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FCC Deepens Payola Probe - Broadcasting & Cable

FCC Deepens Payola Probe

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The FCC has asked for documents from radio groups Entercom, Clear Channel, CBS Radio, and Citadel in its ongoing investigation of payola, the L.A. Times reported Thursday.

They were among a list of radio station owners the FCC is investigating as part of its follow-up to consent decrees struck last year between New York State and a couple of major record labels over their payments in cash and merchandise for radio airplay. Several groups were identified in the NY investigation, whose supporting material was passed along to the commission.

FCC Chairman Kevin Martin promised to investigate radio stations' role in the practice.

Last month, New York State Attorney General Eliot Spitzer was critical of the FCC for what he said was "inaction" on the payola issue. That criticism accompanied his own payola suit against Entercom.

The FCC responded then that it was actively investigating the information supplied by Spitzer from the settlements with Sony BMG and Warner Music last year.

Clear Channel President and CEO Mark Mays has said his programming employees are required to acknowledge that they understand that payola is illegal, and that the handful of 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.

What they shouldn't be doing, according to the consent decrees, is accepting cash payments from record companies to cover operational expenses, spinning discs in exchange for ad buys, use independent promoters as payola middlemen, or accept outright bribes like expensive vacations, event tickets, or electronic equipment.

Back in 2003, Clear Channel, the country's largest radio group, dropped the longstanding industry practice of accepting payments for research from independent promoters also seeking airplay.

The decision followed months of criticism from Capitol Hill, with legislators questioning whether the deals were simply a new take on the payola schemes of the 1950s. Payola was criticized for making it harder for new artists to win radio play if they lacked the big-bucks backing of major labels. The same criticism had been leveled at the promoter contracts.

Although Clear Channel denied crossing any ethical boundaries into the realm of payola, company executives conceded that pressure from lawmakers and public perception persuaded them not to renew promotion contracts, with Mays saying at the time: "We have zero tolerance for 'pay for play' but want to avoid even the suggestion that such a practice takes place within our company."

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