Gulf Union Corporation

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In Tue Marrer or GULF UNION CORPORATION, ET AL.

CONSENT ORDER, ETC., IN REGARD TO TIZE ALLEGED VIOLATION OF : THE FEDERAL TRADE COMMISSION ACT Docket C-1853. Complaint, Jan. 25, 1971—Decision, Jan. 25, 1971 Consent order requiring. a Baton Rouge, Louisiana, radio broadcasting company and its subsidiary to cease engaging in “hypoing” during a period when its broadcast audience is being measured, that is, using unusual promotional practices designed to temporarily increase the size of a broadcast audience during rating periods.

Complaint Pursuant to the provisions of the Federal Trade Commission Act, and by virtue of the authority vested in it by said Act, the Federal Trade Commission, having reason to believe that Gulf Union- Corporation, and Sound Dimensions, Inc., a corporation, hereinafter referred to as. respondents, have violated the provisions of said Act, and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, hereby issues. its complaint stating its charges in that, respect. as follows: — Paracraruy 1. Respondent Gulf Union Corporation is a corporation organized, existing and doing business under and by virtue of the laws of the State of Louisiana, with its principal place of business located in the city of Baton Rouge, State of Louisiana. Respondent. Sound: Dimensions, Inc., is a corporation organized, existing and doing business under and by virtue of the laws of the State of Louisiana, with its principal place of business located in the city of Baton Rouge, State of Louisiana. Respondent Sound Dimensions, Inc., is the licensee of Radio Station WQX Y-FM. Sound Dimensions, Inc., is a wholly owned subsidiary of Gulf Union Corporation which owns the entire capital stock of Sound Di- Complaint 78 B.T.C.

mensions, Inc. Gulf Union Corporation directs and controls the acts and practices of Sound Dimensions, Inc.

Par. 2. Respondents are now, and for some time last past have been engaged in radio broadcasting and in the offering for sale and sale of radio broadcast time to advertisers and advertising agencies. Par. 3. In the course and conduct of their business as aforesaid; respondents now sell and offer for sale, and for some time last past have sold and offered for sale, broadcast time for advertising purposes to advertisers and advertising agencies located both in the State of Louisiana and in various other States of the United States, and respondents now cause, and for some time last past have caused, the broadcasting of radio signals, including, among other things, the aforementioned advertising, from their transmitter and place of business in the State of Louisiana into various other States of the United States, and maintain, and at all times mentioned herein have maintained, a substantial course of trade in the sale of broadcast time and in broadcasting in commerce, as “commerce” is defined in the Federal Trade Commission Act.

Par. 4, Respondents and other radio broadcasters purchase audience measurement reports as compiled and sold by market research companies for use in the sale of broadcast time to advertisers and advertising agencies. These reports are compiled from audience surveys as conducted in each particular market, and purport to contain statistical estimates of the ratings, audience size and audience composition of each radio station attaining certain minimal audience levels in the m=sured market.

Such reports are used by the respondents and other radio broadcasters to demonstrate to the purchasers of advertising time, the size and composition of the audience that is tuned to their station at any particular time of the day, and how the size and composition of their station’s audience compares with that of competing radio broadcasters in the same market.

Advertisers and advertising agencies purchase the same reports for use in determining from which radio broadcaster in a particular market they will purchase broadcast time for advertising purposes. Pan. 5. In the further course and conduct of their’ aforesaid business respondents engaged in certain unusual promotional practices during a rating period, to wit:

1. Respondents conducted and broadcast a contest, designated as “WQXY-FM $30,000 Cash Sweepstakes,” over their radio station beginning on April 11, 1970, and ending on May 10, 1970. Members of “the public were sent a card with a “lucky number” printed on its GULF UNION CORP., ET AL, 213 211 Complaint face. The contest was tied directly to, and required the listening to respondents’ broadcasts. To participate one had to be listening to respondents’ broacast at 7 a.m., 10 a.m., 2 p.m., 5 p.m., for it was at these times that the winning number was announced. Nowhere else could the winning number be obtained.

2. During the period beginning April 16, 1970, and ending May 13, 1970, respondents’ market was being surveyed and measured by the American Research Bureau (ARB). The ARB survey was subscribed to by respondents.

3. The value of the prizes offered daily during this contest was one thousand dollars ($1,000).

4. In the support of this contest, respondents placed 100 television spots in a four week period coinciding with the contest. In addition. respondents promoted their contest with a thirty (30) day showing of billboards in six locations and with three newspaper ads. 5. During respondents’ tenure of its license, they have conducted no other contests.

Par. 6. The employment of short term and unusual promotional practices by a broadcaster has the tendency and capacity to effect a temporary increase in the size of that broadcaster’s audience. Such a temporary increase in the size of a broadcaster’s audience occurring during a period when that broadcaster’s market is being measured or surveyed would cause the survey or rating company to measure an audience for such broadcaster that would be larger than would have been measured but for such short term and unusual promotional practices, thereby causing the rating or survey company to publish in its report, ratings and other data that would appear to be estimates of such a broadcaster’s customary and usual audience. As set forth in Paragraph Four hereof, audience survey reports are extensively used by broadcasters and purchasers of broadcast time as a tool for establishing the cost of broadcast time and for evaluating broadcast audiences. It is therefore an unfair act or practice for a broadcaster5 1 3 7 5 5 980 2081 37 29 96.965027 to5 1 3 7 5 6 1033 2079 135 42 96.013344 employs 1 3 7 5 7 1186 2091 67 31 96.958916 any5 1 3 7 5 8 1271 2081 96 31 96.285667 short5 1 3 7 5 9 1382 2085 88 28 96.654617 terms 1 3 7 5 10 1488 2083 68 31 96.411018 ands 1 3 7 5 11 1573 2085 145 31 93.252434 unusual5 1 3 7 5 12 1735 2094 133 31 91.766464 promo-4 1 3 7 6 0 560 2123 1310 62 -1 5 1 3 7 6 1 560 2123 106 33 96.466461 tional5 1 3 7 6 2 688 2125 149 41 96.793358 practices 1 3 7 6 3 859 2126 111 33 96.687981 which5 1 3 7 6 4 993 2128 62 32 95.165962 has5 1 3 7 6 5 1078 2130 58 31 95.165962 thes 1 3 7 6 6 1157 2130 167 55 96.750397 tendency5 1 3 7 6 7 1348 2142 39 22 96.058548 or5 1 3 7 6 8 1408 2132 157 43 96.058548 capacity5 1 3 7 6 9 1588 2137 36 28 96.620491 to5 1 3 7 6 10 1648 2135 222 42 96.194405 temporarily4 1 3 7 7 0 558 2174 1309 68 -1 5 1 3 7 7 1 558 2174 123 32 96.745361 distort5 1 3 7 7 2 700 2187 39 20 96.989922 or5 1 3 7 7 3 757 2175 117 33 96.927719 inflate5 1 3 7 7 4 892 2176 148 44 96.800224 viewing5 1 3 7 7 5 1058 2179 130 33 96.694168 levels5 1 3 7 7 6 1181 2191 36 21 96.810822 in5 1 3 7 7 7 1237 2191 19 21 95.980743 a5 1 3 7 7 8 1273 2181 181 33 95.980743 broadcasts 1 3 7 7 9 1473 2184 133 31 96.249237 markets 1 3 7 7 10 1625 2184 127 43 95.632454 during5 1 3 7 7 11 1771 2196 19 22 95.632454 a5 1 3 7 7 12 1811 2191 56 51 93.173859 pe-4 1 3 7 8 0 559 2224 1310 54 -1 5 1 3 7 8 1 559 2224 75 33 96.343887 riod5 1 3 7 8 2 652 2226 97 31 96.954483 when5 1 3 7 8 3 769 2227 75 31 96.485359 that5 1 3 7 8 4 862 2229 158 31 96.472847 markets 1 3 7 8 5 1012 2239 28 32 96.472847 is5 1 3 7 8 6 1058 2229 102 43 96.829247 beings 1 3 7 8 7 1178 2232 177 32 96.739410 measured5 1 3 7 8 8 1374 2243 38 21 96.414299 or5 1 3 7 8 9 1432 2234 175 41 96.667946 surveyed.5 1 3 7 8 10 1627 2235 185 43 96.685783 Engaging5 1 3 7 8 11 1833 2236 36 32 96.031448 in4 1 3 7 9 0 556 2275 737 48 -1 5 1 3 7 9 1 556 2275 81 31 96.641327 such5 1 3 7 9 2 652 2286 20 20 96.915260 a5 1 3 7 9 3 688 2276 148 40 96.933807 practices 1 3 7 9 4 851 2277 30 32 96.371269 is5 1 3 7 9 5 896 2278 124 33 96.371269 known5 1 3 7 9 6 1036 2290 36 21 93.260979 as5 1 3 7 9 7 1090 2280 203 43 88.479805 “hypoing.”3 1 3 8 0 0 555 2325 1312 141 -1 4 1 3 8 1 0 597 2325 1270 52 -1 5 1 3 8 1 1 597 2325 196 42 96.374496 Therefore,5 1 3 8 1 2 814 2327 57 32 96.733536 thes 1 3 8 1 3 892 2329 145 32 96.466049 unusual5 1 3 8 1 4 1060 2331 228 40 96.466049 promotional5 1 3 8 1 5 1310 2333 165 41 96.872475 practices5 1 3 8 1 6 1497 2335 39 32 96.973129 of5 1 3 8 1 7 1558 2335 57 33 96.618980 thes 1 3 8 1 8 1637 2337 230 40 96.560242 respondents,4 1 3 8 2 0 556 2352 1310 72 -1 5 1 3 8 2 1 556 2385 35 22 61.768246 as5 1 3 8 2 2 617 2379 49 28 74.781036 sets 1 3 8 2 3 694 2352 99 57 96.942024 forth5 1 3 8 2 4 817 2377 35 33 94.786179 in5 1 3 8 2 5 878 2379 204 42 94.786179 Paragraphs 1 3 8 2 6 1108 2381 86 33 96.360588 Five5 1 3 8 2 7 1221 2382 128 42 96.360588 hereof,5 1 3 8 2 8 1376 2384 183 33 96.990280 constitutes 1 3 8 2 9 1585 2386 118 48 96.679039 unfair5 1 3 8 2 10 1730 2391 70 29 95.098305 acts5 1 3 8 2 11 1828 2400 38 20 95.098305 or4 1 3 8 3 0 555 2426 172 40 -1 5 1 3 8 3 1 555 2426 172 40 78.271729 practices.3 1 3 9 0 0 555 2476 1309 100 -1 4 1 3 9 1 0 594 2476 1270 48 -1 5 1 3 9 1 1 594 2476 82 33 95.936958 Par.5 1 3 9 1 2 694 2477 28 32 96.658989 7.5 1 3 9 1 3 739 2479 73 30 96.969429 Thes 1 3 9 1 4 829 2482 68 28 96.964622 acts5 1 3 9 1 5 915 2480 68 32 96.847443 ands 1 3 9 1 6 998 2482 164 39 96.513168 practices5 1 3 9 1 7 1179 2483 41 32 97.012932 of5 1 3 9 1 8 1237 2484 220 40 96.598610 respondents5 1 3 9 1 9 1474 2497 37 21 96.625687 as5 1 3 9 1 10 1527 2491 50 27 95.372635 sets 1 3 9 1 11 1594 2488 121 31 95.372635 forth5 1 3 9 1 12 1710 2500 32 20 93.246071 in5 1 3 9 1 13 1760 2489 104 32 91.863037 Para-4 1 3 9 2 0 553 2527 1309 49 -1 5 1 3 9 2 1 553 2527 109 41 96.945892 graphs 1 3 9 2 2 682 2521 85 39 96.172058 Five5 1 3 9 2 3 787 2529 118 32 96.851059 hereof5 1 3 9 2 4 925 2542 87 21 96.461578 were5 1 3 9 2 5 1030 2532 189 34 95.915253 calculated5 1 3 9 2 6 1240 2545 37 21 96.832031 or5 1 3 9 2 7 1297 2534 162 42 96.668892 designed5 1 3 9 2 8 1479 2540 36 28 96.762733 to5 1 3 9 2 9 1536 2548 98 21 96.672958 causes 1 3 9 2 10 1653 2539 61 31 93.168976 thes 1 3 9 2 11 1731 2539 131 33 87.846825 Ameri- Decision and Order 78 FTC, can Research Bureau to publish in its April-May 1970 report for the Baton Rouge market, ratings and other audience data that would appear to be estimates of respondents’ customary and usual audience but which would in fact be estimates based upon the measurement of an audience larger than respondents customarily or usually have, and to cause ARB to place in the hands of purchasers of such reports, audience ratings and other data which would have the tendency and capacity to mislead and deceive such purchasers as to the size and composition of respondents’ customary and usual audience. Therefore the aforesaid unusual promotional practices of respondents constitute deceptive acts or practices. Par. 8. In the course and conduct of their aforesaid business, and at all times mentioned herein, respondents have been, and now are, in substantial competition in commerce with corporations, firms and individuals in.the sale of broadcast time of the same general nature as that sold by respondents. .

Par. 9. The use by respondents of the aforesaid unfair or deceptive acts and practices has had, and now has, the capacity and tendency to mislead the purchasers of broadcast time into the erroneous and mistaken belief that the ratings and other audience data contained in the aforementioned April-May 1970 report are estimates of the usual audience of the radio stations reported therein and into the purchase of substantial quantities of respondents’ broadcast time by reason of said erroneous and mistaken belief. As a consequence thereof substantial trade in commerce has been and is being unfairly diverted to the respondents from their competitors, and substantial injury has thereby been, and is being, done to competition in commerce.

Par. 10. The aforesaid acts and practices of respondents, as herein alledged, were and are all to the prejudice and injury of the public and of respondents’ competitors and constituted, and now constitute, unfair and deceptive acts and practices in commerce in violation of Section 5 of the Federal Trade Commission Act. Decision anp Orprr The Federal Trade Commission, having initiated an investigation of certain acts and practices of the respondents named in the caption hereon, and the respondents having been furnished thereafter with a copy of a draft of complaint which the Bureau of Consumer Protection proposed to present to the Commission for its consideration and which if issued by the Commission, would charge respondents with violation of the Federal Trade Commission Act; and GULF UNION CORP:, ET AL. 215 211 Decision and Order The respondents and counsel for the Commission by the respondents of all the jurisdictional facts set forth in the aforesaid draft of complaint, a statement that the signing of said agreement is for settlement purposes only and dees not constitute an admission by respondents that the law has been violated as alleged in such complaint, and waivers and other provisions as required by the Commission’s Rules; and The Commission having thereafter considered the matter and having determined that it had reason to believe that the respondents have violated the said Act, and that complaint should issue stating its charges in that respect, and having thereupon accepted the executed consent agreement and placed such agreement on the public record for a period of thirty (80) days, now in further conformity with the procedure prescribed in Section 2.34(b) of its Rules, the Commission thereby issues its complaint, makes the following juris Tieationa) findings, and enters the following order: 1. Respondent Gulf Union Corporation, is a corporation organized, existing and doing business under and by virtue of the laws of the State of Louisiana with its principal office and place of business located at 1864 Nicholson Drive, Baton Rouge, Louisiana. Sound Dimensions, Inc., is a corporation organized, existing and doing business under and. by virtue of the laws of the State of Louisiana with its principal office and place of business located at 1737 Wooddale Boulevard, Baton Rouge, Louisiana. 2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents, and the proceeding is in the public interest.

ORDER It is ordered, That respondents, Gulf Union Corporation, a corporation, and Sound Dimensions, Inc., a corporation, their officers, agents, representatives and employees, directly or through any corporate or other device, in connection with the broadcasting, and the advertising, offering for sale or sale of broadcast time in commerce, as “commerce” is defined in the Federal Trade Commission Act, do forthwith cease and desist from:

Conducting or participating in any unusual contest or giveaway or promotional practice which is calculated or designed to temporarily: increase the size of their broadcast audience only during a rating or survey period or which is calculated or designed to cause any rating or survey company to publish and place in the hands of purchasers thereof, audience rating or 470-536—73 15 Complaint 78 FVT.C.

other data which may mislead or deceive such purchasers as to the size or composition of respondents’ audience. ft is further ordered, That the respondent corporations shall forthwith distribute a copy of this order to each of their operating divisions.

lt is further ordered, That respondent Sound Dimensions, Inc., notify the Commission at least thirty (380) days prior to any proposed change in the corporate respondent such as dissolution, assignment or sale, resulting in the emergence of a successor corporation, corporation which may affect compliance obligations arising out of the creation or dissolution of subsidiaries or any other change in the the order.

lt is further ordered, That the respondents herein shall, within sixty (60) days after service upon them of this order, file with the Commission a report in writing setting forth in detail the manner and form in which they have complied with this order.