FTC report on violence stokes regulatory fires

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The Federal Trade Commission report on marketing violent content to kids could trigger other major regulatory and congressional debates on advertising and media practices.

The FTC report focused on movie, music and videogame marketers, accusing them of ignoring their own industry ratings systems to target underage consumers. But within days of the report's Sept. 11 release, the ad industry faced the prospect that fallout would extend beyond those three industries' marketing strategies and revive old congressional debates over ad deductibility or limits on violent programs.

PASSAGE UNLIKELY

Sen. John McCain (R., Ariz.) said his Senate Commerce Committee this week will try to move forward Sen. Ernest "Fritz" Hollings' (D., S.C.) Children's Protection from Violent Programming Act. But Sen. McCain acknowledged chances of Senate passage are unlikely. The legislation would bar TV stations from running violent programming when a "substantial" number of children are present.

Meanwhile, the Senate Judiciary Committee plans a hearing to look at eliminating antitrust measures that would prevent the three industries from developing stronger conduct codes.

Several senators talked of attaching anti-ad or anti-violence amendments to other legislation.

Sen. John Breaux (D., La.), for instance, asked representatives of the three industries cited in the report what their response would be if he offered an amendment to remove the deductibility of ads for companies marketing adult products to kids. An aide later said the senator was speaking "rhetorically."

Separately, Sen. Judd Gregg (R., N.H.) threatened to introduce legislation imposing sanctions on companies marketing violent products to kids.

PROGRAMMING REQUIREMENTS

The Federal Communications Commission already planned to revisit the requirement that TV media companies provide 3 hours a week of children's education programming and limit the number of ads on kids' shows -- specifically, to determine how it would apply to digital TV. Now the FCC will also look at the suitability of ads, whether program promotions should be included in ad limits and whether there should be curbs on interactive marketing.

"It has brought an incredible spotlight of attention to the question of violent media and how it is marketed," said Dan Jaffe, exec VP of the Association of National Advertisers. "It has engendered a cottage industry of proposals. The heat is clearly on."

The heat is likely to be turned up next year. Democratic presidential candidate Al Gore in a statement said entertainment marketers have six months to act voluntarily.

While FTC Chairman Robert Pitofsky last week declined to impose his own timetable, he said the commission wants to act next year if the industry does not move.

"Industry codes that are now worth the paper they are written on will not be acceptable," he said, adding the industries' marketing practices "undermine parental warnings and bring into question the fundamental credibility of the rating and labeling systems."

MOVIE INDUSTRY PLAN

There was some indication last week that voluntary moves could be coming in the movie industry, which spends more than $2 billion of the nearly $3 billion spent on ads by the three industries. (The videogame industry recently instituted its own limit on ad placement.)

Movie studio heads who declined to testify at a Senate Commerce Committee hearing last week are scheduled to testify at a second hearing next week.

Jack Valenti, lobbyist for the Motional Picture Association of America, notably declined to defend marketing to kids of R-rated movies. He said he would discuss the report with studio executives.

"We should not target under 17," said Mr. Valenti, adding that if Hollywood were to respond at the next hearing, "studio heads would have to agree with me."

Fueling the furor were some of the report's specific examples of inappropriate marketing. Among instances cited:

nOne unidentified R-rated movie was promoted via flyers given to youth organizations such as the Camp Fire Boys & Girls.

nA marketing plan for a videogame rated M for mature listed "males 17 to 34" as its target but added, "the true target is males 12 to 34."

nMarketing plans for three companies' M-rated videogames showed ads running in Nintendo Power, a magazine with 75% readership younger than 17.

Legislators reacted with unbridled anger during last week's Senate committee hearing.

"It shows that entertainment companies are literally making a killing off of marketing violence to kids," said Sen. Sam Brownback (R., Kan.)

The FTC "found dozens of smoking guns about smoking guns," said Sen. Joe Lieberman (D., Conn.), making his first return to the Senate since becoming the Democratic vice presidential candidate. "It is outrageous and it must stop."

Sen. McCain called the report "a sad commentary on corporate responsibility" and at one point blasted Sony Pictures Entertainment and agency McCann-Erickson Worldwide, Los Angeles, for trying to get spots for the "extraordinarily violent" PG-13 film "The Fifth Element" on cable channel Nickelodeon.

Marketers didn't question the FTC's overall charges, but sharply questioned the report's suggestion that a substantial teen presence should disqualify marketers from targeting primarily adult audiences.

The FTC report said if 35% or more of the audience for a publication or Web site is under 17, then marketing violent content is inappropriate. For TV, the report deemed as off limits any show with a high teen viewership, even if up to 70% of its overall audience is adult.

HALTING LEGAL ADS

Doug Lowenstein, president of the Interactive Digital Software Association, said the FTC's standard would halt perfectly legal ads aimed at adults.

"We reject the FTC's operating assumption that ads in publications that happen to have some noteworthy percentage of younger readers, but a substantial and perhaps dominant share of older readers and users, is inappropriate," he said. "Using this guidepost, virtually every game Web site and sites like MTV.com would be off-limits to advertisers of mature products."

Sega of America President-CEO Peter Moore said his company and his industry would "push back" if the FTC tries to impose the proposed standards. "I will find it extremely difficult to justify banning M-rated game titles from a magazine that has over half of its readership aged 17 or older. It is neither practical nor fair to imply that we should bypass advertising media targeted to the gaming enthusiast simply because of the possibility of spillage to a younger demographic."

Marketing groups also questioned the FTC's ability to impose those particular standards.

"It seems to me they are taking an extreme position," said Hal Shoup, exec VP of the American Association of Advertising Agencies. "I don't think it is sustainable legally."

Penny Farthing, counsel for the Freedom to Advertise Coalition, an association of ad and media groups, said of the FTC's proposed standard that any line "ought to be drawn with more of a scientific basis."

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