News Analysis: Spirited Debate

The battle over liquor ads is headed for Capitol Hill
WASHINGTON, D.C.–Now that the tobacco wars have waned, Capitol Hill lobbyists say alcohol ads are the next big fight. Vice advertising is an easy target for politicians, since protecting children is a seductive rallying cry.
Alcohol ads have been banned from billboards in four cities: Chicago, Cleveland, Los Angeles and Oakland, Calif. In addition, Congress ordered the Federal Trade Commission in November ’97 to write a report on how well industry self-regulation prevents the marketing of alcoholic beverages to kids.
Lobbyists believe the FTC this month will release its report, fueled, in part, by a ’98 Beck’s spot that showed people consuming alcohol on a boat. FTC Commissioner Mozelle Thompson believes the “evidence of actors and the language portrayed in the ad” suggest “the message is targeted at a youthful audience, ” a red flag for the agency.
Insiders expect the FTC to address the issue of beer ads on TV, during sporting events, etc., that youngsters are likely to see. The report may also recommend that alcohol marketers establish a third-party board to screen ads to ensure kids aren’t targeted.
This initiative strikes fear in the hearts and pocketbooks of the ad industry. After all, alcohol marketers spent $1.2 billion on ads last year. Hard liquor ads represent about 25 percent of that total.
Is Congress set to crack down on advertising another legal product?
Advertisers can take comfort in a Supreme Court decision in June, which sends the strongest signal to date that advertising should be given broad protection under the First Amendment. In Greater New Orleans Broadcasting Association v. United States, the court ruled that the federal government could not make exceptions in advertising. It could not restrict casino ads to only air on tribal reservations.
The 9-0 decision struck down a 1934 Federal Communications Commission law prohibiting private casinos from advertising gaming activity on radio or television for fear of increasing the number of gamblers.
“This case is a wake-up call to judges who have viewed commercial speech as a second-class citizen under the First Amendment,” says Steven Brody of Cadwalader, Wickersham & Taft, a New York lawyer specializing in First Amendment issues. “The Supreme Court has now recognized what marketing experts have known for years; that in a mature market, advertising’s primary effects are [not to increase consumption but] to encourage brand switching and maintain brand loyalty.”
But old ideas die hard.
The theory that ads increase consumption is the reasoning behind the city ordinances banning alcohol ads from billboards in the four metros. More bad news: The city council in Washington, D.C., has again introduced such a bill, and New York City Councilwoman Una Clarke is currently drafting a similar bill.
“Outdoor advertisements are a unique and distinguishable medium of advertising which subjects the general public to involuntary and unavoidable forms of solicitation,” Cleveland’s ordinance states. Billboards are considered different from other forms of advertising because they are inescapable.
Because billboard bans restrict a single means of advertising, the tactic is suspect in light of the Greater New Orleans case. Lawsuits have been filed that challenge the restrictions in Oakland, Cleveland and Chicago. A district court has already thrown out the ban in Chicago, but the city is appealing.
“What the people in the states and localities are saying is these ‘terrible’ ads are outdoors, kids see them and we better stop them,” says Dan Jaffe, executive vice president of the Association of National Advertisers. “I don’t think the courts will allow outdoor ads to be singled out for this kind of sweeping censorship.”
The Beer Institute, the Wine Institute, the Outdoor Advertising Association of America and the California Beer and Beverage Distributors aren’t taking any chances. They filed a lawsuit Aug. 23, 1999 in U.S. District Court in Los Angeles to overturn that city’s ban, which demands the removal of truthful and non-misleading outdoor advertising of alcoholic beverages.
Distilled spirits companies have also seized the day. “We believe the Greater New Orleans ruling should cause all cities with beverage alcohol billboard bans to review their ordinances in light of this unanimous decision,” says Lisa Hawkins, a spokeswoman for the Distilled Spirits Council of the U.S. Hawkins says the industry is considering filing a lawsuit.
While Greater New Orleans may help the effort to overturn billboard bans, can the case serve as a warning to the networks, which refuse to carry hard liquor ads, although no law prevents them? The distillers, led by Seagram Americas, ended their voluntary ban to broadcast liquor ads in 1996, but the spots are scattered on a few network affiliates and cable channels rather than a full-court-press effort.
Why? Networks worry about offending people if they run liquor ads. As with condom ads, it’s easy to upset sensibilities. In addition, the nets fear disapproval from the FCC, which has the power to yank a broadcaster’s license, a position forcefully articulated by past Chairman Reed Hundt and current Chairman William Kennard. Broadcasters worry that if they air spirits ads, they may aggravate citizens, which, in turn, will rile Congress.
If this scenario unfolds, Kennard can legitimately go to the Hill and complain about liquor ads, which he says are “too important an issue for America to put in the closet.”
The nets refer to this action as the FCC’s “raised eyebrow” policy. The millions they would gain from running the ads would be offset by the potential trouble they may cause. Not only could the FCC react, but the FTC could recommend that Congress enact legislation to require the dreaded third-party screenings. Or, Congress may allow the FTC to require it through regulation–without having to pass legislation.
Some ad lobby groups, however, think the FCC’s “raised eyebrow” policy creates a prohibition that can be legally challenged in court now that Greater New Orleans is on the books.
“It’s an interesting question,” says attorney Robert Corn-Revere of the Washington, D.C., firm Hogan & Hartson. “The rationale of Greater New Orleans would counsel against imposing any kind of regulation on distilled spirits from the FCC because of the exceptions where advertising for beer and wine are allowed.”
Meantime, Greater New Orleans has made advertisers less fearful of the FTC report. “We support industry self-regulation that has teeth,” said C. Lee Peeler, associate director of the FTC’s Division of Advertising Practices, at a meeting of the National Association of Attorneys General in March.
Of course, this is Washington, and the political two-step is de rigueur. If the FTC is heavy-handed, John Dingell (D-Mich.), ranking member of the Commerce Committee, may weigh in. Rep. W.J. Tauzin, (R-La.), chairman of the House Subcommittee on Telecommunications, Trade and Consumer Protection, has also floated the idea of a single voluntary code of conduct for advertisers, instead of the three existing codes. Distillers would love it, but beer and wine officials, as well as the FTC, are opposed.
Bill Roesing, a representative at Joseph E. Seagram & Sons, thinks the best approach for distillers is to adopt a wait-and-see attitude. “I don’t know of anyone [who can] point to any adverse community reaction to the tens of thousand of [TV] spirits ads that have run in the last two years,” he says. “At the end of the day, I think this is a business decision, not a legal calculation.”
Two words: election 2000.