Four Groups Settle Radio Payola Investigation - Broadcasting & Cable

Four Groups Settle Radio Payola Investigation

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The FCC is close to a deal with four major radio station group owners to resolve a portion of the commission's radio payola investigation.


The agreement would, in part, settle the investigation that stemmed from a number of consent decrees between record companies and New York State over various pay-for-play radio schemes.

According to an FCC source, Clear Channel, CBS, Intercom and Citadel 

have agreed to pay a combined $12.5 million 

 In a side agreement, they agreed to provide air time to independent artists represented by the American Association of Independent Music (AAIA).
FCC Commissioner Jonathan Adelstein, who has made payola and deceptive on-air practices in general, a theme of his second term as commissioner, praised the agreement on independent artists.
"I appreciate broadcasters considering creative ways of getting fresh music to their audiences. I think that getting independent artists on the radio will, hopefully be very successful from a business perspective. You know they are going to be trying to make these segments successful, and maybe discover that there is a whole segment of audience interested in hearing independent artists."

According to Peter Gordon, chief negotiator for AAIM, the four radio groups have agreed to provide 8,400 half-hour segments dedicated to independent artists between 6 a.m. and midnight. "This is not meant to be buried in the middle of the night," eh said.

Gordon says it is a good faith agreement rather than a contract, and he applauded the groups for that good faith effort. "They should be commended for embracing one of the more vibrant sectors to help put a fresh face on their programming," he said.

He said the two would work together to set up a schedule for the airplay. "This isn't a case of get in and get out, " he said, "but of building a new platform and a new relationship." He also hoped, with Adelstein, that the effort would spur other groups to follow suit.

"Clear Channel has always been ahead of the curve in preventing payola, and we've devoted tremendous resources to police our own backyard and ensure compliance," said that company in a statement. "While no violations were found, we are pleased to announce that Clear Channel has agreed to settle this longstanding payola investigation with the FCC.

"We believe it is time to close the door on this ongoing inquiry and move forward, which is in the best interest of our company.

"Separately, the company is pleased to announce we are reaffirming our commitment to new and emerging artists by committing a significant amount of airtime to music performed by unsigned artists."

The FCC source said there are many other groups under investigation and that this deal will only resolve any complaints or allegations about those four.

Adelstein said the FCC had established a "template for future discussions with other broadcasters who have allegations currently pending."

Senator Russ Feingold (D-Wis.), who proposed legislating higher fines for payola, said he would wait to see the consent decree before commenting, beyond saying it was encouraging that some serious money was involved, but discouraging that no responsibility for wrongdoing was acknowledged.

“While I am withholding judgment on the FCC’s consent decree on payola until it is official, I am encouraged today by reports of a significant financial settlement between the federal government and major radio broadcast companies that improves access and increases air time for independent and local artists," he said in a statement.

"While these developments are a step in the right direction, the apparent lack of an acknowledgement of wrong-doing sends the wrong message.  Whatever the final settlement says, it is clear that we need continued oversight both internally and by the FCC to make sure the changes in the industry’s practices are not just on paper.”

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