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Clear Channel Fined Just $8,000 by FCC for Payola Violation

October 20, 2000|CHUCK PHILIPS | TIMES STAFF WRITER

The Federal Communications Commission has fined the nation's largest radio conglomerate $8,000 for violating payola laws--a mere slap on the wrist compared with the millions of dollars in recent fines meted out to broadcasters for airing "indecent" material.

The fine against Clear Channel Communications marks the first time the federal government has acted on what critics say is a growing tactic by broadcasters to skirt payola laws: guaranteeing airplay of artists' songs in exchange for free appearances at radio station concerts.

Federal law prohibits radio stations from taking money or anything of value in exchange for playing songs without disclosing the payment to listeners, the violation allegedly committed by Clear Channel stations.

But media watchdogs say the puny size of the punishment imposed in this case will do little to deter Clear Channel or any other radio giant from testing the payola laws with similar promotions in the future.

"This is a weak slap on the wrist from a feeble commission that is no match for Clear Channel or any of the other big radio conglomerates that are powerful players in Washington," said Jeff Cohen, founder of Fairness and Accuracy in Reporting, a New York-based media watchdog group. "The FCC is obviously ill-equipped to deal with this new form of payola. It's no longer about some deejay in the control room stuffing a few bucks into his back pocket. These days payola is being done right out in the open by huge conglomerates. And nobody in Washington seems to care."

In recent years, the federal government has allowed San Antonio-based Clear Channel to gobble up more than 900 radio stations and 120 huge concert venues, instantly transforming the conglomerate into the dominant player in the broadcast and concert businesses. Media watchdogs express concerns that Clear Channel could try to use its muscle to push the boundaries of the payola laws even further than it already has.

The FCC was prompted to look into the practice in 1998 following a series of stories in The Times disclosing that AMFM/Chancellor Media--now owned by Clear Channell--billed A&M Records $237,000 to promote pop singer Bryan Adams' new single, "On a Day Like Today," on a handful of its stations. The campaign, which was built around a series of commercials and contests, also required Adams to perform for free at Chancellor charity concerts in several cities.

After the stories ran, the FCC approached Chancellor and asked for a copy of the A&M contract and other documents connected to the promotion. After reviewing statements and paperwork provided by AMFM/Chancellor, the FCC determined it could only prove that two of the 10 stations involved in the promotion broke the law, government sources said.

Last week, the agency issued two notices to Clear Channel stating that WKQI-FM in Detroit and KHKS-FM in Dallas "willfully and repeatedly" violated the law by increasing airplay of Adams' song in return for money and a guarantee that he would perform free at station concert events.

"We conclude that airplay of the record became part of the quid pro quo for the consideration the station received from A&M," said David H. Solomon, chief of the enforcement bureau of the FCC in an Oct. 12 notice of violation to Clear Channel. The notice has not been previously reported.

"We find that [Clear Channel-owned] AMFM broadcasted 'On a Day Like Today' by Bryan Adams, in consideration for Mr. Adams' agreement to appear at a concert sponsored by the station, without airing required sponsorship identification announcements," Solomon said in the notice.

It is unclear whether Clear Channel intends to appeal the fine. The radio behemoth did not even acquire AMFM/Chancellor until nearly a year after the Adams promotion ran.

Clear Channel Chief Executive Randy Michael did not return repeated calls for comment. The AMFM/Chancellor executives who authorized the promotion could not be reached for comment, but two years ago denied any wrongdoing. At that time, AMFM/Chancellor contended that the contract for the promotion included no provision to guarantee airplay of the song.

Critics say that such arrangements have become common as radio industry mergers force record companies and marketers to deal with fewer and more powerful radio groups. The joint marketing of airplay, promotions and concerts is an outgrowth of a relentless consolidation in the broadcast industry since 1996.

Indeed, the huge conglomerates created by the merger wave are particularly hungry for new revenue to justify their expansions. Merging is an expensive process that often leaves the surviving company saddled with debt. Therefore, it is not surprising that the large groups are exploring the money-raising potential of novel marketing campaigns, live concerts and other promotional packages.

Music and radio insiders say Clear Channel executives are already kicking around a new "music initiative" under which the radio behemoth may begin the unprecedented practice of charging record labels for airplay statistics as well as other innovative marketing and promotional campaigns.

Meanwhile, artist managers continue to privately complain that numerous pop acts are being pressured by Clear Channel and other radio giants to perform without pay at radio station benefit shows, which though providing income for local charities, also bolster ratings and advertising revenue for broadcasters.

In the Adams controversy, the FCC determined that KHKS received $30,400 of the $270,000 paid by AMFM/Chancellor for commercial time, plus promotional and concert appearances in exchange for increasing the number of times the song was aired. That's seven times the fine that the FCC imposed upon the radio station for violating payola-related broadcast rules.

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