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FCC, Radio Firms in Talks

Negotiations to settle allegations of improper payments for airplay are hung up on two issues.

April 01, 2006|Charles Duhigg | Times Staff Writer

Four of the nation's largest radio station groups are in active talks with the Federal Communications Commission to settle investigations over alleged "pay for play" violations.

But negotiations with Clear Channel Communications Inc., CBS Radio Inc., Entercom Communications Corp. and Citadel Broadcasting Corp. have bogged down over how large a fine the companies should pay and what constitutes improper on-air promotion, according to industry and agency sources familiar with the talks.

Some of the radio companies have proposed fines of as much as $1 million. However, at least one FCC commissioner, Democrat Jonathan Adelstein, is pushing for penalties that could exceed $10 million per company.

Another disagreement centers on the FCC's contention that the practice of giving radio stations CDs, concert tickets and other goods in exchange for mentioning upcoming concerts and album releases, violates federal regulations unless the deals are disclosed on the air.

But radio executives say such exchanges are standard within the industry, and that it would be burdensome to disclose them each time an artist is mentioned.

"There's going to be a huge problem if every time a disc jockey mentions Madonna, they have to list everything the station has received from her record company," said Harry Cole, a communications attorney not involved in the negotiations.

Federal regulations generally require broadcasters to tell listeners when promotions have been paid for so that they do not confuse advertisements with unpaid editorial content.

Neither the four radio companies nor FCC officials would comment on the negotiations. Insiders who detailed the discussions requested anonymity, citing the delicacy of talks.

Radio executives say the FCC has proposed that stations abide by a compliance plan similar to the terms negotiated by New York Atty. Gen. Eliot Spitzer's settlement last June with Sony BMG Music Entertainment. That agreement generally prohibits Sony BMG employees from giving radio programmers gifts or meals valued at more than $150.

Some FCC officials, however, have tentatively approved "spin programs" that would allow record companies to pay stations to play songs late at night to influence airplay charts, as long as those payments were disclosed.

Spitzer, who sued Entercom last month over allegations of illegal pay for airplay, has criticized the FCC, saying its oversight of the radio industry is lax.

The FCC met with many of the radio companies under investigation for the first time in February, months after Spitzer shared some of his evidence with the agency detailing pay-for-play exchanges. At times, however, Spitzer's office has been slow to hand over documents, arguing that the agency's investigation is moving too slow.

Access to Spitzer's documents also is a sticking point in the negotiations between radio companies and the FCC. Radio executives say they have asked to see the agency's evidence, but that federal officials, citing a confidentiality agreement with Spitzer's office, have refused to provide anything beyond summaries of wrongdoing.

People familiar with the negotiations said FCC officials and radio executives were eager to reach an agreement, although Adelstein's tough stance could make it difficult.

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