Payola: The Next Big Storm?

Like the “perfect storm” that led to the strongest indecency crackdown in FCC history, recent events could produce a wave of aggressive FCC enforcement of payola and related sponsorship-identification rules. Broadcasters ought to take protective action, and the FCC needs to be careful not to interfere with broadcasters' editorial discretion and First Amendment rights.

Nearly two years ago, FCC Commissioner Jonathan Adelstein began calling for more FCC action on payola and sponsorship identification. Recently, a series of high-profile revelations have focused attention on government- sponsored video news releases (VNRs); columnists or experts being paid to tout products or political positions on the air; gifts from record promoters to disk jockeys; and plain old “pay for play.” Some have questioned whether program producers, promoters and others are making the required disclosures to broadcasters and whether broadcasters are exercising enough diligence about on-air disclosures. An advocacy group began a campaign to flood the FCC with e-mails about the issue. Congress held hearings, and enactment of VNR legislation appears imminent. New York Attorney General Eliot Spitzer last week announced a $10 million settlement with Sony BMG Music Entertainment regarding “gifts” to radio stations for airplay.

The FCC has announced two payola/sponsorship-ID investigations—involving Armstrong Williams and “pay for play” allegations at a radio station in Buffalo, N.Y.—and released a public notice strongly warning broadcasters (and others) about their disclosure and due-diligence responsibilities regarding VNRs. This spring, Commissioner Adelstein encouraged members of the public to file complaints in what he referred to as a “neighborhood-watch” approach to payola/sponsorship-ID enforcement. More recently, he called for an FCC investigation as a follow-up to the New York settlement.

It is unclear whether this is the tipping point for a new round of FCC investigations. In any event, broadcasters certainly should promptly take steps to ensure they are complying with the law. This means disclosing payment or consideration (even to others) to air program material, and reasonable diligence to find out about such payments from their employees and program suppliers. It also means redoubling efforts to learn about and disclose sources of program material that is political or involves controversial issues, even if it is provided for free. Compliance by broadcasters now may forestall the need for strong FCC enforcement later.

If the FCC decides to move more aggressively in enforcing payola and sponsorship-identification rules, it would be wise to be sensitive to the editorial discretion and First Amendment rights of broadcasters, particularly relating to news and public-affairs programming. And overly burdensome interpretations of disclosure rules, or stricter requirements, could deter broadcasters from airing certain news and public-affairs programs that would serve the public interest, and may even run afoul of the First Amendment.