The industry received a wake-up call Thurs when the FCC revealed that its 1st audit of cable for compliance with children’s advertising restrictions snagged two of the biggest kids’ programmers, Viacom’s Nick and Disney’s ABC Family. Viacom will pay $1mln, ABC Family $500K to settle potential violations found during a random FCC audit in Nov ’03. The nets blamed computer and human error. It was the 1st time the agency has targeted cable for kid’s advertising violations. Typically, it audited only broadcasters, and usually only when its license was up for renewal. The Commission says random audits will become regular. "All cable operators, DBS providers, commercial television broadcasters, and companies that provide children’s programming should know that we will vigorously enforce our children’s advertising limits," FCC chmn Michael Powell said. FCC rules permit programmers to show 10.5 mins of advertising/hr on the weekend during kids’ programs, and 12 mins/hr weekdays. The FCC says it found 591 instances in which Nick programs violated the minutes/hr rules. That equates to about 1,021 30-sec spots. In addition, Viacom reported there were about 145 instances of commercials for products associated with programming being run (another FCC no-no). The FCC found similar tying problems with 31 half-hr episodes that ran on ABC Family. In addition to the monetary settlements, both nets agreed to formally train employees on the rules and conduct internal audits for the next 2 years; those audits are to be reported to the FCC. Nick will lose out on potential ad dollars because it’s required to reduce advertising during the next 10 months by the number of minutes it exceeded the limits. Nick didn’t intentionally violate rules, it said. "While the vast majority of our programming hours were well under the FCC commercial allotments, we take full responsibility for any errors, and have initiated new procedures to help ensure this will not happen again," Nick added. ABC Family said it revised its computer system once it became aware of the mistake. "We derived no economic benefit from the error, as these commercials were never sold for placement in related shows."

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