Free Press Pushes Tough Payola Fines
By John Eggerton -- Broadcasting & Cable, 4/3/2006 6:40:00 AM
Activist group Free Press says it has sent 50,000 letters to the FCC calling for "a full and thorough investigation into all allegations of payola in the commercial radio industry and hold bad actors accountable."
The FCC already has an investigation ongoing into payola stemming from investigations by New York Attorney General Eliot Spitzer that resulted in settlement agreements with a couple of major music producers. Both Spitzer and the FCC have been investigation major radio station groups implicated in the pay for play investigations. But Free Press wants to make sure that whatever settlements, if any, result from the broadcaster investigations carry some kind of punitive weight rather than simply cost of business.
Free Press' call Monday for tough fines was prompted by a a story in the New York Times that Clear Channel was proposing to pay up to $3 million to settle with the FCC. "A $1.5 million to $3 million fine is peanuts," said Free Press Campaign Director Timothy Karr. "The Clear Channel colossus controls more than 1,200 radio stations nationwide. If Clear Channel is indeed guilty of payola abuses, the FCC should not let them off with a slap on the wrist," a phrase echoing that of Democratic Commissioner Jonathan Adelstein (see below).
Last month, Spitzer has filed suit against another target of the investigation, Entercom Communications, alleging it traded airtime for pay. It was the latest in a series of payola suits filed by the state. Earlier suits against music companies Warner Music Group and Sony BMG for paying for airtime were settled by the companies, but Spitzer, and the FCC are targeting the other side of the equation, the stations that allegedly accepted the payola and played the songs. Entercom is one of the top five radio station owners in the country, with stations in 20 markets: Boston, Seattle, Denver, Sacramento, Portland, Kansas City, Indianapolis, Milwaukee, New Orleans, Norfolk, Buffalo, Memphis, Providence, Greensboro, Rochester, Greenville/Spartanburg, Madison, Wichita, Wilkes-Barre/Scranton and Gainesville/Ocala. Spitzer alleges that radio stations:
• "Traded air time for gifts and other payments;
• Traded air time for promotional items and personal trips;
• Solicited and accepted payments from record labels for air time;
• Instituted corporate programs, supported and directed by senior management, that sold air time to record labels in order to manipulate the music charts."
Spitzer also last month asked the FCC to act on its current Payola investigation.
"Almost a year after payola was exposed in significant detail, the FCC has yet to respond in any meaningful way," he said. "The agency’s inaction is especially disappointing given the pervasive nature of this problem and its corrosive impact on the entertainment industry."
Following the settlements with Warner and BMG, FCC Chairman Kevin Martin in August pledged to open the commission's own investigation, and Spitzer turned over documents from Warner and BMG to the commission. Kevin Martin in a press conference last month would not comment on the status of the investigation, but assured reporters that it was continuing.
Adelstein, who has made the issue of adequately identifying paid programming something of a cause in his second term, has said: "The New York Attorney General investigation is piling evidence on top of evidence of the widespread abuse of the public trust. Given the voluminous documents pointing to major, systematic violations of FCC rules, the penalties should be commensurate with the crime. We can't let any violators get away with a slap on the wrist."
Following the consent decrees, Spitzer said he was not done with his ongoing investigation and had reportedly subpoenaed many of the top radio groups, some of whose stations had been cited in the evidence detailing the illegal practices. Independently, Sen. Russ Feingold (D-Wis.) introduced a bill that would increase the penalties for payola, including putting a radio station's license at risk, though no action has been taken on it.
The Senate Commerce Committee is also expected to raise the issue in a general FCC oversight hearing, which was postponed from February until whenever a fifth commissioner is confirmed.
Despite the raft of Spitzer subpoenas to radio companies, reportedly including Clear Channel and Infinity,
Clear Channel President and CEO Mark Mays said last fall that he did not see a "train wreck" coming on the issue of payola.
During a Progress and Freedom Foundation panel session in Washington in October, Mays said that his programming employees are required to acknowledge that they understand that payola is illegal, and that the 4-6 employees investigated in connection with the BMG consent decree were the bad actors, leaving 99.9% of its radio programmers doing what they should be doing.
David Solomon, former chief of the FCC's enforcement bureau, had a different take on the possible fallout from the ongoing investigation. In an op ed in B&C last August, Solomon said the payola settlements could trigger "a wave of aggressive FCC enforcement of payola and related sponsorship-identification rules."
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