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CONTACT: Amy Smorodin
September 19, 2008
(202) 289-8928
Product Placement Regulation Unnecessary
Ferree and Thierer Respond to Possible FCC Advertisement Regulation

WASHINGTON D.C. - The Federal Communications Commission's proposal to impose tighter rules and restrictions on "embedded advertisements" in broadcast programs is paternalistic and unconstitutional, state Ken Ferree and Adam Thierer in comments filed today with the Commission. If such rules are implemented, the Commission will destroy the financial health of the free broadcast medium and make them even less able to compete with unregulated platforms.

In the comments, Ferree and Thierer, President and Senior Fellow at The Progress & Freedom Foundation, cite a lack of evidence that viewers are unaware of, or harmed by product placement advertising in programs. "When brand names are used in program material, the public generally understands that some form of commercial sponsorship is involved," the authors explain. "Indeed, it is hard even to imagine that the American public could be as ignorant or naïve as a majority of the Commission appears to believe they are." The Federal Trade Commission has also found that integrated advertising material is not false or misleading to consumers and, therefore, the FCC has no basis to interfere with private commercial speech.

The enhanced disclosure obligations described in the Notice, the authors state, are unconstitutional. The government may only regulate commercial speech when "only to the extent that the regulation in question directly and materially advances a substantial government interest and is no more extensive than necessary." In the case of product placements, there is no substantial evidence of consumer harm and the potential rules relating to them identified in the Notice would place an inordinate burden on the speech rights of programs, advertisers, and media operators.

The increased disclosure regulations would also be detrimental to the financial viability of traditional media platforms, which depend heavily on advertising to survive. "Further, enhanced government regulation of speech on traditional platforms will only serve to accelerate the migration of program content to new, unregulated platforms," the authors explain.

"Advertisers and consumers have moved on and are adapting to the 21st Century media marketplace," Ferree and Thierer conclude, "The Commission should, too."

The comments are available on the PFF website.

The Progress & Freedom Foundation is a market-oriented think tank that studies the digital revolution and its implications for public policy. It is a 501(c)(3) research & educational organization.



The Progress & Freedom Foundation