FCC Launches Payola Probes of 4 Radio Giants
The Federal Communications Commission on Wednesday launched formal investigations into pay-for-play practices at four of the nation's largest radio corporations, the biggest federal inquiry into radio bribery since the congressional payola hearings of 1960.
Two FCC officials with direct knowledge of the matter confirmed that the agency had requested documents from Clear Channel Communications Inc., CBS Radio Inc., Entercom Communications Corp. and Citadel Broadcasting Corp. over allegations that radio programmers had received cash, checks, clothing and other gifts in exchange for playing certain songs without revealing the deals to listeners, a violation of federal rules.
The FCC requests, known formally as "letters of inquiry," are the first step in investigations that could result in sanctions ranging from financial penalties to the revocation of stations' licenses.
An FCC spokeswoman declined to comment. Representatives of the four radio companies could not be reached for comment.
In the past, radio executives at firms including Clear Channel, the nation's largest station owner, have said that company policies prohibit accepting gifts for airplay and that internal probes have not revealed widespread wrongdoing.
The four broadcasters have been negotiating with the FCC for weeks to forestall a federal inquiry by offering to discontinue certain practices and pay limited fines. But those talks stalled last month over the issue of how much the broadcasters should pay.
Clear Channel proposed a fine of about $1 million, according to people with knowledge of the negotiations. Some commissioners were pushing for as much as $10 million, those sources said.
"We were in the process of trying to reach settlements, but when talks were inconclusive, we decided we needed more information," said an FCC official who spoke on the condition of anonymity because the investigation was continuing. "We will continue to speak with the parties and to hold those who have violated commission rules accountable."
The FCC requires that radio listeners be informed anytime there is an exchange of items of value for airplay of specific songs.
The FCC's action comes amid New York Atty. Gen. Eliot Spitzer's pay-for-play probe, launched in 2004, which has alleged wrongdoing by both music and radio companies. In February, Spitzer sued Entercom, alleging that high-ranking executives had implemented scams to trade cash for airplay of songs by such artists as Avril Lavigne, Liz Phair and Jessica Simpson.
