Minority Statement

• Daniel K. Inouye

  Senator
  Read statement

  Minority Statement

  Daniel K. Inouye

  Mr. Chairman, I want to thank you for calling today’s hearing to examine current practices concerning the use of Video News Releases, commonly referred to as “V-N-Rs.”

  When used appropriately, VNRs, like written press releases, can provide television news directors with an important source of information and video footage that can then be reviewed and edited to create independent news stories.

  Unfortunately, as recent press accounts have documented, the increasingly “prepackaged” and scripted nature of VNRs, sometimes including actors posing as news reporters, has tempted some news organizations to air VNRs in full without disclosing the true source of such information.

  Based on these reports, I wrote to then-Chairman of the Federal Communications Commission (FCC), Michael Powell, in March of this year, asking the FCC to investigate this matter and to take whatever remedial action was necessary to prevent television and radio audiences from being misled.

  Roughly one month later, the FCC, under the leadership of its newly appointed Chairman, Kevin Martin, responded by unanimously adopting a public notice that reminds broadcasters and cable operators of the disclosure obligations under the Communications Act and requests further investigation into the production, provision, and use of VNRs.

  Today’s hearing lets us examine in greater detail the problems that arise when VNRs created by government agencies are distributed without proper disclosure to the viewing public about their true source. This practice has been criticized by the Government Accountability Office (GAO) for some time. The GAO has taken issue with the current Administration’s interpretation of when attribution is required.

  This is not a partisan issue. Congress passed language as part of the Supplemental Appropriations bill this past Tuesday that will prevent federal agencies from using funds appropriated this fiscal year to create such prepackaged news stories unless clear government attribution is provided. While this restriction is only temporary, other proposals have been advanced that would result in a more permanent solution.

  Mr. Chairman, it was Thomas Jefferson who first noted that “information is the currency of democracy.” But its true value to our society can only be realized if our ethical standards require, and our laws enforce, a level of transparency and openness that protect the American public from being misled. As a result, I look forward to today’s hearing and to our continuing efforts to enrich civic discourse.

  
  ###

Testimony

• The Honorable Jonathan S. Adelstein

  Administrator

  Rural Utilities Service, U.S. Department of Agriculture
  Read statement

  Testimony

  The Honorable Jonathan S. Adelstein

  STATEMENT OF JONATHAN S. ADELSTEIN
  Commissioner, Federal Communications Commission
  Before the U.S. Senate Committee on Commerce, Science &
  Transportation
  
  May 12, 2005
  10:00 a.m.
  
  Mr. Chairman, Mr. Co-Chairman, and Members of the Committee, thank you for inviting me to testify before you today about pre-packaged news stories, also known as video news releases, or “VNRs.” The issue of concern with pre-packaged news stories is that, absent proper disclosure, listeners and viewers may believe that these stories are produced by bona fide news organizations, rather than third-parties who may have a vested interest in the content of the story. As a Member of the Commission charged with overseeing the influential and powerful medium of television, this issue is one of great concern to me, and I appreciate the opportunity to share my views. This hearing is especially timely because, until recently, there appeared to be a surprising lack of awareness that the Communications Act and FCC rules already require disclosure by broadcasters and cable companies of who is behind certain paid material or political or controversial issue programming. Because of the need to highlight our rules, I was especially pleased that we voted unanimously last month to remind broadcasters and cable operators of their obligations under the law. Under the leadership of our new Chairman, Kevin Martin, we came together on a bipartisan basis to warn that we take our responsibilities seriously and plan to enforce the law vigorously, and sought comment to learn more about how VNRs are used, and whether there is a need for the Commission to refine its rules further to protect the public. Pre-packaged news stories are attractive to busy newsrooms that are trying to fill longer news windows with fewer journalistic resources, because they are off-the-shelf, ready-to-go news stories that require no expenditure by the news outlet. Although government-produced pre-packaged news stories have been the focus of attention recently, private corporations also use VNRs to provide information about their products. Recently, I’ve read reports about the growing practice of companies paying to guarantee that a media outlet will air their pre-packaged news stories. VNRs are thus one symptom of the growing commercialization of our media. We are also seeing reports of a rising tide of product placement, and 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. This practice is likely to increase, given that embedding products within programming is partly a response to the fact that technology increasingly allows consumers to view television content how and when they choose. In order to comply with our rules, advertisers, broadcasters and cable operators would be well-served to review our public notice on VNRs, since the same rules can apply to product placements. In FCC parlance, the issue of “sponsorship identification” dates to the very beginning of broadcast regulation. Congress recognized from the outset that with the American model of developing broadcast service along private commercial lines, consumers have a right to know who is trying to persuade them. As far back as the Radio Act of 1927, and continuing with the Communications Act of 1934 and subsequent amendments, Congress has maintained an unvarying requirement that radio and television broadcasters must announce by whom any valuable consideration was paid for or furnished. This means that the concept of sponsorship identification is in fact older than the FCC itself. The Commission adopted its first rules on sponsorship identification in 1944. Since that time, our rules have of course evolved some, but have never deviated from the core requirements. Our rules have always required that whenever programming is aired for consideration, the fact of sponsorship and the identity of the sponsor must be disclosed. Our rules have also always required that, in the case of controversial issue or political programming, whenever any material or service has been furnished to the station as an inducement to broadcast such programming, the fact that such material or service was furnished and the identity of the source be disclosed. In 1960, Congress generally excluded property or services provided to broadcasters free or at nominal charge from the scope of consideration that triggers the disclosure requirement – except for controversial issue or political programming. As the Commission has acknowledged in the past, disclosure is especially important with this type of programming. As a result, for over sixty years, our rules have required a disclosure to be made, in the case of controversial issue or political programming, whenever any material or service of any kind, regardless of cost, is furnished to broadcasters as an inducement to air that programming. As recently as 2002, the Commission also reiterated that disclosure is particularly important when the government is the sponsor of broadcast matter. In 1960, Congress also revised section 317 to impose a due diligence requirement on broadcasters to obtain from their employees, and others they deal with directly in programming, the information they need to make the required sponsorship identification announcement. The Commission has implemented the express requirements of section 317, and has extended its sponsorship identification rules to cable operators for “origination programming,” or programming subject to their exclusive control. The seriousness with which this Committee is treating this matter is entirely consistent with the historical concern of the Committee and Congress as a whole. In recent months – as evidenced by today’s hearing – much attention has been given to the appropriateness of Federal departments and agencies using pre-packaged news without clear disclosure of the government’s role in creating the VNRs. Conflicts within the government about whether this activity is or is not consistent with laws against using appropriated funds for propaganda have arisen, with the Department of Justice and the Government Accountability Office reaching different legal conclusions on the matter. The Commission has no direct jurisdiction regarding the propaganda laws, and therefore has taken no position on it. I reiterate, however, that no matter what view one takes in that debate, the Commission itself has stated clearly in our recent Public Notice that broadcasters and cable companies do have an obligation to disclose the source of political or controversial issue programming when the source has furnished material to them as an inducement for broadcasting that programming. Legislation such as S. 967, the Truth in Broadcasting Act of 2005, would be an effective complement to our existing sponsorship identification rules. The bill would explicitly and unambiguously require Federal agencies that produce pre-packaged news stories to announce, within the news stories themselves, that the government is the source of the stories. This requirement would apply whether or not consideration was exchanged, and whether or not controversial or political issues were involved. The bill would also explicitly and unambiguously prohibit the removal of the announcement. This announcement would satisfy the disclosure requirements under our rules, such that the bill would not impose any new burden on broadcasters and cable companies, and, in fact, would appear to simplify compliance. In sum, the bill would ensure that Federal agencies disclose their involvement in pre-packaged news stories, that broadcasters and others airing stories are aware of the government’s involvement, and, most importantly, that listeners and viewers understand the nature and source of the information being presented. Again, Mr. Chairman, thank you for inviting me to testify today. I am happy to answer any questions you may have.

• Mr. Austin Schlick

  Acting General Counsel

  Federal Communications Commission
  Read statement

  Testimony

  Mr. Austin Schlick

  Statement of
  Austin C. Schlick
  Acting General Counsel
  Federal Communications Commission
  Before the
  Committee on Commerce, Science and Transportation
  U.S. Senate
  May 12, 2005
  Chairman Stevens, Co-Chairman Inouye, and members of the Committee, thank you for this opportunity to discuss issues surrounding video news releases (“VNRs”). Consistent with the requirements of the Communications Act, the Commission has adopted rules that further the public’s right to know the source of broadcast programming. The rules establish disclosure requirements that apply to sponsored programming regardless of its source, and are not specific to government-sponsored programming. I will summarize the existing Communications Act provisions and FCC rules that apply to sponsored programming. I also will describe the Commission’s recent issuance of a public notice and request for comment on this topic. Statutory Provisions and Rules Governing Sponsorship Identification Sections 317 and 507 of the Communications Act address sponsorship identification. Section 317(a) generally requires broadcast stations to make an announcement at the time they broadcast any material in exchange for “valuable consideration . . . directly or indirectly paid, or promised to or charged or accepted by, the station so broadcasting.” Section 317(a)(1) includes an exception to this general requirement, providing that “‘service or other valuable consideration’ shall not include any service or property furnished without charge or at a nominal charge for use on, or in connection with, a broadcast unless it is so furnished in consideration for an identification in a broadcast.” Section 507 requires disclosure to the station when there is an exchange of consideration or an agreement to accept consideration involving a station employee. Disclosure obligations also extend to those involved in producing, preparing, or supplying program matter that is intended for broadcast. If any such person receives or provides consideration for the inclusion of program matter, disclosure up the chain of distribution is required. A broadcast licensee that receives disclosure pursuant to Section 507 must make a sponsorship identification announcement even if the licensee did not itself receive consideration. In addition, under Section 317(c), a licensee must exercise reasonable diligence to obtain sponsorship information from its employees or from other persons with whom it deals directly. Section 317 and the FCC’s implementing rules – which are found at 47 C.F.R. § 73.1212 – also address the content of sponsorship announcements when they are required. When the licensee airs the program, it must disclose that program matter was sponsored, paid for, or furnished, and by whom or on whose behalf the consideration was supplied or promised. Under a specific statutory authorization in Section 317(a)(2), the FCC has established special disclosure rules for programming that involves political material or the discussion of a controversial issue of public importance. Political and controversialissue programming is not covered by an exception to the disclosure requirements that Congress established in Section 317(a)(1). Generally, as stated above, sponsorship identification is required where consideration is provided in exchange for the broadcast of any material. However, as also noted above, sponsorship identification is not necessary under Section 317 if property or services that otherwise might qualify as consideration are furnished “without charge or at a nominal charge for use on, or in connection with, [a] broadcast,” and the provider of the property or services does not receive special on-air identification or promotion. This exception covers, for example, music recordings or video provided without charge for use on the air, if there is no special promotion by the station. In the case of political or controversial issue programming, however, the Commission has required sponsorship identification even when the program material is provided to the station for free and without any special promotion by the broadcaster. The FCC’s rules also establish special requirements for sponsorship announcements and record-keeping in connection with political or controversial-issue programming. Finally, in Section 76.1615 of its rules, the Commission has established for cable operators a set of sponsorship identification requirements that are based on the requirements for broadcasters under Section 317. Enforcement With respect to issues of enforcement, if the Commission determines after investigation that an entity that holds a Commission authorization has violated the sponsorship identification rules, it may impose administrative sanctions. Those sanctions potentially may include monetary forfeitures of up to $32,500 per violation, and the initiation of license revocation proceedings. Section 507 itself establishes civil and criminal penalties for violation of its disclosure requirements, with the possibility of a fine of up to $10,000 and as much as a year of imprisonment. The April 13, 2005 Public Notice The FCC has received a large number of requests to investigate the use of VNRs by broadcast licensees and cable operators in light of the sponsorship identification rules. Several of those requests have come from Members of this Committee. On April 13, 2005, the Commission unanimously adopted and released a Public Notice that reminded broadcast licensees, cable operators, and others of their sponsorship identification obligations. The Public Notice also requested public comment on various issues relating to the use of VNRs, including: how VNRs actually are used in programming; the terms on which they are provided to broadcasters and cable operators;whether mechanisms are in place to ensure that broadcasters and cable operators are notified about payments in connection with the production and provision of VNRs andabout the identity of entities that provide political and controversial issue material; and whether there are alternative or better means – in addition to the FCC’s current rules – by which the Commission could ensure proper disclosure. The Commission encourages interested parties to participate in its new proceeding on VNRs and to address these questions. Initial comments are due on June 22, 2005; reply comments are due on July 22, 2005. These comments will help the Commission enforce sponsorship identification requirements, and better assist Congress in its deliberations on this issue. Thank you for this opportunity to discuss the Commission’s sponsorship identification rules and the April 13, 2005 Public Notice. I will be happy to answer your questions.

Witness Panel 2

• Ms. Susan Poling

  Managing Associate General Counsel

  U.S. Government Accountability Office
  Read statement

  Witness Panel 2

  Ms. Susan Poling

  Testimony Before the Committee on
  Commerce, Science, and Transportation,
  U.S. Senate
  VIDEO NEWS RELEASES
  Unattributed Prepackaged
  News Stories Violate
  Publicity or Propaganda
  Prohibition
  
  Statement of Susan A. Poling, Managing Associate General Counsel, Office of General Counsel
  
  Unattributed Prepackaged News Stories Violate Publicity and Propaganda Prohibition What GAO Found Prepackaged news stories are complete, audio-video presentations that may be included in video news releases, or VNRs. They are intended to be indistinguishable from news segments broadcast to the public by independent television news organizations. To help accomplish this goal, these stories include actors or others hired to portray “reporters” and may be accompanied by suggested scripts that television news anchors can use to introduce the story during the broadcast. These practices allow prepackaged news stories to be broadcast, without alteration, as television news. The publicity or propaganda prohibition states, “No part of any appropriation contained in this or any other Act shall be used for publicity or propaganda purposes within the United States not heretofore authorized by the Congress.” GAO has long interpreted this provision to prohibit agencies from, among other things, producing materials that are covert as to origin. Our opinions have emphasized that the critical element of covert propaganda is concealment of the government’s role in producing the materials. Agencies have violated this law when they used appropriated funds to produce articles and op-ed pieces that were the ostensible position of persons not associated with the government. In two legal opinions this past year, federal agencies commissioned and distributed prepackaged news stories and introductory scripts about their activities that were designed to be indistinguishable from news stories produced by private news broadcasters. In neither case did the agency include any statement or other indication in its news stories that disclosed to the television viewing audience, the target audience of the purported news stories, that the agency wrote and produced those news stories. In other words, television-viewing audiences did not know that stories they watched on television news programs about the government were, in fact, prepared by the government. GAO concluded that those prepackaged news stories violated the publicity or propaganda prohibition. While agencies generally have the right to disseminate information about their policies and activities, agencies may not use appropriated funds to produce or distribute prepackaged news stories intended to be viewed by television audiences that conceal or do not clearly identify for the television viewing audience that the agency was the source of those materials. It is not enough that the contents of an agency’s communication may be unobjectionable. Neither is it enough for an agency to identify itself to the broadcasting organization as the source of the prepackaged ews story. In addition to these opinions, the Comptroller General issued a circular letter to the heads of all cabinet departments and federal agencies in February to alert them to our opinions on VNRs and to remind them of their duty to disclose the source of materials that they disseminate to the public. Chairman Stevens and Members of the Committee: Thank you for the opportunity to be here today to discuss the legal opinions recently issued by the Government Accountability Office (GAO) regarding the use of prepackaged news stories by federal agencies. In the past year, GAO has issued two legal opinions on the production of video news releases (VNRs) that included prepackaged news stories by both the Department of Health and Human Services (HHS) and the Office of National Drug Control Policy (ONDCP). In both of these instances, we concluded that the agencies violated the federal governmentwide prohibition on the use of appropriated funds for purposes of publicity or propaganda not authorized by Congress. In addition, in February, the Comptroller General sent a circular letter to the heads of all federal agencies to alert them to our recent opinions and to remind them of the prohibition on publicity or propaganda.

  Background Since the 1990s, VNRs have become a popular public relations tool for private corporations, nonprofit organizations, and government entities to disseminate information, in part because they provide a cheaper alternative than more traditional broadcast advertising and are welcomed by some local news stations in smaller markets with significant budget restraints.

  VNRs Contain Slates, B-Rolls, and Prepackaged News Stories While the use of VNRs is widespread and widely known by those in the media industry, the quality and content of materials considered to constitute a VNR can vary greatly. Generally, a VNR package may contain several items, including a series of video clips, known as B-roll footage; title cards containing relevant information, known as slates; a prepackaged news story, sometimes referred to as a story package; and other promotional materials.1 These materials are produced in the same manner as television news organizations produce materials for their own news segments. By eliminating a news station’s production efforts and costs of producing an original news story, VNR creators can find stations willing to broadcast a favorable news segment on a desired topic. The B-roll footage and slates are intended to assist news stations in producing their own news stories, while the story package is a preassembled,ready-to-air news story that is often accompanied by a suggested lead-in script for the anchor. Even if a broadcaster does not use a story package or scripted materials in full, the production of a professionally complete news story provides a framework for the message conveyed in the final broadcast, which allows the producer, in this case, the federal agency, to assert some control over the message conveyed to the target audience--the viewer of the broadcast. The popularity of VNRs may be attributed to the ease with which the materials may be distributed. While some packages are distributed directly from the source to television stations, satellite and electronic news services, such as those provided by CNN Newsource, facilitate distribution to a number of news markets in a short period of time. Broadcast stations subscribe to these services, which provide journalist reports and stories and advertising, in addition to VNR materials. While the news services label VNRs differently than independent journalist news reports, there apparently is no industry standard as to the labeling of VNRs. In fact, some news organizations that broadcast the HHS VNR indicated that they misread the label or they mistook the story package as an independent journalist news story on CNN Newsource.

  HHS VNRs Included Narration by Contractors Posing as Reporters GAO examined three VNR packages that HHS made available to local news organizations. The VNRs consisted of three videotapes with corresponding, printed scripts; two of the videotapes were in English, and one was in Spanish. The B-roll footage on each of the English videotapes was exactly the same and contained footage of President Bush, in the presence of Members of Congress and others, signing the Medicare prescription drug legislation into law, and a series of clips of seniors engaged in various leisure and health-related activities, including consulting with a pharmacist and being screened for blood pressure. The English videotapes also included clips of former HHS Secretary Tommy Thompson and Leslie Norwalk, Deputy Administrator of the Centers for Medicare & Medicaid Services (CMS), making statements regarding changes to Medicare. The Spanish videotape includes clips of statements by Dr. Cristina Beato of CMS, instead of Thompson and Norwalk. The two English VNRs contained different story packages, each narrated by Karen Ryan, an HHS subcontractor, who was not affiliated with a news organization. The first story package focused on CMS’s advertising campaign regarding the prescription drug legislation. The suggested anchor lead-in stated that “the Federal Government is launching a new, nationwide campaign to educate 41 million people with Medicare about improvements to Medicare.” The lead-in ended with “Karen Ryan explains.” The video portion of the story package began with an excerpt of the television advertisement with audio stating, “it’s the same Medicare you’ve always counted on plus more benefits.” Karen Ryan then explained, “That’s the main message Medicare’s advertising campaign drives home about the law.” As more clips from the advertisement appeared, Karen Ryan continued her narration, indicating that the campaign helps beneficiaries answer their questions about the new law, the administration is emphasizing that seniors can keep their Medicare the same, and the campaign is part of a larger effort to educate people with Medicare about the new law. The story package ended with Karen Ryan stating: “In Washington, I’m Karen Ryan reporting.” The second English story package focused on various provisions of the new prescription drug benefit and did not mention the advertising campaign. The anchor lead-in stated: “In December, President Bush signed into law the first ever prescription drug benefit for people with Medicare.” The anchor lead-in then noted, “There have been a lot of questions about” the new law and its changes to Medicare and “Karen Ryan helps sort through the details.” The video portion of the news report started with footage of President Bush signing the legislation, and Karen Ryan’s narration indicated that when it was “signed into law last month, millions of people who are covered by Medicare began asking how it will help them.” Next, the segment included footage of Tommy Thompson, in which he states that “it will be the same Medicare system but with new benefits.” Karen Ryan continued her narration, stating “most of the attention has focused on the new prescription drug benefit . . . all people with Medicare will be able to get coverage that will lower their prescription drug spending . . . Medicare will offer some immediate help through a discount card.” She also told viewers that new preventive benefits will be available, low-income individuals may qualify for a $600 credit on available drug discount cards, and “Medicare officials emphasize that no one will be forced to sign up for any of the new benefits.” Karen Ryan’s narration then led into clips of Thompson and Norwalk explaining other beneficial provisions of the new law. The second story package also ended with, “In Washington, I’m Karen Ryan reporting.” The Spanish-language materials contained the same three items as the English language VNRs—a B-roll, slates, and a story package. After the B-roll segments, the story package segment appeared. This segment was considerably longer than its two English counterparts, focused on prescription drug benefits, and was narrated by Alberto Garcia, who is also an HHS subcontractor, not a reporter. The anchor lead-in was similar to the second English story package, except the anchor indicates that Alberto Garcia “helps sort through the details.” The video segment began with the footage of President Bush signing the prescription drug bill into law, as Alberto Garcia narrated that after signing the law, millions of people who are covered by Medicare began asking how the new law will help them. The remainder of the story package contained footage of Dr. Beato and of seniors engaged in various activities. During the video clips of seniors, Alberto Garcia narrated that the prescription drug benefit will be available in 2006 and that drug discount cards will be available in June 2004 and that “[p]eople with Medicare may be able to choose from several different drug discount cards, offering up to 25 percent savings on certain medications.” Alberto Garcia concluded his report, stating: “In Washington, I’m Alberto Garcia reporting.”

  ONDCP Prepackaged News Stories Were Narrated by Contractors Unaffiliated with News Organizations For the ONDCP legal opinion, GAO examined eight VNRs, seven of which included prepackaged news stories, in addition to B-roll footage and slates. Each of ONDCP’s news stories included narration by an unseen person, identified as Mike Morris, Karen Ryan, or Jerry Corsini. The narrator explained that he or she was “reporting” on various ONDCP activities and on various issues related to the use of marijuana by teenagers. Each story was accompanied by proposed “lead-in” and “closing” remarks to be spoken by station news anchors. Many of the suggested anchor remarks included a phrase like, “Mike Morris has the story,” or “Mike Morris has more.” ONDCP informed us that the narrators were hired to read the scripts for the prepackaged new stories, as prepared for and approved by ONDCP. Like the HHS VNR narrators, none of these narrators were affiliated with any news organization at the time the stories were produced or distributed. The various ONDCP story packages touched on the addictive nature of marijuana, the risks of marijuana use to teenagers, an open letter to parents that was sponsored by ONDCP regarding marijuana, the increased use of marijuana by teenagers during the summer, the dangers of driving a vehicle while under the influence of marijuana, and the respiratory health risks of smoking marijuana. Most of the story packages featured statements by ONDCP Director John Walters and/or various drug experts. The suggested anchor closing remarks directed viewers to an anti-drug website and a toll-free telephone number.

  GAO’s Legal Opinions In May 2004, GAO first addressed the use of prepackaged news stories in an opinion2 issued to HHS regarding VNRs it had prepared as part of a campaign to inform Medicare recipients about the new prescription drug legislation.3 In a subsequent opinion issued in January 2005, we addressed the VNRs produced by ONDCP as part of its National Youth Anti-Drug Media Campaign.4

  Agency’s Right to Disseminate Information Does Not Include Covert Propaganda In both of these legal opinions, we concluded that production and distribution of prepackaged news stories that concealed the agency’s role in producing the story violate the publicity and propaganda prohibition. While GAO has long recognized that agencies have a right to inform the public about their activities and to defend the administration’s point of view on policy matters,5 there are several statutory limitations on an agency’s information dissemination, one of which is the publicity or propaganda prohibition. This prohibition, the first version of which was enacted in 1951, is usually contained in annual appropriations acts. It states that, “No part of any appropriation contained in this or any other Act shall be used for publicity or propaganda purposes within the United States not heretofore authorized by the Congress.”6 In applying this prohibition, GAO affords agencies a great deal of discretion in their informational activities. However, GAO has, through 50 years of decisions, identified a number of specific activities that are barred by the publicity and propaganda prohibition. One of the main targets of this prohibition is agency-produced material that is covert as to source. Our opinions have emphasized that the critical element of covert propaganda is concealment of the government’s role in producing the materials.7 GAO has concluded that agencies have violated the law when they undertook activities such as distributing suggested editorials to newspapers or hiring pundits to write commentaries without acknowledging the government’s sponsorship.8 In these cases, even though the newspapers that printed the opinion pieces may have been aware of their source, the newspaper readers did not know of the agency’s role in producing the materials.

  Unattributed Prepackaged News Stories Violate Publicity and Propaganda Prohibition Similarly, in the case of the story packages produced by HHS and ONDCP, the target audience--the viewing public--was unaware that the material was produced by the government. The story packages were clearly designed to be aired exactly as the agency produced them and were intended to resemble traditional news stories. They were narrated by government contract personnel who portrayed reporters and included suggested anchor lead-in scripts, announcing it as a news story by the purported reporter, which facilitated the unaltered use of the story package. Most importantly, the story packages contained no statement or other reference to alert television viewers to the fact that the agency was the source of the purported news story. These characteristics may lead viewers to believe, wrongly, that the piece was an actual news story produced by the local television station and narrated by a real reporter. Therefore, we concluded that the prepackaged news stories constituted covert propaganda and that HHS and ONDCP both violated the prohibition on the use of appropriated funds for publicity or propaganda.9 Furthermore, because the agencies had no appropriation available for covert propaganda, HHS and ONDCP also violated the Antideficiency Act, which prohibits obligations in excess of available budget authority.10 In both of these opinions, we also noted:“In a modest but meaningful way, the publicity or propaganda restriction helps to mark the boundary between an agency making information available to the public and agencies creating news unbeknownst to the receiving audience.” In fact, the appropriations prohibition is not the only marker that Congress has enacted to delineate the boundaries between the government and the free American press.11 Statutory limits on the domestic dissemination of news reports produced by the federal government reflect concern that allowing the government to produce domestic news broadcasts would infringe upon the freedom of the press and constitute, or at least give the appearance of, an attempt to control public opinion.12 HHS and ONDCP both commissioned and distributed prepackaged news stories and introductory scripts about their activities that were designed to be indistinguishable from news stories produced by private news broadcasters. In neither case did the agency include any statement or other indication in its news stories that disclosed to the television viewing audience (the target of the purported news stories) that the agency wrote and produced those news stories. In other words, television-viewing audiences did not know that stories they watched on television news programs about the government were, in fact, prepared by the government. We therefore concluded that those prepackaged news stories violated the publicity or propaganda prohibition.

  Circular Letter Advised All Agencies of Duty to Disclose Source of Materials In addition to the HHS and ONDCP opinions, the Comptroller General issued a circular letter to the heads of all cabinet departments and federal agencies in February of this year to alert agencies to our opinions on prepackaged news stories and to remind them of their duty to disclose the source of materials that they disseminate to the public.13 GAO decided that a governmentwide circular would be appropriate given the increasing use of VNRs by the federal government. In fact, our research showed that VNRs have been produced by a wide range of federal departments and agencies, from the Department of State to the Census Bureau to the Transportation Security Administration. Mr. Chairman, this concludes my prepared statement. I would be happy to respond to any questions regarding our opinions that you or the committee may have.

  GAO Contacts And Staff Acknowledgments For further information about this testimony, please contact Susan A. Poling, at 202-512-2667 or at polings@gao.gov. Other key contributors to this statement were Thomas Armstrong, Jeffrey McDermott, Neill Martin-Rolsky, and Sheila Rajabiun.

• Mr. Douglas Simon

  President and CEO

  D S Simon Productions Inc.
  Read statement

  Witness Panel 2

  Mr. Douglas Simon

  Testimony on S. 967
  Douglas Simon, President & CEO, D S Simon Productions
  
  Prepared Statement Thank you. I’d like to start by disclosing that my company, D S Simon Productions, has produced video news releases or VNRs for Federal Agencies during both the Clinton and current Bush administrations. It is said that the first VNRs were created in the late 1940’s. The first Federal Agency produced VNR that I remember personally watching was during the Nixon Administration. When Neil Armstrong walked on the moon no network had a camera crew at the Sea of Tranquility. NASA provided the footage. No one complained. I have been invited by this committee to examine this bill based upon existing law and existing practices in the news industry. Regardless of VNR vendor practice, the overwhelming majority of producers and reporters at TV stations know the origin of VNR video before deciding to air it. There’s a simple reason for this. Stations won’t air the video if they don’t know the source. They insist on disclosure. While the broadcast decision makers know the source, their station managers may not. The analogy I make is that the Publisher of a newspaper may not know what is being written on page five of the Metro Section. That is why when asked about a controversial government video airing on their news programs, News Directors honestly answered they didn’t know. They know now and I view this as a positive development. There have been loopholes that have allowed some government video to reach journalists via network newsfeed services with the broadcasters possibly confused about its origin. These loopholes are being closed. Changes in broadcast practices now require this funding information to be passed on to the affiliates. As a VNR producer and distributor, you might expect that I am against any regulation that effects our industry practice. I’m not. While many in the PR Video Industry disagree, I believe, when government is involved, and even in the private sector, not only do the journalistic gatekeepers need to know the original funding source of VNR material but the public has the right to know. That being said, increased government control over news broadcasts is not a hallmark of democracy. I am concerned the “Truth In Broadcasting” bill will decrease, not increase the information available to the public. It will limit, not expand the transparency of government activities. The bill calls for the FCC to create the design, presentation and language of a disclaimer that news stations would be required to air throughout the entire segment. Rather than deciding whether the story, or a portion of it, should air based on news standards, stations will be factoring in whether they are comfortable changing the look of their broadcast. Depending on the politics of the administration in power, and in their viewing area, broadcasters may feel pressure if they run or don’t run government video. This bill could result in the government altering the format of the video it produces to avoid disclosure requirements. Worse, government may turn to unregulated third parties or pop-up think tanks to become the source of the video and escape restrictions. The most serious risk is increasing government control over broadcast news limiting freedom of speech—especially when coupled with the recent FCC Notice of April 13th which held stations could be subject to fine when failing to disclose the source of “matter furnished to them” which could be applied to any information broadcasters receive. If legislation is needed, rather than regulate and threaten broadcasters I would encourage that you draft the “Transparency in Government use of PR Video Act”. This act would require: All government video disseminated to news stations whether they include pre-packaged news stories or not be posted on a government web site where the public could access it. All e-mail and fax pitches on behalf of placing the video would be required to disclose that the package is produced by the US Government. The video tape would include a graphic identifying the government as the source of the video at the front of the tape, the VNR without graphics and a second version of the video on the tape with the disclaimer burned in over the entire video. This will avoid confusion and give broadcasters the option of how its disclaimer should look without the threat of government sanction. This bill will dramatically increase transparency in government, allow the dissemination of more accurate information to millions more people and preserve our freedom of the press. Voice-overs in VNRs have been an industry convention for more than 40 years. The focus on “fake reporters” in terms of the public good misses the core issue. The public has the same right to know what our government does, when a voice-over is recorded on a VNR and when it is not. Much also has been made of “fake news” which conveys a powerful but false image when applied to VNRs. The truth is that what we provide for government clients is not news, fake or otherwise. It is paid advocacy. I hope we can agree that third-party video of all kinds is advocacy whether you believe it is factual information or propaganda. I call on you to seriously consider these recommendations and focus your attention on government behavior as opposed to setting limits on broadcasters. Thank you. Supplemental Information Who I am Speaking on Behalf of It is an honor for me to be here today. While I have long been active in promoting ethical practices within public relations and currently serve as Vice President of the Public Relations Society of America’s New York Chapter, I am here in my capacity as President & CEO of D S Simon Productions, a company that I founded 19 years ago on July 4, 1986. VNR Industry Practices The industry custom for how VNRs are produced has been established since the late 1960’s. It includes an edited package with a voice-over that a station could air in part or in whole or simply use as a reference when they create a story using third-party video. We see approximately five percent of the VNRs we distribute airing in their entirety and an even smaller number using the actual voice-over we recorded. The goal of a VNR project is to receive the widest possible airings of the key messages contained within. Given the small percentage of airings where an entire video is used, a well-crafted VNR offers stations maximum flexibility in using the story as they see fit. In some cases, a station will use the video to support a story angle that is either unrelated to or even in opposition to the intended messaging in the Video News Release. This is an accepted risk in our industry and combined with the station option not to use the video, is one of the best safeguards at avoiding overly commercial or overly biased information being disseminated. The VNR tape typically includes additional sound bites and footage as well as background information, as a graphic and contact information for a journalist to fact check. Depending on the story and budget, some projects will not include a scripted package but will simply include footage, sound bites and background information. This is commonly called a “B-Roll” package. Once the video is produced, it is delivered to news outlets via satellite, direct mail or some of the newer digital distribution systems. The third aspect of the process is notifying the media that the story is available. This is done by, e-mail, fax, phone pitches and wire services. The fourth part of the process is monitoring of usage. This is done primarily through an electronic encoding signal (much like closed captioning) that is invisible to the viewer at home but allows Nielsen Media Research to report back to us which stations have aired VNR video and when. Secondary monitoring services are also used. I can state emphatically that almost 100 percent of the broadcast decision makers we deal with know the original funding source of the video we provide them. We include notification about the original funding source in our e-mail and fax pitches in addition to labeling on the video itself. Broadcast Industry Practice The Radio-Television News Directors Association (RTNDA) has issued new guidelines. CNN Newsource, CBS Newspath and Fox NewsEdge also sell time to VNR distributors on their newsfeed services. CBS has always labeled this video as a corporate feed and identifies the funding sponsor to its affiliates. CNN now has VNR video and its own video on a separate interface so a station cannot pull a VNR thinking it was CNN content. This change was made after the infamous “Karen Ryan video” for the Department of Health and Human Services. The Fox NewsEdge affiliate feed now includes a “Courtesy of” banner on all third-party video sent out to its affiliates. In a survey of 132 broadcast producers and reporters D S Simon Productions completed in April of this year before the FCC Notice was issued, they told us that if they receive even a pitch that does not reveal the sponsor almost 80 percent never use the story that follows. The Proportion of Unlabeled Government Video to Broadcast News Content How much government produced VNR content is the public actually seeing that is controversial or unlabeled? From conversations I’ve had with representatives of monitoring services no more than 10 percent of news is VNR footage. Of that, less than two percent comes from the US Government. If half of that is controversial, unlabeled government material we are talking about 1/20th of one percent of news content being a concern. There is strong evidence the source of this video is increasingly communicated to viewers based on changes in broadcast practices. The Threat to Broadcasters if this Bill is Adopted The most serious risk is increasing government control over broadcast news limiting freedom of speech—especially when coupled with the recent FCC Notice of April 13th which held stations could be subject to fine when failing to disclose the source of “matter furnished to them” which could apply to any information broadcasters receive. Depending on how it is interpreted, stations could be subject to fines if they aired a report based upon an unnamed source or whistleblower. My Suggestions for a “Transparency in Government Public Relations Video Act” to Improve the “Truth In Broadcasting” Bill This act would require all government video disseminated to news stations whether they include pre-packaged news stories or not be posted on a government web site where the public could access it. It could be made available in libraries so people who do not have Internet access would be able to view it at no charge. This posting would include the script or transcript of sound bites as well as slate information. All e-mail and fax pitches on behalf of placing the video would be required to mention that the package is produced by the US Government. The video tape would include a graphic identifying the government as the source of the video at the front of the tape, the VNR without graphics and a second version of the video on the tape with the disclaimer burned in over the entire video to avoid confusion and to give broadcasters the option of how its disclaimer should look without the threat of government sanction. Phone and e-mail contact information of a spokesperson from the Federal Agency providing the video would also be included. If you are concerned about partisanship, you could allow the Senate majority and minority the option to appoint one spokesperson to contribute one sound bite to the video for balance. The monitoring data detailing which stations broadcast portions of the video could also be made public. Broadcasters would be encouraged to comply with the guidelines established by the RTNDA for use of third-party video but not required to do so. This bill would dramatically increase transparency in government, allow the dissemination of more accurate information to millions more people and preserve our freedom of the press.

• Ms. Barbara Cochran

  President

  Radio-Television News Directors Association
  Read statement

  Witness Panel 2

  Ms. Barbara Cochran

  TESTIMONY
  BARBARA COCHRAN
  PRESIDENT
  RADIO-TELEVISION NEWS DIRECTORS ASSOCIATION
  BEFORE
  SENATE COMMITTEE ON COMMERCE, SCIENCE AND TRANSPORTATION
  MAY 12, 2005
  
  Mr. Chairman and Members of the Committee, I am Barbara Cochran, President of the Radio-Television News Directors Association (“RTNDA”). Thank you for inviting me to appear before you today to discuss S. 967, the Truth in Broadcasting bill introduced by Senator Lautenberg and cosponsored by other Senators, including members of this Committee, Senators Kerry, Boxer and Dorgan. RTNDA is the world’s largest professional organization devoted exclusively to electronic journalism. RTNDA represents local and network news executives, educators, students and others in the radio, television and cable news business in over thirty countries. I have worked as a journalist in Washington for nearly 30 years and have held management positions in print, radio and television. I was managing editor of the Washington Star, vice president for news at National Public Radio, executive producer of Meet the Press at NBC News, and vice president and Washington bureau chief at CBS News. I became president of RTNDA in 1997. As you well know, the members of RTNDA are on the front lines in managing the news operations of radio, television and other electronic news distribution organizations. News directors are responsible for determining what stories will be covered as well as when and how these stories will be presented. News organizations often receive news topic suggestions and materials from third parties. These inputs are not a significant source of news for most operations, and they do not replace the important and substantial newsgathering activities of our members’ organizations. In the case of audio clips and video footage, these inputs can, however, provide useful material that the news organization could not have obtained on its own. For example, a hospital may provide footage of its operating room or NASA may provide a graphic depiction of a space mission. When third party audio or video is submitted to a news operation, the news director or a news staff member who has been assigned that responsibility must determine the newsworthiness of the material, and he or she must judge whether and how to use this material. On behalf of my membership, I want to express our appreciation to the Chairman for scheduling this hearing to provide an opportunity to discuss the appropriate role of the government in the treatment of VNRs. We also appreciate the initiative taken by Senator Lautenberg and the other sponsors of S. 967 to ensure that VNRs distributed to broadcasters and other programming distributors contain information concerning their source. As Commissioner Adelstein recently said, “it is up to Congress if it chooses to further strengthen the responsibility of government agencies to disclose more fully that material is government-produced.” As news directors, we appreciate the policy rationale for the disclosure requirement imposed on government agencies that prepare and release “prepackaged news stories,” as contemplated by S. 967 and contained in Senator Byrd’s amendment to the recently passed supplemental appropriations legislation. The issue of how to use material from video and audio news releases is one RTNDA has grappled with for more than 15 years. As electronic journalists, RTNDA members are committed to providing the public with accurate and credible news stories. In 1989, RTNDA’s Board of Directors, whose members are news executives from across the country, adopted a policy that calls for clear and complete disclosure of the origin of any outside material that is used in a news story or news program. This policy was incorporated into the RTNDA Code of Ethics and Professional Conduct when it was revised in 2000. The statement is unambiguous. The Code says that professional electronic journalists should “clearly disclose the origin of information and label all materials provided by outsiders.” Last year, when it was first disclosed that a few stations had used a video news release produced by a federal agency without disclosing the origin, possibly because the origin was not clear, the RTNDA Ethics Committee decided to expand its guidance on the use of outside audio and video material. Over the past 12 months, the committee developed guidelines for newsrooms as they consider whether to incorporate this material into their own stories or programs. The guidelines were released at our annual convention in April. I have attached a copy of the guidelines to my statement and ask that it be included in the hearing record. [ATTACHMENT A] The main principle is unchanged: material from outside sources must be clearly identified to the audience. The guidelines are intended to help with the editorial decision-making about whether the material should be used in the first place. Recent events have highlighted the importance these guidelines. In March, the New York Times reported that the federal government was sending an unprecedented number of video news releases to local stations and they found evidence that some stations were using the releases without altering them or identifying them. Unfortunately, as the story was spread through other news media, the impression grew that the use of unidentified audio and video from government agencies was a rampant practice. That is not the case. Based on conversations with news directors over the past two months, I believe stations use very little outside material among the dozens of stories and hours of news programming they produce each day. Of the material they receive, far more comes from corporate sources than government agencies. Furthermore, the material is far more likely to be used as background footage or excerpted in stories that the news rooms produce themselves. Very rarely are releases used in their entirety. Technological changes have made the distribution of audio and video material more complicated and sometimes made it more difficult to ascertain the point of origin. Providers have taken steps to make sure that, even in newer, digital formats, this material is clearly labeled. Nonetheless, the reports that originated with the New York Times challenged the credibility of local news. As a consequence, news directors have met with their staffs, reiterated their policies and made sure everyone in the newsroom understands that if such material is used it must be identified. We believe RTNDA’s guidelines will be helpful in facilitating those newsroom discussions. Because electronic journalists operate as trustees of the public, underlying our VNR guidelines is the basic tenet that the public must be properly informed. News operations are primarily concerned with the collection and accurate reporting of relevant news stories to their listeners and viewers. In the vast majority of cases and operations, news is collected directly by the news staff. Even when third party video or audio is received, it generally will not be used by a local news organization if similar material can be obtained directly by the station or through a network feed. Our guidelines reflect and reinforce this practice. When a judgment is made that third party video is relevant to a news story and cannot be obtained through a news source, our guidelines call for the clear disclosure of the origin of the material—and this disclosure applies to all sources of third party materials, including private parties, corporations and all levels of government. The guidelines cover a broad range of situations and VNR materials. They seek to protect the editorial integrity of the audio and video aired, to avoid commercialization of a news stories, and to otherwise guard against third party influence of news content. We believe that these guidelines help to ensure that the public receives the highest quality and most accurate information and is fully informed as to the source of third party material. Our members have renewed their efforts to honor their commitments to these guidelines and to their responsibilities as electronic journalists. Significant market forces compel them to do so – credibility with their listeners and viewers is their stock in trade. As the bill reflects, sections 317 and 507 of the Communications Act of 1934 confer disclosure authority and responsibilities on the Federal Communications Commission with regard to sponsorship identification by broadcasters, cable operators, producers and others subject to its rules. The FCC recently issued a “reminder” to these entities of their obligations to comply with the FCC’s rules. The FCC’s release stated that its “rules are grounded in the principle that listeners and viewers are entitled to know who seeks to persuade them.” RTNDA supports this public right to know and our guidelines are designed to achieve this goal of clearly disclosing “the nature, source and sponsorship” of news material viewed by the public. The FCC also is seeking comment on appropriate ways to improve the disclosures and the situations covered thereby. RTNDA looks forward to the opportunity to submit comments and to work with the FCC and others to ensure the public receives clear and accurate disclosure—and most importantly—that the public has clear and unfettered access to relevant information. The determination of what to include in any particular newscast constitutes the very core journalistic function of a broadcaster, and is a matter far removed from government supervision. The government must be cautious, therefore, in taking any action that would interfere with the editorial judgments of electronic journalists or otherwise dictate news decisions or content. RTNDA urges you, therefore, not to respond to the mistakes of a few by imposing rules that could very well restrict the ability of professional journalists to select and present newsworthy material to the public. Electronic journalists have every incentive to protect the editorial integrity of the audio and video they air without government intervention. In closing, I believe we share common goals—a free press and an informed public. I look forward to working with you to develop the best ways to achieve and protect these goals.

• Ms. Judith Turner Phair

  President & CEO

  Public Relations Society of America
  Read statement

  Witness Panel 2

  Ms. Judith Turner Phair

  Testimony by Judith T. Phaira
  President and CEO of Public Relations Society of America
  United States Senate Committee on Commerce, Science &
  Transportation
  May 12, 2005
  
  MR. CHAIRMAN AND MEMBERS OF THE COMMITTEE: On behalf of the Public Relations Society of America I thank you for the opportunity to submit this testimony concerning S. 967. PRSA represents 20,000 public relations professionals in business, government, education, nonprofit and other sectors. Our membership is divided into ten regional Districts with 114 local Chapters in the United States and the District of Columbia. We’re governed by a board of directors that is elected by members. Our 8,000 plus-member Public Relations Student Society of America has 260 Chapters on campuses at colleges and universities throughout the United States. The mission of PRSA is to advance the profession of public relations and public relations professionals through education, innovation and adherence to a strong code of ethical behavior. The PRSA Member Code of Ethics is signed by each member as a prerequisite to join. It guides them in their daily activities in the practice of public relations. That’s extremely important in the context of S. 967, which addresses one important tool in the public relations process – the Video News Release, or VNR. Like members of this committee, our members are well aware of the issues surrounding the production of VNRs by government entities or with federal funds. And our position on VNRs is probably similar to those of each member of this committee. Our Society recognizes that, in strategic communications planning, video news releases can be valuable tools promoting the free flow of information. Just as “print” news releases follow the style of print journalism, VNRs utilize a format that is most adaptable to electronic media. Both print and video news releases present information in a way that is preferred by these respective media and that meets public information needs and interests. But we also believe that VNRs should be produced and disseminated with the highest levels of transparency, candor and honesty. To provide open communication that fosters informed decision, we must do more than simply funnel information through the media to the public. We must reveal the sponsors for causes and interests represented and disclose all financial interests related to the VNR. We believe that most of our members and the 120,000 men and women practicing public relations in the United States today hold that view. Therefore, we see no issue regarding the codification of a practice that government communications professionals and their contracted agents should already be doing. Our concern with S. 967 is that some of its provisions go beyond what appears to be the intent of the legislation — that is, to require full disclosure of government sponsorship of VNRs and clear identification sources of information contained in those releases. The portions of the bill of greatest concern to PRSA reference how this disclosure would be made. We believe those provisions may have the unintended consequence of actually impeding the free flow of important information to the public. We believe that public relations professionals involved in producing video news releases should provide broadcasters with all the information they need in order to decide the best way to use the information contained in the releases. Disclosure to the public is ultimately the responsibility of broadcasters. It could come in many forms, depending on the content and context of the VNR and the broadcasters’ news production formats, and as long as the result is to keep the public totally informed about the sources of information. By proscribing the specifics of disclosure to be used in the production of government-sponsored VNRs, the S 967 could cause some broadcasters not to use the information at all. PRSA believes the government should not hold broadcasters to a different standard in presenting news to their viewers than those that print media impose upon themselves. PRSA has long advocated the ethical, honest production of video news releases and full disclosure of their sponsorship. It’s an issue of vital importance to our industry and we’re working constantly to keep the disclosure bar set high for our members and, by example, for others in our profession. VNRs have been used successfully — with full disclosure of sources of information — for conveying information to the public about a number of important public programs. For example, VNRs have been effective components of public service campaigns on such topics as labeling of over-the-counter drug supplements, seat belt usage, online tax return filing and cancer detection and prevention. Public relations exists as a profession today because it has established a level of trust with the media and the public. In our role of providing information to the public — often through media outlets — that trust is essential. We can be “trusted” only if we work diligently to earn trust. We believe that imposing rigid requirements and specifications on the information we provide to the public will not best serve the building of this trust. THANK YOU.