Amici Brief of Colorado Ethics Watch, CREW, Colorado Common Cause and Progressives United

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    ATTACHMENT 1

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    ATTACHMENT 2

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    ATTACHMENT 3

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    FEDERAL ELECTION COMMISSION

    Washington, DC 20463

    June 30, 2011

    CERTIFIED MAIL

    RETURN RECEIPT REQUESTED

    ADVISORY OPINION 2011-11

    Trevor Potter, Esq.Joseph Birkenstock, Esq.

    Matthew T. Sanderson, Esq.

    Caplin & Drysdale Chtd.One Thomas Circle, NW

    Suite 1100

    Washington, DC 20005

    Dear Messrs. Potter, Birkenstock, and Sanderson:

    We are responding to your advisory opinion request on behalf of Mr. StephenColbert concerning the application of the Federal Election Campaign Act of 1971, as

    amended (the Act), and Commission regulations to Mr. Colberts plans to establish and

    operate a political committee (the Committee). Mr. Colbert wishes to establish the

    Committee to solicit and accept contributions in unlimited amounts from the generalpublic for the purpose of making independent expenditures. He also asks whether the

    press exemption would cover costs incurred by the U.S. subsidiaries of Viacom, Inc. andrelated entities (Viacom) for the following activities, or whether these costs must be

    disclosed as contributions to the Committee:

    covering the Committee and its activities on The Colbert Report(the Show);

    producing independent expenditure advertisements for the Committee; and

    administering the Committee.

    The Commission concludes that Mr. Colbert may establish and operate theCommittee, which plans to solicit and accept contributions in unlimited amounts for the

    purpose of making independent expenditures from individuals, political committees,

    labor organizations, and corporations (but not foreign nationals, Federal contractors,

    national banks, or corporations organized by authority of any law of Congress). TheCommission further concludes that while some of Viacoms activities would fall within

    the press exemption, others would not. The Shows coverage of the Committee, and its

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    AO 2011-11Page 2

    production of independent expenditure advertisements used solely in the Shows

    coverage of the Committee, would fall within the press exemption. Thus, costs incurredby Viacom in connection with these activities would not need to be disclosed by the

    Committee as in-kind contributions. However, Viacoms production of independent

    expenditure advertisements provided to the Committee to distribute outside of the Show

    (including airing as paid advertisements on other shows and networks or as content forthe Committees website), and Viacoms administration and operation of the Committee,would not fall within the press exemption, because these activities are not legitimate

    press functions. Consequently, all costs incurred by Viacom for these activities would

    need to be disclosed by the Committee as in-kind contributions to the Committee.

    Background

    The facts presented in this advisory opinion are based on your letters received onMay 13, 2011 and June 14, 2011.

    You state that since 2005, Mr. Colbert has hosted the Show, a half-hour televisionprogram that is distributed on cable television and through associated Internet sites. The

    Show is owned, distributed, and produced by Viacom,1which is neither owned nor

    controlled by any political party, political committee, or candidate. On the Show, Mr.Colbert discusses political figures, issues, and news through on-air monologues and guest

    interviews, as well as other methods. The Show has addressed campaign finance rules

    and issues from time to time.

    You state that Mr. Colberts activities off the set have also served as material for

    the Show. For example, in 2008, the Show used Mr. Colberts attempt to run in the

    South Carolina Democratic presidential primary election as a vehicle to discuss and

    provide commentary on campaign-related issues, such as ballot access rules andpaperwork. Similarly, Mr. Colbert co-hosted the Rally to Restore Sanity and/or Fear in

    October 2010, which the Show covered extensively to provide commentary on politicaldiscourse in the United States. Other examples of the Shows coverage of Mr. Colberts

    off-set activities include: his congressional testimony on immigration, his U.S.O. Tour to

    Baghdad, his public dispute with the Associated Press about the word truthiness, and

    his sponsorship of the U.S. Speedskating Team. In all instances, these activities havebeen funded by Viacom.

    Most recently, Mr. Colbert discussed on the Show the idea of creating his ownpolitical committee. To date, the idea of this Committee, which has been referred to as

    the Colbert SuperPAC on the Show, has been a vehicle for Mr. Colbert to discusscampaign finance rules and new developments in politics.

    Mr. Colbert now plans to establish the Committee, the activities of which will be

    covered on the Show and used by Mr. Colbert as an on-air premise for discussingcampaign finance rules and other aspects of American politics. Neither Viacom nor its

    1Staff of the Show are employees of Hello Doggie, a production company that produces the Show under

    contract to Viacom.

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    AO 2011-11Page 3

    corporate management will control or direct the Committees activities. The Shows

    production, current format, and distribution will not be altered in covering or commentingon the Committee.

    You state that the Committee will file a Statement of Organization with the

    Commission as a nonconnected committee. You represent that it will make onlyindependent expenditures and will not make monetary or in-kind contributions to anycandidate, political committee, or political party. It also will not coordinate its

    expenditures with any candidate or political party. The Committee will solicit and accept

    unlimited contributions from individuals, political committees, corporations, and labor

    organizations. It will comply with all applicable requirements of the Act andCommission regulations, including disclaimer and reporting rules.

    You state that the Committee will have its own website, which will discusspolitical events, offer opinions on political matters, and solicit contributions. The

    Committee will pay for the costs associated with this website, as well as the Committees

    solicitation costs and some of its other expenses, including, for example, the cost of Mr.Colberts Committee-related travel and Committee mementos. Much of the cost of

    operating the Committee, however, including costs to produce some of its independent

    expenditure advertisements and to prepare and file the Committees reports with theCommission, will be incurred by Viacom either directly, or indirectly through payments

    to its vendors.

    While hosting the Show, Mr. Colbert plans to refer to the Committees website,describe the Committees operations, mention audience participation opportunities, and

    air the Committees independent expenditure advertisements. These independent

    expenditure advertisements will be created by the Shows staff using the Shows

    production resources.

    You state that these independent expenditure advertisements will be subject toViacoms regular review process. This review process is performed by lawyers and

    executives from Viacom. It includes a review of scripts of the Show and, where

    appropriate, specific proposals or subjects regarding content of the Show, to identify legal

    and commercial issues and to ensure compliance with standards and practices for cableshows. This process will also apply to the Shows coverage of the Committee. As

    Executive Producer of the Show, however, Mr. Colbert is and will remain principally

    responsible for formulation of the Shows content, subject to this review process.

    You state that independent expenditure advertisements created by the Showsstaff will be aired on the Show (or posted on the Shows website) as part of the Showscoverage of the Committee. Some of these independent expenditure advertisements will

    be provided to the Committee to air as paid advertisements on other shows and networks.

    All of the independent expenditure advertisements will remain the intellectual property ofViacom.

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    You state that the Shows production resources and staff will also be used to

    prepare and file the Committees reports with the Commission.

    Questions Presented

    1.

    May Mr. Colbert form an independent expenditure-only committee that acceptsunlimited contributions from individuals, political committees, corporations, and

    labor organizations?

    2. If the Committee is discussed on the Show, must airtime and related costs incurred by

    Viacom be reported as in-kind contributions, or will these costs be exempt from

    reporting requirements under the press exemption?

    3. If the Committee receives in-kind contributions from Viacom, may it also solicit and

    accept contributions from the general public?

    Legal Analysis and Conclusions

    Question 1. May Mr. Colbert form an independent expenditure-only committee thataccepts unlimited contributions from individuals, political committees, corporations, and

    labor organizations?

    Yes, Mr. Colbert may form a political committee that makes only independent

    expenditures2and does not make contributions. The Committee may accept unlimited

    contributions from individuals, political committees, corporations, and labor

    organizations but not from foreign nationals, Federal contractors, national banks, or

    corporations organized by authority of any law of Congress.

    A political committee that makes only independent expenditures may solicit and

    accept unlimited contributions from individuals, corporations, labor organizations, andother political committees, but not from foreign nationals, Federal contractors, national

    banks, or corporations organized by authority of any law of Congress. SeeAdvisory

    Opinion 2010-11 (Commonsense Ten) (corporations and labor organizations may

    contribute without limit to political committees that make only independentexpenditures);see alsoCitizens United v. FEC, 130 S. Ct. 876, 913 (2010) (corporate-

    funded independent expenditures are constitutionally protected speech); SpeechNow.org

    v. FEC, 599 F.3d 686 (D.C. Cir. 2010) (en banc) (individuals may contribute withoutlimit to political committees that make only independent expenditures). The political

    committee must register with the Commission

    3

    and comply with all applicable reportingrules. See SpeechNow, 599 F.3d at 698.

    2The term independent expenditure means an expenditure by a person expressly advocating the election

    or defeat of a clearly identified candidate that is not made in concert or cooperation with or at the request or

    suggestion of such candidate, the candidates authorized political committee, or their agents, or a politicalparty committee or its agents. 2 U.S.C. 431(17); 11 CFR 100.16.

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    In Advisory Opinion 2010-11 (Commonsense Ten), the Commission concluded

    that a nonconnected political committee that made only independent expenditures couldsolicit and receive unlimited contributions from individuals, political committees,

    corporations, and labor organizations. Like Commonsense Ten, the Committee plans to

    register as a nonconnected political committee, plans to make only independent

    expenditures, and will not make contributions or coordinated communications. You statethat it will comply with all applicable requirements of the Act and Commissionregulations, including disclaimer and reporting rules.

    Accordingly, the Commission concludes that Mr. Colbert may establish and

    operate the Committee. The Committee may solicit and accept unlimited contributionsfrom individuals, political committees, corporations, and labor organizations, but the

    Committee may not solicit or accept contributions from foreign nationals, Federal

    contractors, national banks, or corporations organized by authority of any law ofCongress. The Committee must comply with all applicable reporting and disclaimer

    requirements.

    Question 2. If the Committee is discussed on the Show, must airtime and related costs

    incurred by Viacom be reported as in-kind contributions,4or will these costs be exempt

    from reporting requirements under the press exemption?

    If the Committee is discussed on the Show, airtime and related costs incurred by

    Viacom for its coverage of the Committee on the Show will be exempt from reporting

    requirements under the press exemption. Costs incurred by Viacom to produceindependent expenditure advertisements aired solely on the Show will also be exempt

    from reporting requirements under the press exemption. If Viacom produces these

    independent expenditure advertisements for the Show and also provides these

    independent expenditure advertisements to the Committee to distribute outside of theShow (including airing as paid advertisements on other shows and networks or as content

    for the Committee's website), then the costs of these independent expenditureadvertisements will be in-kind contributions by Viacom to the Committee and must be

    reported as such. If Viacom produces independent expenditure advertisements directly

    for the Committee for distribution outside the show, the costs of these advertisements will

    3

    The Committee has previously determined that such political committees may include a letter with theirForm 1 Statements of Organization clarifying that they intend to accept unlimited contributions for the

    purpose of making independent expenditures. SeeAdvisory Opinions 2010-09 (Club for Growth) and2010-11 (Commonsense Ten) and attachments thereto.

    4Nothing in the request indicates that an in-kind contribution from Viacom to the Committee would

    constitute a direct or indirect contribution or donation by a foreign national under 2 U.S.C. 441e.

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    AO 2011-11Page 6

    also be reportable in-kind contributions by Viacom. Finally, any costs incurredby

    Viacom to administer the Committee will be reportable in-kind contributions.5

    The Act and Commission regulations define the terms contribution and

    expenditure to include any gift of money or anything of value for the purpose of

    influencing a Federal election. 2 U.S.C. 431(8)(A) and (9)(A); 11 CFR 100.52(a) and100.111(a). The Act and Commission regulations require political committees to reportall contributions received, whether monetary or in-kind, and expenditures made during a

    given reporting period. See2 U.S.C. 434(b); 11 CFR 104.3.

    Under the Act, [t]he term expenditure does not include . . . any news story,commentary, or editorial distributed through the facilities of any broadcasting station,

    newspaper, magazine, or other periodical publication, unless such facilities are owned or

    controlled by any political party, political committee, or candidate. 2 U.S.C.431(9)(B)(i). Commission regulations further provide that neither a contribution nor an

    expenditure results from any cost incurred in covering or carrying a news story,

    commentary, or editorial by any broadcasting station (including a cable televisionoperator, programmer or producer) . . . unless the facility is owned or controlled by any

    political party, political committee, or candidate[.] These exclusions are known as the

    press exemption. 11 CFR 100.73 and 100.132. Costs coming within this exemptionare not contributions or expenditures and are not subject to the reporting requirements of

    the Act or Commission regulations.

    The legislative history of the press exemption indicates that Congress did notintend to limit or burden in any way the First Amendment freedoms of the press and of

    association. [The exemption] assures the unfettered right of the newspapers, TV

    networks, and other media to cover and comment on political campaigns. H.R.REP.NO.

    93-1239, at 4 (1974).

    The Commission has historically conducted a two-step analysis to determinewhether the press exemption applies. First, the Commission asks whether the entity

    engaging in the activity is a press entity. See, e.g.,Advisory Opinions 2005-16 (Fired

    Up!), 1996-16 (Bloomberg), and 1980-90 (Atlantic Richfield). Second, the Commission

    applies the two-part analysis presented inReaders Digest Assn v. FEC, 509 F. Supp.1210, 1215 (S.D.N.Y. 1981), which requires it to determine:

    5As indicated above, Mr. Colbert, who plans to establish the Committee, is and will remain principally

    responsible for the formulation of the Shows content. The Commission does not address how, if at all, theanalysis would be different in the absence of this relationship.

    Additionally, the Commission assumes for the purposes of this advisory opinion that all costs incurred by

    Hello Doggie to produce the Show or administer the Committee are attributable to Viacom. Therefore, the

    Commission need not determine whether Hello Doggie would be making in-kind contributions to the

    Committee.

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    (A) Whether the entity is owned or controlled by a political party, political

    committee, or candidate; and

    (B) Whether the entity is acting as a press entity in conducting the activity at

    issue (i.e., whether the press entity is acting in its legitimate press function).

    See also FEC v. Phillips Publg, 517 F.Supp. 1308, 1312-13 (D.D.C. 1981); AdvisoryOpinions 2007-20 (XM Radio), 2005-19 (Inside Track), 2005-16 (Fired Up!), and

    2004-07 (MTV).

    1) Is Viacom a Press Entity?

    The Commission has previously determined that Viacom is a press entity. See

    Advisory Opinion 2004-07 (MTV). Nothing in the facts presented by Mr. Colbert orotherwise available to the Commission would cause the Commission to reconsider this

    prior determination at this time.

    2) Ownership Criteria and Legitimate Press Function

    A) Is Viacom Owned or Controlled by a Political Party, Political Committee, orCandidate?

    The Commission has previously determined that Viacom is not owned or

    controlled by a political party, political committee, or candidate. SeeAdvisory Opinion2004-07 (MTV). Nothing in the facts presented by Mr. Colbert or otherwise available to

    the Commission causes the Commission to reconsider this prior determination at this

    time.

    B) Is Viacom Acting in its Legitimate Press Function?

    The Commission considers two factors in determining whether a press entity is

    acting in its legitimate press function. They are (1) whether the press entitys materials

    are available to the general public, and (2) whether the materials are comparable in form

    to those ordinarily issued by the press entity. Advisory Opinions 2005-16 (Fired Up!)(citingFEC v. Mass. Citizens for Life (MCFL), 479 U.S. 238, 251 (1986)) and 2000-13

    (iNEXTV) (concluding that a website was viewable by the general public and akin to a

    periodical or news program distributed to the general public).

    InMCFL, the Supreme Court held that a Special Edition newsletter did notqualify for the press exemption because it differed in certain considerations of formfrom the press entitys regular newsletter. MCFL, 479 U.S. at 250-51. Among those

    considerations of form enumerated by the Supreme Court were the fact that the Special

    Edition was not published through the facilities of the press entitys regular newsletterbut by a staff that had prepared no previous or subsequent newsletters, and that the

    Special Edition was distributed to a group far larger than the regular newsletters

    audience. Id.

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    In looking at these two factors, the Commission is also mindful that a press

    entitys press function is distinguishable from active participation in core campaign orelectioneering functions. Advisory Opinion 2008-14 (Meloth, Inc.). While the press

    exemption covers press activity, it does not cover campaign activity, even if the

    campaign activity is conducted by a press entity. SeeMCFL, 479 U.S. at 251

    (recognizing the distinction of campaign flyers from regular publications);ReadersDigest Assn, 509 F. Supp. at 1214 (the press exemption would not apply where, forexample, on Election Day a partisan newspaper hired an army of incognito propaganda

    distributors to stand on street corners denouncing allegedly illegal acts of a candidate and

    sent sound trucks through the streets blaring the same denunciations, all in a manner

    unrelated to the sale of its newspapers);see alsoMcConnell v. FEC, 540 U.S. 93, 208(2003) (commenting that the press exemption does not afford carte blancheto media

    companies generally to ignore FECAs provisions).

    As described further below, the Shows coverage of the Committees activities is

    part of Viacoms legitimate press function. The other activities proposed by Mr. Colbert,

    however, would result in Viacom engaging in active participation in core campaign orelectioneering functions and thus do not constitute Viacom acting in its legitimate press

    function.

    1. Costs to Cover the Committee on the Show

    The Commission concludes that Viacoms coverage of the Committee on the

    Show, and its production of independent expenditure advertisements used solely in theShows coverage of the Committee, are part of Viacoms legitimate press function. Thus,

    the costs of those activities need not be reported by the Committee as in-kind

    contributions.

    Coverage of the Committee on the Show includes producing and airing segments

    of the Show that discuss the Committees operations, the Committees support for oropposition to Federal candidates, the Committees website, audience participation

    opportunities, and the Committees independent expenditure advertisements. These

    segments will consist of news stories, commentary, and editorials in the context of

    providing a continuing premise for the Show to cover and offer commentary on campaignfinance laws and other aspects of American politics.

    UnderMCFLs considerations of form analysis, the production and distributionof segments of the Show featuring discussions of the Committee and the Committees

    independent expenditure advertisements will be comparable in form to previouslyproduced segments appearing on the Show. For example, these segments will beproduced through the regular production facilities of the Show. Thus, the staff that

    produces these segments of the Show will be the same staff that produces other segments

    of the Show that do not discuss the Committee. These segments will also be subject tothe same review by Viacom as other segments of the Show. Further, these segments of

    the Show will be distributed on the same cable television channel, Comedy Central, and

    during the same time slot, and their content will be made available on the same website,

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    as other segments of the Show. The format of the Show, which currently discusses

    political actors, issues, and news through on-air monologues and guest interviews, willnot be altered. Therefore, Viacom will be acting within its legitimate press function

    when it features on the Show discussions of the Committee, and costs incurred by

    Viacom will not be in-kind contributions from Viacom to the Committee.6

    2. Costs Related to Independent Expenditure Advertisements Provided to the

    Committee to Distribute Outside of the Show

    The Commission concludes that Viacom would not be acting within its legitimate

    press function by providing independent expenditure advertisements to the Show and alsoproviding the independent expenditure advertisements to the Committee, or providing

    independent expenditure advertisements produced directly for the Committee to

    distribute outside of the Show (including airing as paid advertisements on other showsand networks or as content for its website). Thus, costs incurred by Viacom for this

    activity would need to be reported by the Committee as in-kind contributions from

    Viacom to the Committee.

    As noted above, the press exemption covers press activity, not campaign activity

    by a press entity. SeeMCFL, 479 U.S. at 251;Readers Digest Assn, 509 F. Supp. at1214. Here, Viacoms provision of independent expenditure advertisements to the

    Committee would constitute active participation [by Viacom] in core campaign or

    electioneering functions outside the scope of the press exemption. Advisory Opinion

    2008-14 (Meloth, Inc.). This result would stretch the boundaries of the press exemptionfar beyond those contemplated by Congress and the Supreme Court. See, e.g.,MCFL,

    479 U.S. at 251;Readers Digest Assn, 509 F. Supp. at 1214;see alsoMcConnell,

    540 U.S. at 208. Thus, based on the facts of this request, independent expenditure

    advertisements provided to the Committee to distribute outside of the Show would be in-kind contributions to the Committee.

    7

    3. Committees Administration Costs

    The Commission similarly concludes that the administration of the Committee by

    Viacom would constitute active participation [by Viacom] in core campaign orelectioneering functions and would therefore not be part of Viacoms legitimate press

    function. Thus, costs incurred by Viacom to administer the Committee would need to be

    reported by the Committee as in-kind contributions by Viacom.

    6A news story, commentary, or editorial that lacks objectivity or is satirical can still be considered part of a

    press entitys legitimate press function, even if that news story, commentary, or editorial expressly

    advocates the election or defeat of a clearly identified candidate for Federal office. SeeAdvisory Opinions

    2010-08 (Citizens United) and 2005-19 (Inside Track). Even if the materials produced and aired byViacom contain express advocacy, Viacoms coverage of them on the Show will be covered by the press

    exemption.

    7Seefootnote 5 above.

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    There is no basis on which to conclude that the administration of a political

    committee is part of the legitimate press function of a press entity. Accordingly, suchactivities are beyond the scope of the press exemption and must be reported by the

    Committee as in-kind contributions received from Viacom.

    Question 3. If the Committee receives in-kind contributions from Viacom, may it alsosolicit and accept contributions from the general public?

    Yes, if the Committee receives in-kind contributions from Viacom, it may also

    solicit and accept contributions from individuals, political committees, corporations, and

    labor organizations (but not from foreign nationals, Federal contractors, national banks,or corporations organized by authority of any law of Congress).

    As discussed above, a political committee that makes only independentexpenditures may solicit and accept unlimited contributions from individuals,

    corporations, labor organizations, and other political committees (but not from foreign

    nationals, Federal contractors, national banks, or corporations organized by act ofCongress). SeeAdvisory Opinion 2010-11 (Commonsense Ten);see alsoAdvisory

    Opinion 2010-09 (Club for Growth). The Committees acceptance of contributions from

    Viacom would thus not bar it from soliciting and accepting unlimited contributions fromother permissible sources.

    This response constitutes an advisory opinion concerning the application of the

    Act and Commission regulations to the specific transaction or activity set forth in yourrequest. See2 U.S.C. 437f. The Commission emphasizes that, if there is a change in any

    of the facts or assumptions presented, and such facts or assumptions are material to a

    conclusion presented in this advisory opinion, then the requestor may not rely on that

    conclusion as support for its proposed activity. Any person involved in any specifictransaction or activity which is indistinguishable in all its material aspects from the

    transaction or activity with respect to which this advisory opinion is rendered may rely onthis advisory opinion. See 2 U.S.C. 437f(c)(1)(B). Please note that the analysis or

    conclusions in this advisory opinion may be affected by subsequent developments in the

    law, including, but not limited to, statutes, regulations, advisory opinions, and case law.

    The cited advisory opinions are available on the Commissions website, www.fec.gov, ordirectly from the Commission's Advisory Opinion searchable database at

    http://www.fec.gov/searchao.

    On behalf of the Commission,

    (signed)Cynthia L. Bauerly

    Chair

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