Thursday, April 20, 2006

The Federal Communications Commission this week formalized its investigation into the pay-for-play practices reportedly used by four of the nation’s largest radio stations.

“I am pleased that we have launched this formal phase of the payola investigation,” Commissioner Jonathan Adelstein said yesterday, referring to the “letters of inquiry” that were sent to Clear Channel Communications Inc., CBS Radio Inc., Entercom Communications Corp. and Citadel Broadcasting Corp.

Entercom does not operate any stations in the Washington area, but Clear Channel owns eight including WWDC-FM (101.1) and WTEM-AM (SportsTalk 980), while CBS owns five, including WPGC-FM (95.5) and WJFK-FM (106.7).

Citadel does not currently own any local stations but later this year is scheduled to buy Walt Disney Co.’s ABC Radio, which owns three: WMAL-AM (630), WJZW-FM (Smooth Jazz 105.9) and WRQX-FM (Mix 107.3).

Local Clear Channel and CBS executives referred all questions to their respective corporate spokesmen, neither of whom would comment yesterday.

“This should put to rest any question about the FCC’s commitment to enforce the law,” said Mr. Adelstein, the commission’s harshest payola critic. “Our investigation will be a thorough and complete review of the industry’s alleged payola practices.”

The letters of inquiry were first reported yesterday in the Los Angeles Times.

Scandals involving payola — a contraction of “pay” and the old “Victrola” windup record players — erupted in the 1950s and 1960s, when disc jockeys such as Alan Freed were charged with taking bribes to spin songs without publicly disclosing the deals, a violation of federal and state laws.

Record companies Sony BMG and Warner Music Group Corp. last year agreed to stop paying radio station employees to feature their artists, and to pay $10 million and $5 million, respectively, to settle an investigation by New York Attorney General Eliot Spitzer.

FCC Chairman Kevin J. Martin in August announced that the commission’s Enforcement Bureau would conduct the federal payola investigation. The FCC can fine offenders $32,500 per violation, not to exceed $325,000, with criminal penalties up to $10,000 per violation.

In November, Mr. Spitzer filed a payola lawsuit against Entercom, which the company is seeking to have dismissed. At that time, he also criticized the FCC for its inaction on the matter.

“Almost a year after payola was exposed in significant detail, the FCC has yet to respond in any meaningful way,” said Mr. Spitzer, who is seeking the Democratic Party’s gubernatorial nomination and has turned his information over to the FCC. “The agency’s inaction is especially disappointing given the pervasive nature of this problem and its corrosive impact on the entertainment industry.”

Maritere Arce, a spokeswoman for Mr. Spitzer, said, “We’re welcoming the FCC’s action today … and hopefully it will help to eradicate” payola in the industry.

Radio stations nationwide compete vigorously to maintain and add listeners, and finding the right music mix can keep many smaller stations in business.

“As a [program director] your life depends on adding the right songs,” said John Lund, a radio consultant in Burlingame, Calif., who is not affiliated with the four companies being investigated.

Mr. Lund said disclosure is the key. “If there is no paperwork [and on-air disclosure], they should get nailed,” he said.

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