The Federal Communications Commission’s (FCC) new rules governing foreign sponsorship disclosures for broadcasters went into effect on March 15, 2022. Broadcast stations airing BBC, France 24, Al Jazeera and Deutsche Welle programming (not to mention programming from Russian or Chinese sources) have known this was coming, but do you know – really know – the source of the programming aired over your station? Per these new rules, stations that air programming from other sources (whether via a time brokerage or local marketing agreement, or simply by purchase from various producers) have the obligation to investigate to determine the source and, if a foreign government is found in the chain, begin compliance with sponsorship identification and new record-keeping requirements.

The FCC previously adopted its new foreign sponsorship disclosure rules in an April 22, 2021 Report and Order. The new rules require broadcasters to disclose whether certain programming aired on their stations was directly or indirectly sponsored, paid for or furnished by a foreign governmental entity. Specifically, the new rules extend the sponsorship identification requirements to programming aired on a station pursuant to an airtime lease agreement if the direct or indirect programming provider is a “foreign governmental entity.” A lease agreement is defined broadly to include any oral or written agreement pursuant to which the broadcaster makes time available to another party to program its station in return for compensation. 

We previously summarized the new rules in an earlier client alert in detail, including the identification and record-keeping requirements created by the new rule. This alert focuses on the new diligence requirements now effective for broadcasters in reviewing their new and existing lease agreements to determine their compliance obligations under the new rule. 

Under the new rule, broadcast licensees must exercise “reasonable diligence” to determine whether the lessee or any party within the production/distribution chain of the programming broadcast on a station is a foreign governmental entity. To exercise “reasonable diligence,” the broadcaster must, at a minimum, do all of the following:

• Inform the lessee of the foreign sponsor disclosure requirement.
• Ask the lessee whether it qualifies as a foreign governmental entity.
• Ask the lessee whether any person or entity within the production/distribution chain of the programming broadcast qualifies as a foreign governmental entity and has provided some type of inducement to air the programming.

The broadcaster must also independently confirm whether the lessee is a foreign governmental entity by checking the U.S. Department of Justice’s FARA database and the FCC’s U.S.-based foreign media outlets reports. 

With the new rules in effect, broadcasters must now make these inquiries at either the time of execution of a new lease agreement or the time of renewal thereof. In addition, broadcasters that are parties to existing agreements now have six months – i.e., until Sept. 15, 2022 – to make these inquiries to confirm whether any of their existing lease agreements trigger compliance obligations under the new rules. 

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