why they’re seldom written down. Over the past two years I’ve collected over 60 NUDs and NSDs, and only three were in writing. But that doesn’t mean they’re a secret. In our business almost nothing is a secret. Broadcasting is a small world. Especially in medium and small markets, a NUD or NSD is almost never a secret.

When we hear of one, we should do exactly what we would do if we were confronted with a breach of any other provision of the contract: require the advertiser to demonstrate that there was no breach, or to cure the breach. If there is no explanation and no cure, we should terminate the contract – just as we would if the advertiser breached the provision requiring timely payment for spots, or breached the no-indecency provision – and just as the advertiser would if we failed to air spots or provide make goods.

If these standard contract compliance procedures are followed, advertising discrimination will be dead within two years, and that won’t be soon enough. Compliance would restore to minority broadcasters $200M+/year that they earn – but never collect – because 5-10% of advertisers unfortunately go out of their way to try to ensure that few, if any, members of minority broadcast audiences will patronize their stores.

Do you not agree, that the problem does not originate at the station?

There’s blame on both sides. Let’s be honest about this: some of the problem has originated with stations that quietly market themselves as friendly homes for advertisers that wish to discriminate. Remember the infamous “Katz Memo” which originated with a rep firm that invited advertisers to patronize its client’s radio stations and thus reach (white) “prospects, not suspects”?

Like many market distortions, discrimination has a supply side and a demand side. When a broadcaster looks the other way, or winks and nods as it pockets money paid by advertisers for discriminatory placements, the broadcaster becomes a part of a discriminatory scheme. Advertising discrimination would be impossible if there were no demand for discriminatory advertisers’ dollars by some broadcasters.

Let's say I'm an Account Executive and I'm having a discussion with an advertiser. The advertiser says I'm buying the rock station and the news/talk station, not the urban station. Here's my check. He reads the certified paragraph about non-disc. and signs the order. What does anyone really expect to happen at that point.

The rule requires the broadcaster to refuse the business, and most broadcasters will do that because broadcasters are law abiding citizens. And broadcasters believe in the Golden Rule “do unto others as you would have them do unto you.” NUDs and NSDs cause immense damage to minority broadcasters. So we should all ask ourselves this: if our house were on fire, wouldn’t we want our neighbor to call the fire department? Isn’t that what we’d do if our neighbor’s house were on fire? This is not just aspirational, it’s true, because broadcasters are members of an honorable profession.

Here’s an example drawn from the experience of another honorable profession. Suppose you’re a real estate agent. A developer comes to your office. She tells you “we don’t sell to African Americans, Jewish people, Hispanics or single parents. Here is my check.” Is there even one real estate agent who would cash the check? Let’s go one more step: wouldn’t most broadcasters refuse to air that developer’s advertising? And wouldn’t most broadcasters refuse business from an advertiser that practices discrimination in employment? Or in public accommodations? Of course most of us would refuse this unseemly business. Broadcasters are leaders of our local communities. Most broadcasters will follow their best instincts and refuse every invitation to participate in any racially discriminatory scheme.

What are your expectations from an account executive when confronted with advertiser racism? The pressure to get business back to the station is greater than ever.

Thanks to the FCC’s rule, an AE now has a diplomatic way to avoid a fight with an advertiser. She can say “I’m sorry, I can’t jeopardize our FCC license.” And walk away from the business. GMs and GSMs should back up their AE’s and reward them for doing the right thing.

What really needs to be done to make sure this problem goes away?

This is the time to show the world that our business has integrity, that the privilege of a broadcast license, the free and protected use of the public’s spectrum, really means something to us.

To make sure discrimination goes away, its simple: broadcasters should obey the rule. We shouldn’t tell advertisers, agencies and rep firms “if you have a NUD or NSD, don’t tell us – we don’t want to know.” Instead we should want to know. We should demand to know. And we should respond firmly by telling discriminators “we won’t help you degrade our listeners and viewers. Take your business somewhere else. We’re broadcasters, and we don’t want it.”

Keep in mind that a marketplace that’s free of race discrimination is not just good for minority broadcasters – it’s good for all broadcasters. Minorities are 40% of the audience for free, over the air TV and radio. Advertising discrimination means that the stations that minorities patronize the most (although hardly exclusively) are less able to afford to provide the level of service that all consumers expect and deserve. If minority consumers come to regard our industry as providing them with second class treatment, they have somewhere else to go: Cable. FIOS and U-verse. Satellite radio and TV. Pandora. I-Pods. YouTube.

On the other hand, if our industry seizes this opportunity to demonstrate how inclusive we are, how respectful of civil rights we are, how eager we are to fight race discrimination, we can all attract more minority consumers and build their loyalty and patronage. We can do good and do well at the same time.This is a teachable moment – and what it teaches is that we are all interconnected. As Dr. King reminded us on the night before he was assassinated, when he told the congregation that he’d been to the mountaintop, “we must live together as brothers or perish as fools.”