AO 2010-08: Film production, distribution costs qualify for press exemption
The funds a non-stock corporation spends to produce and distribute documentary films that mention federal candidates are covered by the press exemption from the Federal Election Campaign Act’s (the Act’s) definitions of expenditure and electioneering communication.
Background
Citizens United is a Virginia-based non-stock corporation that describes its principal purpose as promoting “social welfare through informing and educating the public on conservative ideas and positions on issues, including national defense, the free enterprise system, belief in God, and the family as the basic unit of society.” Its activities include issue advocacy, direct email communications, disseminating publications and advertising and litigation. It also conducts political activities, such as making contributions, through a separate segregated fund. Citizens United is not owned or controlled by any political party, political committee or candidate.
This organization also produces and distributes films, which frequently deal with political issues and mention political candidates, through its in-house production arm, Citizens United Productions, and sometimes through affiliated agencies. Citizens United distributes these films as DVDs and theatrical releases, and on broadcast, cable and satellite television.
Citizens United asked whether the costs of producing and distributing its films, and related marketing activities, are covered by the press exemption from the Act’s definitions of “expenditure” and “electioneering communication.”
Analysis
The Act contains an exemption from the term expenditure for “any news story, commentary, or editorial distributed through the facilities of any broadcasting station, newspaper, magazine, or other periodical publication, unless such facilities are owned or controlled by any political party, political committee, or candidate.” 2 U.S.C. § 431(9)(B)(i). The Act and Commission regulations also include a similar exemption from the definition of electioneering communication for a communication that appears in a news story, commentary or editorial distributed through the facilities of any broadcast, cable or satellite television or radio station, unless such facilities are owned or controlled by any political party, political committee or candidate. 2 U.S.C. § 434(f)(3)(B)(i) and 11 CFR 100.29(c)(2). Together, these exclusions are commonly referred to as the “press exemption” or “media exemption.”
In past advisory opinions, the Commission has applied the press exemption to a wide array of media, including cable television, the Internet, satellite broadcasts and other communications. The Commission conducts a two-step analysis to determine whether the media exemption applies. First, the entity engaging in the activity in question must be a press or media entity. AOs 2005-16, 1996-16, 1980-90. Second, the Commission must establish that the entity is not owned or controlled by a political party, a political committee or a candidate and that the entity is acting in its legitimate press function. Reader’s Digest Ass’n v. FEC, 509 F. Supp. 1210, 1215 (S.D.N.Y. 1981).
While the Act and Commission regulations do not define the term “press entity,” the Commission has examined whether the entity in question regularly produces news stories, commentary and/or editorials. In the Explanation and Justification for the Final Rules on Electioneering Communications, the Commission stated that it will interpret “news story, commentary, or editorial” to include documentaries and educational programming within the context of the media exemption to the “electioneering communication” definition in 11 CFR 100.29(c)(2). Citizens United has made 14 films since 2004, and is currently producing several more. The organization also devotes a substantial amount of its budget to producing and distributing its documentary films. Based on these facts, the Commission determined that Citizens United is a press entity for the purposes of this opinion.
Citizens United and its production affiliates are not controlled by any candidate, political party or political committee.
When considering whether an entity is serving a legitimate press function, the Commission examines whether the communication materials in question are available to the general public and whether they are comparable to those ordinarily issued by the entity. In FEC v. Mass. Citizens for Life, 479 U.S. 238, 251 (1986), the Supreme Court held that a “Special Edition” newsletter did not qualify for the media exemption because the communication was not published through the same facilities as the regular newsletter, and it was distributed to a much larger group than the regular newsletter. The Commission found that the films discussed in Citizens United’s AO request are available to the general public and comparable in form to those previously produced. In addition, Citizens United receives monetary compensation from broadcasters that air its documentaries.
Based on these factors, the Commission determined that Citizens United’s documentary films are eligible for the media exemption.
Courts have held that where the underlying product is covered by the press exemption, so are advertisements to promote that product. See FEC v. Phillips Publ’g, 517 F. Supp. 1308, 1313 (D.D.C. 1981) (citing Reader’s Digest, 509 F. Supp. at 1215). Thus, Citizens United’s ads would fall under the media exemption to the extent that they promote activities that are part of the organization’s legitimate press function. Ads that promote activities that are not part of Citizens United’s legitimate press function would not be covered by the media exemption.[FN1]
AO 2010-08: Date issued: June 11, 2010; Length: 12 pages
FOOTNOTES
1 Having found that Citizens United’s films qualify for the press exemption, the Commission determined that the question of whether the production and distribution of its films and related marketing activity constitute bona fide commercial activity by a commercial entity was moot.