Four Radio Broadcasters Settle Payola Claims With FCC For $12.5 Million
Clear Channel Communications Inc., CBS Radio, Entercom Communications Corp. and Citadel Broadcasting Corp. have agreed to pay the government $12.5 million and provide 8,400 half-hour segments of free airtime for independent record labels and local artists in separate settlements aimed at curbing the persistent practice known as “payola,” according to sources.
Payola – generally defined as radio stations accepting cash or other consideration from record companies in exchange for airplay – has been around as long as the radio industry and was made illegal following a series of scandals in the late 1950s.
Two Federal Communications Commission officials, who spoke on condition of anonymity because final language has not been approved by the full commission, said the monetary settlement is part of a consent decree between the FCC and the aforementioned four companies. The settlement between the government and the four broadcasters was reached in conjunction with a separate deal designed to lead to more airtime for smaller record companies and their lesser-known artists as well as local musicians.
In addition to airplay, the broadcasters and the independent labels have also negotiated a set of “rules of engagement” that will guide how record company representatives and radio programmers interact.
The American Association of Independent Music, a group of independent record labels, has received a commitment from the same four broadcasters for the free airtime, the sources said. The free airtime would be granted to companies not owned or controlled by one of the nation’s four dominant music labels – Sony BMG Music Entertainment, Warner Music Group, Universal Music Group and EMI Group.