Big Radio Settles Payola Charges
Tuesday, March 6, 2007
Radio listeners sick of hearing the same tunes again and again may soon encounter surprising new voices, thanks to a $12.5 million settlement pending against major broadcasters accused of taking record companies' bribes.
The four broadcast conglomerates, which together own more than 1,500 stations, have agreed to pay hefty fines and to provide air time for local artists and independent record labels, government and industry officials said yesterday. The negotiated settlement is meant to end a probe into the practice of what is known as "payola," in which large record companies quietly give cash or other benefits to radio station employees who agree to play music by the companies' artists.
"This is the largest collective fine in the history of American broadcasting," said Jonathan S. Adelstein, one of the five members of the Federal Communications Commission. "It wipes payola off the radio dial," he said, and gives lesser-known musicians a chance to reach a wider audience.
For years Adelstein, a Democrat, has railed against pay-to-play practices. But he said the government was making little headway until New York attorney general Eliot L. Spitzer (D) -- now the state's governor -- conducted a major investigation. "He brought us the evidence we needed," Adelstein said in an interview.
Under the pending agreement -- reported yesterday by the Associated Press and confirmed by Adelstein -- Entercom Communications will pay $4 million in fines, followed by Clear Channel Communications ($3.5 million), CBS Radio ($3 million) and Citadel Broadcasting ($2 million). Adelstein said he expected a majority of the commissioners to approve the settlement this week.
Small record companies say payola limits the breadth of radio playlists because big labels pay to have their artists aired repeatedly. It is illegal for stations to accept such payments without publicly disclosing them.
Andy Levin, Clear Channel's executive vice president, said in a statement that his company has "devoted tremendous resources" to preventing payola at its stations. "While no violations were found," he said, "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."
The other three companies declined comment or did not respond to requests for interviews.
Aside from paying the fines to the FCC, the four companies have agreed to give about 4,000 hours of air time to small record companies and local artists. "This is a new opportunity for fresher, newer artists to be heard on the radio," Adelstein said.
FCC Chairman Kevin J. Martin, a Republican, said in an interview that he supported the settlement, which he said would "hopefully set a strong tone for the enforcement of the rules" regarding radio play.
Previous investigations have targeted the giver rather than recipients of payola. In 2005, music producer Sony BMG agreed to pay $10 million and Warner Music Group agreed to pay $5 million to settle Spitzer's allegations of offering payola to radio stations.