AO 2019-05: Internet communications company may enter into license agreements with political committees
System73, an incorporated communications technology network, may enter into license agreements with political committees for the exclusive right to livestream the committees' events.
Background
System73 provides internet livestream and linear streaming services to commercial clients. It has created two streaming channels as part of its business arrangements with commercial clients and now wishes to expand its business to political committees. System73 proposes to enter into license agreements with candidate and party committees to “broadcast their campaign appearances, rallies, debates and related events” as the “exclusive livestream provider” of a committee’s events.
Under the proposal, System73 would negotiate and sell advertising time to third parties for ads to appear during streaming political committee content. System73 would not pay a political committee for the right to livestream committee events, and the political committee would not receive any of the proceeds from System73’s advertising sales.
Analysis
Commission regulations exclude from the definition of contribution "[a]ny cost incurred in covering or carrying a news story, commentary, or editorial by any broadcasting station (including a cable television operator, programmer or producer), Web site, newspaper, magazine, or other periodical publication, including any Internet or electronic publication…unless the facility is owned or controlled by any political party, political committee, or candidate." This is known as the "press exemption" or "media exemption."
To determine whether the media exemption applies, the Commission uses a two-step analysis. First, the Commission determines whether the entity engaging in the activity is a media entity within the meaning of the Federal Election Campaign Act and Commission regulations. Second, the Commission determines whether the entity is owned or controlled by a political party, political committee, or candidate and whether the entity is acting in its capacity as a media entity in conducting the activity.
In the first step of the analysis, the Commission found that System73 is a media entity because it operates two online channels that focus on business, finance, and investment news and sporting events, producing original content, featuring live events, and disseminating content acquired from other creators.
In the second step of the analysis, the Commission found that System73 is not owned or controlled by a political party, political committee, or candidate and that it would act within the scope of its legitimate media function in streaming a committee’s events without charge to the political committee.
Since the proposed activity is within the media exemption to the Act’s prohibition on corporate contributions, the Commission concluded that System73’s proposal to enter into license agreements with political committees for the exclusive right to livestream the committees’ events is permissible.
Date issued: May 31, 2019; Length: 7 pages
Citations
Regulations
11 CFR 100.73
News story, commentary, or editorial by the media