AAF Government Report

October 1, 2009

Clark Rector Jr., Executive Vice President – Government Affairs

Congressional Committee Looks at Future of Newspapers

The Congressional Joint Economic Committee conducted an October 24 hearing entitled “The Future of Newspapers: The Impact on the Economy and Democracy.” Prior to the hearing, the AAF provided the committee staff with economic data from the Global Insight study showing the impact of advertising on job creation and economic activity.

The primary focus of the hearing was on the struggles of much of the industry to find a successful business model that accounts for a significant portion of readership moving to online reception of the news, and reductions in advertising revenue because of this shift, as well as decreases in classified advertising due to competition from online competitors. Witnesses discussed the effect these changes have has on newsgathering and civic engagement.

Advertising deductibility was mentioned towards the end of the hearing when Chairwoman Carolyn Maloney, D-N.Y., asked if eliminating or limiting advertising as a fully deductible business expense would have an impact on newspapers. Each of the panelists stated that such a proposal would have a devastating impact by creating a disincentive to advertise, further reducing newspaper revenues, and thus amounting to a de facto tax on the media. Chairwoman Maloney thanked the panelists for their comments and –significantly – said that she agreed.

Prepared testimony and a webcast of the hearing can be found on the Committee website.
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NTIA and ICANN Reach Agreement

The National Telecommunications and Information Administration (NTIA) and Internet Corporation for Assigned Names and Numbers (ICANN) have reached a permanent agreement that guarantees the independence of ICANN. It will also “ensure the transparency and accountability of ICANN to the benefit of all users of the Internet and that includes periodic reviews of ICANN performance," according to Congressman Rick Boucher, chairman of the House Subcommittee on Communications, Technology and the Internet. The most recent of a series of short term agreements expired September 30.

In recent months ICANN has been considering a plan to create thousands of new generic Top Level Domains (gTDL) which many observers were concerned could place an undue burden on corporations and brand owners. In the new agreement, ICANN has said it will address various issues of concern, including consumer protection and trademark protections, before proceeding with the implementation of new gTDLs.
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House Committee Approves Data Security Protections

The House Energy and Commerce Committee approved legislation that mandates security policies from businesses that gather and store sensitive information from individuals. The legislation, which would apply only to commercial businesses otherwise subject to FTC jurisdiction, also provides for nationwide notification if there is a data breach.

An important amendment added to the legislation permits consumers to ban data brokers from using the gathered information for marketing purposes and would allow these consumers to access and correct information about themselves in these databases.

The Committee also passed legislation regulating peer to peer programs while providing for consumer education about privacy and security risks associated with file sharing. Installers of peer to peer software must inform consumers before the software is installed and to allow consumers to remove installed software or opt out of its installation.

No date for House Floor action has been set.
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Proposed CFPA Raises Dangers for Advertising

Consumer Financial Protection Agency (CFPA) legislation (H.R. 3126) continues to move in the House Committee on Financial Services where Committee Chairman Barney Frank is leading the charge. The AAF supported Advertising Coalition has written Chairman Frank to express reservations regarding the legislation. The letter can be found here.

The letter expresses our concern that the legislation is too vague because it would make it unlawful for a person to “advertise… (a) financial product or service that is not in conformity with this (legislation) …or regulation … issued by the Agency…” The AAF believes this standard needs to be modified to specify false or misleading commercial speech. We believe that the definition of this standard should not be left to the discretion of the agency.

The bill raises serious issues in its efforts to expand liability for the advertising of a consumer financial product. The AAF believes the language is so all encompassing that it could be read to authorize the prior restraint of speech – a position that raises serious First Amendment issues.

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