Center for Digital Democracy, 10/06/05
So-called "Trusted" Brands Nick and Disney Seek to Thwart Safeguards
Viacom's Nickelodeon is leading a campaign of intimidation to prevent the Federal Communications Commission from implementing safeguards designed to protect children under twelve years old from the excesses of TV and online marketing. Nick is fighting new rules--slated to go into effect on Jan. 1--that would limit its ability to engage kids in the kinds of "immersive," interactive advertising that is at the core of its business model.
In a September 26, 2005 filing at the FCC, Nick, Disney/ABC, and GE/NBC/Telemundo basically claimed that serving the educational and developmental needs of children in the digital TV age violated their "First Amendment" rights. It's clear that for Nick, surrounding kids in an interactive advertising environment so they can be pitched ads from Burger King, Pringles, and Hershey Candy is more important to them than rules designed to protect children. (For an example of Nick's "Fairly Odd Parents" promoting P&G's Pringle campaign, see: http://www.zemoga.com/zemoga/projects/projectDetail.php?id_detail=2&id_ind=1.)
Nick and Disney are especially troubled by updated FCC safeguards designed to ensure that children aren't exposed to unlimited amounts of commercials, as well as ads pitched by program hosts--such as SpongeBob--urging them to buy the products (known as the "no-host-selling" policy). Under the old rules, commercial time in children's programming has been limited to a generous 12 minutes an hour (10.5 minutes an hour on the weekends). Nor could the "host" of a program (such as the star or animated character) sell products during the show. These were safeguards developed over the years by the FCC, based on developmental research and supported by health professionals. Urged by children's groups to update its rules to reflect the realities of digital TV, the commission wisely crafted appropriate policies. In a rare show of bipartisan unity, the FCC approved new rules in September 2004. They are currently scheduled to take effect on Jan. 1, 2006.
Among the new protections are those that prevent Nick and Disney from readily using digital TV's power to send children into an endless world of online, host-driven marketing. For example, Nick and the others know that running the Nick.com logo as part of its TV programming will help drive kids to their sites. The FCC's new policy would prohibit the display of such links unless:
• the website offers a substantial amount of bona fide program-related or other noncommercial content;
• the website is not primarily intended for commercial purposes, including either e- commerce or advertising;
• the website's home page and other menu pages are clearly labeled to distinguish the noncommercial from the commercial sections; and
• the page of the website to which viewers are directed by the website address is not used for e-commerce, advertising, or other commercial purposes (e.g., contains no links labeled "store" and no links to another page with commercial material).
These rules would prevent Nick and the others from promoting their websites, since they are 24/7 commercialized environments. The networks are livid. That's why Viacom's Nick and Disney/ABC have hired high-priced political operatives to arm-twist the FCC and intimidate children's advocacy groups. Disney is using former Clinton Solicitor General Seth Waxman, while Viacom/Nick has turned to Big Media's legal consigliere, the law firm of Dick Wiley. Via private and other communications, Nick and Disney's representatives have threatened to go to court in an effort to sweep away the Children's Television Act, and even challenge the entire basis of the commission's authority to regulate in the public interest.
According to their recent FCC filing, Nick and Disney/ABC claim their online sites "offer a safe and child-friendly haven…informative, entertaining, and often educational and instructional." In a formal "Declaration" submitted to the FCC, Herb Scannell, Nick's president, claims that the company's "philosophy is to put children first…." He writes that Nick's website serves the public interest, and such new rules would hurt its "educational" programming offerings. If these new rules go in to effect, says Scannell, Nick will no longer have "the funds necessary to continue creating the high quality…programming…."
But Scannell failed to tell the commission--as parent Viacom told the SEC in its annual report-- that Nickelodeon also receives significant income for its programming from cable and satellite subscribers. While he told the FCC that its websites help "empower" kids and serves as a supplement to its TV programming, Scannell neglected to say that Nick.com is a full-fledged "e-commerce" marketing site. Nick's business model is the merging of what it calls "branded entertainment" with marketing, advertising, and data collection. Nick knows that today's children are fully engaged in "multiplatform" viewing--watching TV and navigating online at the same time. As Nick Online Senior Vice President and General Manager Mike Skagerlind said this summer, "We know that kids are on different platforms, even at the same time. We are following the audience, creating a mosaic of offerings in the TV, broadband and mobile space." (See: Enid Burns, "Nickelodeon's TurboNick to Surround Viewers with Video," ClickZ News, July 7, 2005.)
In today's world, TV and online have merged. For example, Nick's TV ad-selling force also handles online commercials, such as those of its new broadband TurboNick channel. Nick simultaneously sells TV and online ads before a new "season" begins (during the so-called upfront market). Nick is also heavily involved in virtual TV advertising, partnering with Rupert Murdoch's Sky TV in the UK to offer interactive games that appear on the TV screen alongside the program itself.
Despite all its protestations about being a good corporate citizen, Nick wants to keep the FCC away from any policy that would limit junk food marketers. In June 2005, Nick made a major move in the world of "immersive" advertising that targets kids when it purchased Neopets for $160 million. The site integrates the products and content in a junk-food marketer's dream. No other company supports so many focus groups and research projects--all designed to better market to our nation's children and youth.
The networks have other concerns as well. They don't like the new rules because they put some more teeth in the implementation of the only specific public interest programming rules on the FCC's books. The networks decry having to do any additional programming for children on their new digital channels as well.
Viacom's Nick and Disney should be ashamed of their effort to scuttle the FCC's new children's protections. But they have no shame--only mega-dollars in their eyes as our kids get fat from fast-food, and spend tons of money on their "branded" products. But it's time the public spoke out. Tell your pension fund or broker to divest of Viacom and Disney. Call Viacom/Nick's Superchief Sumner Redstone at 212-258-6000, and new Disney President Robert Iger at 818-560-1000. Tell them to "grow up" and to support the FCC's children's digital safeguards.
Addendum: Both Viacom and the United Church of Christ have decided to challenge the FCC's new children's TV rules in separate federal courts--Viacom because the regulations "exceed the commission's authority," and the UCC because the rules do not go far enough (failing to ban kids' interactive advertising entirely and for allowing too many preemptions of children's programming).
Walt Disney Co., Viacom, NBC Universal, and NBC Telemundo, "Motion for Extension of Effective Date or, in the Alternative, Administrative Stay"
Exhibit A: Declaration of Martin D. Franks, CBS executive vice president, planning, policy and government relations
Exhibit B: Declaration of Herb Scannell, Nickelodeon Networks president
Exhibit C: Declaration of Walter Liss, ABC president of owned television stations
Exhibit D: Declaration of Rich Ross, Disney Channel Worldwide president
Exhibit E: Declaration of Kristen Gray, 4Kids Entertainment assistant general counsel