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Statement of Chairman Martin
Statement of Commissioner Copps
Statement of Commissioner Adelstein
Statement of Commissioner Tate
Statement of Commissioner McDowell
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Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of )
) File No. EB-06-IH-1109
CBS RADIO, INC. ) Acct. No. 200732080012
) FRN No. 0003616588
)
ORDER
Adopted: March 21, 2007 Released: April 13, 2007
By the Commission: Chairman Martin and Commissioners Copps, Adelstein,
Tate, and McDowell issuing
separate statements.
1. In this Order, we adopt the attached Consent Decree entered into
between the Federal Communications Commission (the "Commission") and CBS
Radio, Inc. ("CBS Radio"). The Consent Decree terminates the investigation
initiated by the Enforcement Bureau against CBS Radio as to whether CBS
Radio and its direct and indirect subsidiaries that hold FCC
authorizations may have violated the sponsorship identification
requirements set forth in Sections 317 and 507 of the Communications Act
of 1934, as amended (the "Act"), and Section 73.1212 of the Commission's
rules.
2. The Commission and CBS Radio have negotiated the terms of a Consent
Decree, a copy of which is attached hereto and incorporated by reference.
3. After reviewing the terms of the Consent Decree, we find that the
public interest would be served by approving the Consent Decree and
terminating all pending proceedings against CBS Radio relating to the
investigation of whether it or any of its subsidiaries that hold FCC
authorizations violated Sections 317 and 507 of the Act, and Section
73.1212 of the Commission's rules.
4. Based on the record before us, we conclude that nothing in the record
before us creates a substantial and material question of fact in regard to
these matters as to whether CBS Radio and its subsidiaries that hold FCC
authorizations possess the basic qualifications, including character
qualifications, to hold or obtain any FCC licenses or authorizations.
5. Accordingly, IT IS ORDERED, pursuant to Sections 4(i), 4(j), and 503(b)
of the Communications Act of 1934, as amended, that the attached Consent
Decree IS ADOPTED.
6. IT IS FURTHER ORDERED that the Secretary SHALL SIGN the Consent Decree
on behalf of the Commission.
7. IT IS FURTHER ORDERED that all Enforcement Bureau investigations
regarding possible violations by CBS of 47 U.S.C. SS 317, 508 and 47
C.F.R. S 73.1212 ARE TERMINATED, and that all third-party complaints
against CBS for possible violations of the same pending before the
Enforcement Bureau as of the date of the Consent Decree ARE DISMISSED WITH
PREJUDICE.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary
CONSENT DECREE
1. The Federal Communications Commission and CBS Radio, Inc., for itself
and on behalf of its direct and indirect subsidiaries that hold FCC
authorizations (collectively, the "Company"), hereby enter into this
Consent Decree for the purpose of resolving and terminating certain
investigations currently being conducted by, or pending before, the
Commission relating to compliance with the Sponsorship Identification
Laws, as defined below, by Company Stations.
2. For purposes of this Consent Decree the following definitions shall
apply:
(a) "Act" means the Communications Act of 1934, as amended, 47 U.S.C.
S 151 et seq.;
(b) "Adopting Order" means an order of the FCC adopting this Consent
Decree, without any modifications adverse to Company or any Company
Station;
(c) "Bureau" means the FCC's Enforcement Bureau;
(d) "Business Reforms" means the Company-wide conduct and activities
described in Attachment B to this Consent Decree;
(e) "Company Station" and "Company Stations" means one or more broadcast
stations licensed to Company pursuant to authorizations issued by the FCC;
(f) "Commission" or "FCC" means the Federal Communications Commission or
its staff acting on delegated authority;
(g) "Complaints" means third-party complaints which may have been received
by, or in the possession of, the Commission or the Bureau, alleging
violations of the Sponsorship Identification Laws by Company, by a Company
Station or by any Company employee prior to the effective date of the
Adopting Order;
(h) "Compliance Plan" means that Company-wide program described in
Attachment A to this Consent Decree;
(i) "Effective Date" means the date on which the FCC releases the Adopting
Order;
(j) "Final Order" means the status of the Adopting Order after the period
for administrative and judicial review has lapsed;
(k) "Investigations" means any investigation of alleged violations of the
Sponsorship Identification Laws by Company, any Company Station, or any
Company employee;
(l) "Parties" means Company and the Commission;
(m) "Rules" means the Commission's regulations found in Title 47 of the
Code of Federal Regulations; and
(n) "Sponsorship Identification Laws" means, individually or collectively,
47 U.S.C. S 317, 47 U.S.C. S 508, 47 C.F.R. S 73.1212, and/or any
Commission policy relating to sponsorship identification or the practices
commonly referred to as "payola" or "plugola."
I. BACKGROUND
3. The Commission and Company acknowledge that any proceedings that might
result from the Investigations and/or the Complaints will be
time-consuming and will require substantial expenditure of public and
private resources.
4. In order to conserve such resources, to insure continued compliance by
Company with the Sponsorship Identification Laws, and to effectuate
business reforms in the broadcasting and music industry, the Commission
and Company are entering into this Consent Decree in consideration of the
mutual commitments made herein.
II. AGREEMENT
5. The Parties agree that the provisions of this Consent Decree shall be
subject to approval by the Commission by incorporation of such
provisions by reference in an Adopting Order.
6. The Parties agree that this Consent Decree shall become effective on
the date on which the FCC releases the Adopting Order. Upon release,
the Adopting Order and this Consent Decree shall have the same force
and effect as any other orders of the Commission and any violation of
the terms of this Consent Decree shall constitute a violation of a
Commission order, entitling the Commission to exercise any rights and
remedies attendant to the enforcement of a Commission order.
7. Company agrees that the Commission has jurisdiction over the matters
contained in this Consent Decree and the authority to enter into and
adopt this Consent Decree.
8. As part of the Adopting Order, the Commission shall terminate all
Investigations and shall dismiss the Complaints with prejudice. From
and after the Effective Date, the Commission shall not, either on its
own motion, in response to any petition to deny or other third-party
complaint or objection, or in response to any request from any other
federal, state or local agency, initiate any inquiries,
investigations, forfeiture proceedings, hearings, or other sanctions
or actions against Company or any Company Station, with respect to
any pending or future application to which Company is a party
(including, without limitation, any application for a new station, for
renewal of license, for assignment of license, or for transfer of
control), or any Company employee, based in whole or in part on (i)
the Investigations; (ii) the Complaints, (iii) any other similar
investigations or complaints alleging a violation by Company, any
Company Station, or any current or former Company employee of the
Sponsorship Identification Laws occurring prior to the Effective Date,
(iv) the allegations contained in any of the foregoing, (v) the
underlying facts or conduct that relate to any of the foregoing, or
(vi) any act or omission of Company or any Company employee occurring
prior to the Effective Date and relating to any of the foregoing.
Without limitation to the foregoing, the FCC shall not (a) use the
facts of this Consent Decree, the Investigations, the Complaints, any
other similar complaints alleging violation by any Company Station of
the Sponsorship Identification Laws with respect to any broadcast
occurring prior to the Effective Date, or the underlying facts,
behavior, or broadcasts that relate to any of the foregoing, for any
purpose relating to Company, any Company Station, or any Company
employee, (b) on its own motion provide any information within its
possession in connection with any of the foregoing to any other
federal, state or local agency, or request any such agency to
investigate or pursue enforcement action with respect thereto, and (c)
shall treat all such matters as null and void for all purposes.
9. Company has had in place policies and procedures to deter employees
from engaging in conduct that violates the Sponsorship Identification
Laws, but is willing to adopt a new plan in an effort to enhance the
effectiveness of Company's efforts. Accordingly, Company is in the
process of implementing, new, more expansive, Company-wide Business
Reforms and a Compliance Plan designed to help insure that the conduct
and broadcasts by Company, Company Stations or its employees will not
violate the Sponsorship Identification Laws. Summaries of the Business
Reforms and the Compliance Plan are set forth in Attachments B and A
hereto, respectively. Company agrees to implement the Business Reforms
and the Compliance Plan within 60 days of the Effective Date and to
keep such Business Reforms and Compliance Plan in effect for three (3)
years after the Effective Date. In the event that Company wishes to
revise any material aspect of the Business Reforms or the Compliance
Plan, Company will provide the Commission advance written notice of
the proposed changes. Company may implement such changes if the
Commission does not object to them within 30 days of their submission
by Company.
10. Company will make a voluntary contribution to the United States
Treasury in the amount of Three Million Dollars ($3,000,000) within
thirty (30) days after the Order adopting this Consent Decree has
become a Final Order. Company will make this contribution without
further protest or recourse, by check or similar instrument, payable
to the order of the Federal Communications Commission, P.O. Box
358340, Pittsburgh, PA 15251-8340. Payment by overnight mail may be
sent to Mellon Bank /LB 358340, 500 Ross Street, Room 1540670,
Pittsburgh, PA 15251. Payment by wire transfer may be made to ABA
Number 043000261, receiving bank Mellon Bank, and account number
911-6106. The payment should reference Acct. No. 200732080012 and FRN
# 0003616588.
11. Company waives any and all rights it may have to seek administrative
or judicial reconsideration, review, appeal or stay, or to otherwise
challenge or contest the validity of this Consent Decree and the
Adopting Order, provided no modifications are made to the Consent
Decree adverse to Company or any Company Station. If the Commission,
or the United States acting on its behalf, brings a judicial action to
enforce the terms of the Adopting Order or this Consent Decree, or
both, Company will not contest the validity of this Consent Decree or
of the Adopting Order, and will waive any statutory right to a trial
de novo. If Company brings a judicial action to enforce the terms of
the Adopting Order or this Consent Decree, or both, the Commission
will not contest the validity of this Consent Decree or the Adopting
Order.
12. Company takes seriously its responsibilities as a licensee to operate
Company Stations in the public interest and to abide by FCC rules and
policies, and its management has had in place policies and procedures
that are designed to ensure compliance with those rules and policies.
Despite these efforts, Company admits, solely for the purpose of this
Consent Decree and for FCC civil enforcement purposes, and in express
reliance on the provisions of Paragraph 8 hereof, and for no other
purpose or to other effect, that Company has conducted an internal
investigation with respect to the matters subject to the
Investigations and Complaints, and Company's policies and practices
with respect to the Sponsorship Identification Laws can be improved so
as to further enhance the prospects for Company-wide compliance. By
entering into this Consent Decree, Company makes no admission of
liability or violation of any law, regulation or policy.
13. In the event that this Consent Decree is rendered invalid in any court
of competent jurisdiction, it shall become null and void and may not
be used in any manner in any legal proceeding.
14. Company hereby agrees to waive any claims it may otherwise have under
the Equal Access to Justice Act, 5 U.S.C. S 504 and 47 C.F.R. S 1.1501
et seq., relating to the matters addressed in this Consent Decree.
15. Each party represents and warrants to the other that it has full power
and authority to enter into this Consent Decree.
16. This Consent Decree may be executed in any number of counterparts
(including by facsimile), each of which, when so executed and
delivered, shall be an original, and all of which counterparts
together shall constitute one and the same fully executed instrument.
FEDERAL COMMUNICATIONS COMMISSION
By: ________________________________
Marlene H. Dortch, Secretary
Date:
CBS RADIO, INC.
(For itself and on behalf of its direct and indirect subsidiaries)
By: _________________________________
Stephen A. Hildebrandt, Vice President and Deputy General Counsel
Date:
ATTACHMENT A
Company Compliance Plan
Company has developed, and is implementing, a Company-wide Compliance Plan
for the purpose of furthering compliance with the Sponsorship
Identification Laws and adherence to the Business Reforms set forth on
Attachment B. The Compliance Plan consists of the following components:
1. Commitment to High Standards on Pay-for-Play; Annual Report
A. Commitment to High Standards on Pay-for-Play. Company commits to
enforcing high standards with respect to the Sponsorship Identification
Laws to avoid violations and the appearance of impropriety in the area of
music selection.
B. Annual Report. The Compliance Officer, as defined below, shall submit
annual reports to Company's Board of Directors and the Commission
concerning Company's compliance with this Agreement and with the Business
Reforms for a period of three years from the effective date of this
Agreement.
2. Training of Programming Personnel. Company will conduct appropriate
training of its employees who are on-air talent and/or materially
participate in the on-air broadcast of program material or in the making
of programming decisions and their supervisory employees ("Programming
Personnel") in the accompanying Business Reforms and the Sponsorship
Identification Laws, including the FCC's interpretation of such statutes
and regulations regarding payola and related issues. Such training will be
provided to all current Company Programming Personnel within 60 days of
the Effective Date. The training will be provided to all new Company
Programming Personnel promptly after they commence their duties. Refresher
training will be provided to all employees described above at least once
every twelve months.
3. Compliance Officer and Market-Level Compliance Contacts.
A. Compliance Officer. Within 45 days of the Effective Date, Company shall
designate a Compliance Officer, whose responsibility shall be to seek to
ensure Company's compliance with the Business Reforms attached to this
Consent Order and with the Sponsorship Identification Laws through the
following duties: (a) the implementation, effectuation, and supervision of
the training program with regard to the Business Reforms and the
Sponsorship Identification Laws for all Company Programming Personnel; (b)
being accessible by telephone and/or e-mail to any Company employee who
seeks advice on compliance with the Business Reforms and the Sponsorship
Identification Laws or who wishes to report potential violations of such
policies and laws; (c) the development and implementation of procedures
designed to ensure Company's continuing compliance with the Business
Reforms and the Sponsorship Identification Laws; (d) monitoring Company's
compliance with the Business Reforms and the Sponsorship Identification
Laws; (e) reporting on a quarterly basis to the General Counsel of Company
regarding compliance of Company Stations and employees with the Business
Reforms and the Sponsorship Identification Laws; (f) reporting on an
annual basis to Company's Board of Directors and the Commission concerning
the compliance of the Company Stations with the Business Reforms and the
Sponsorship Identification Laws; and (g) such other activities as the
Compliance Officer deems necessary or appropriate to carry out his or her
duties.
B. Market-Level Compliance Contacts. Within 45 days of the Effective Date,
Company shall designate a Compliance Contact for each market in which
there is a Company station that plays new music. The market-level
Compliance Contact shall work in conjunction with the Company Compliance
Officer in the implementation and monitoring of the Business Reforms in
such market.
4. Database and Hotline
A. Database. Company shall maintain all documentation of expenditures
required by this Agreement in the database(s) or in hard copy for a period
of not less than three (3) years. The database(s) shall be available for
inspection by the Commission upon request.
B. Hotline. Company Compliance Officer shall maintain a hotline for
employees to call the Compliance Officer to obtain advice on compliance
with the Business Reforms, and report violations of the Business Reforms.
5. Contractual Agreements. Company will ensure that all contractual
agreements with respect to Programming Personnel include a contractual
clause relating to compliance with the Sponsorship Identification Laws.
6. FCC Enforcement Actions. If a Company Station receives a Notice of
Apparent Liability, Order or similar Commission document proposing a
forfeiture and/or contemplating license non-renewal or revocation as a
result of a violation of the Sponsorship Identification Laws occurring
after the effective date of the Consent Decree, the following steps will
be taken:
A. Each employee accused of violating, the Sponsorship Identification Laws
will be suspended and an investigation will immediately be undertaken;
B. Each such employee will be required to undergo remedial training on
Business Reforms and the Sponsorship Identification Laws and satisfy the
Compliance Officer and Company Station management that he or she
understands such regulations and policies before resuming his or her
duties.
C. If a Notice of Apparent Liability, Forfeiture Order, Order or similar
document assessing or proposing a forfeiture, denying a renewal
application and/or revoking a license issued by the FCC is finally
adjudicated and Company is finally found to have violated the Sponsorship
Identification Laws that results in such action by the Commission, the
employee(s) materially involved in the violation or violations that are
the subject of such Commission or Bureau action will be subject to further
disciplinary action, up to and including termination.
ATTACHMENT B
Company Business Reforms
Company has implemented and is implementing on a Company-wide basis,
certain business reforms for the purpose of furthering compliance with the
Sponsorship Identification Laws. To the extent not already undertaken,
within 60 days of the Effective Date of the Consent Decree to which this
statement is attached, Company shall implement and adhere to the following
practices ("Business Reforms").
1. Prohibited Activity.
A. Record Label and Record Label Employees. Neither Company, any Company
Station, nor any Company employee (collectively, "Company Parties")
shall solicit, receive, or accept cash or any other item of value from
a Record Label or Record Label employee in, or as part of, an
exchange, agreement, or understanding to provide or increase airplay
of music provided by any Record Label, except as expressly permitted
under P 2, below, and provided that all such activity complies with
applicable Sponsorship Identification Laws. As used in these Business
Reforms, the term "Record Label" means (a) any entity that
manufactures or distributes audio recordings of music, (b) any artist
under contract to a Record Label (an "Artist"), and (c) any
representative of the Record Label or an Artist, including independent
promoters.
B. Independent Music Promoters. Company Parties shall not accept any item
of value from an independent music promoter, unless that promoter
certifies in writing to Company that no compensation to the promoter
from a Record Label is based upon airplay.
2. Permissible Restricted Activity. Company Parties may engage in the
following activities with Record Labels, subject in each case to
compliance with the Sponsorship Identification Laws and the following
restrictions, and to adherence with the disclosure and documentation
requirements set forth in P 3 below.
A. Contests or Giveaways: Company Parties may solicit, receive and accept
items of value, including but not limited to promotional items, gift
cards, CDs, gift certificates, concert tickets, airfare, hotel rooms,
vouchers and cash, from Record Labels to give away on the air, at a
Company Station event or promotion, or for the benefit of charity, to
persons or entities other than Company employees (or members of their
immediate families or households). Contest rules and on-air announcements
relating to such contests shall clearly indicate the value of the prize(s)
as required by FCC rules and identify the Record Label as the provider of
the prize(s) to be awarded.
B. Advertising: Company Parties may solicit, receive and accept payment
(in cash or other items of value) from Record Labels for on-air
advertising, provided that the announcement clearly identifies the Record
Label as the sponsor of the advertisement.
C. Other Commercial Transactions: Company Parties may enter into
commercial transactions with Record Labels pursuant to which a Company and
a Record Label may license, sell or otherwise agree to distribute or
promote the Record Labels' Artists, songs or records.
D. Artist Appearances and Performances: Company Parties may arrange for
Artists to appear or perform at events or interviews, including under
circumstances where a Record Label has subsidized reasonable costs related
to the appearance, performance or interview. Company Stations' on-air
announcements of an Artist's performance that is subsidized in any part by
the Record Label shall indicate clearly that the Artist's appearance is
sponsored by the Record Label. The broadcast on a Company Station of all
or a portion of the Artist's live performance at the event is permitted,
provided that any such broadcast complies with the Sponsorship
Identification Laws.
E. Nominal Consideration: Company Parties may solicit, receive and accept
the following items of value from Record Labels for use by a Company
Station:
(i) CDs and other promotional items of nominal value. A Company Station
may solicit, receive and accept from Record Labels: (A) electronic copies
of songs and up to 20 copies of the same CD to familiarize Company
employees with recordings; (B) electronic copies of recordings for posting
on Company Station websites to familiarize visitors to such websites with
the Artists' recordings, and (C) promotional items intended for the
personal use of Company Parties, if the value of each such individual item
does not exceed $25, such as T-shirts, key chains, coffee mugs, baseball
hats, posters, pens and bumper stickers.
(ii) Concert tickets. A Company Station may solicit, receive and accept up
to 20 tickets (which may include associated backstage or "VIP"-type
passes) for a single-day concert, for each day of a multi-day concert,
and/or to an industry event to be used by Company employees to familiarize
them with the performing Artists. Tickets provided by Record Labels for
Company employees who are working at the concert and/or industry event
(e.g., technicians, on-air talent, promotions staff, etc.) shall be
subject to the disclosure and documentation provisions of P 3, below, but
shall not be counted towards the 20 ticket limit.
(iii) Modest personal gifts for life event, professional achievement and
holidays, or gifts commemorating achievement by Company or a Record Label.
Company employees may receive and accept reasonable gifts from a Record
Label commemorating life events, professional achievements and holidays. A
"reasonable" gift is one whose value the employee has no reason to believe
is greater than $150. An example of a life event would include a birthday,
wedding or the birth of a child. An example of a professional event would
be a job promotion or the winning of a music industry award. A Company
Station may receive and accept from a Record Label gifts that commemorate
achievements of Company, the Company Station, the Record Label, or the
Record Label's Artists. An example of such a gift would be a plaque
commemorating an Artist's achieving "gold record" level sales.
(iv) Meals and entertainment. Company employees may receive and accept
meals and entertainment in an amount not to exceed $150 per person, per
event, provided that the event is attended by a Record Label employee and
has a legitimate business purpose, and any payment is consistent with the
value of the meal or entertainment. Company employees may receive and
accept meals and entertainment from a Record Label in an amount that
exceeds $150 per person, provided that the event is attended by a Record
Label employee, has a legitimate business purpose, and is approved in
writing by the Compliance Officer, as provided in the accompanying
Compliance Plan. A Company employee may also receive and accept meals and
entertainment from a Record Label for the benefit of his/her spouse or
"significant other" accompanying the employee at such occasion, consistent
with and subject to the limitations of this provision.
(v) Travel and lodging expenses. A Company Station may receive and accept
from a Record Label reasonable travel and lodging expenses for Company
employees to attend live performances or appearances by Artists for the
purpose of familiarizing such employees with a Record Label's Artists. A
Company Station may also receive and accept from a Record Label reasonable
travel and lodging expenses to industry events if the Company Station
provides, to the satisfaction and approval of the Compliance Officer, a
legitimate business purpose underlying the Record Label's payment of such
expenses. Each Company Station shall be limited to 20 such trips annually,
to be allocated among Company employees at the discretion of the Company
Station. For purposes of these Business Reforms, "reasonable travel and
lodging expenses" means commercial airfare (coach class), train or car
service and a sufficient number of nights lodging to accomplish the
intended business purpose. All travel and lodging expenditures must be
approved in advance and in writing by the Compliance Officer. A Company
employee may also receive and accept meals and entertainment during such
trips, consistent with and subject to P 2E(iv), above.
F. Nothing herein shall prohibit a natural increase in airplay of an
Artist's music during the period surrounding, and coincident with (i) a
contest or giveaway that promotes that Artist and (ii) the Artist's
appearance or performance at an event, provided that, to the extent the
increase in airplay results from an agreement or understanding with the
Record Label or Artist, such increased airplay shall comply with the
Sponsorship Identification Laws.
3. Mandatory Documentation. Company shall record and document all activity
set forth in P 2 as follows:
A. Database record of items of value received from a Record Label. Company
shall establish and maintain one or more databases (collectively, the
"Database") containing a record identifying all items of value received by
each Company Station or Company employee from Record Labels (exclusive of
Artist performances and commercial transactions with Record Labels), and
the disposition of such items shall be recorded as follows. In the case of
each item of value that exceeds $25 in value (on an individual per item
basis) intended to be awarded in a contest or given away by a Company
Station, the Database shall record the date and manner of disposition and
recipient of each such item. Items received for use by a Company Station
or its employees (such as CDs for review by station employees and concert
tickets) shall be so recorded. Items in excess of $25 received by Company
or Company employees personally or in connection with business-related
meals, entertainment and travel shall be recorded in the Database
separately.
B. Contests or Giveaways. In addition to the documentation maintained in
the Database in each instance where Company solicits, receives or accepts
an item of value from a Record Label to give away on the air, Company
shall (i) verify in writing to the Record Label that the contest prize(s)
will not be given away to an employee of a Company Station (or to members
of their immediate families or households); and (ii) for each item of
value given away that exceeds the monetary reporting threshold established
by the Internal Revenue Service, maintain a record verifying that a
contest winner has been selected, including the full name and address of
the recipient of the prize, and provide this information, in writing, to
the Record Label upon request.
C. Advertising by Record Labels. All advertising by Record Labels shall be
subject to a written agreement and recorded in one or more separate
databases.
STATEMENT OF
CHAIRMAN KEVIN J. MARTIN
Re: CBS Radio, Inc., File No. EB-06-IH-1109, Order
Re: Citadel Broadcasting Corp., File No. EB-06-IH-1108, Order
Re: Clear Channel Communications, Inc., File Nos. EB-05-IH-0059,
EB-05-IH-0144, Order
Re: Entercom Communications Corp., File No. EB-05-IH-0033, Order
The Commission has longstanding rules prohibiting payola. These rules
serve the important purpose of ensuring that the listening public knows
when someone is seeking to influence them or the types of music that they
hear on the radio. As I have said before, the Commission will not tolerate
non-compliance with its rules.
In order to resolve the Commission's investigation into whether these
license holders were violating applicable sponsorship identification laws,
the four companies have agreed to implement various business reforms to
ensure that their respective stations and employees do not violate the
sponsorship identification laws in the future. They have also agreed to
make significant contributions to the U.S. Treasury totaling $12.5
million.
Through this strong enforcement action that we take today, the Commission
has provided clear guidance to licensees and sent a strong message that
the practice of payola must stop for good.
STATEMENT OF
COMMISSIONER MICHAEL J. COPPS
Re: CBS Radio, Inc., File No. EB-06-IH-1109, Order
Re: Citadel Broadcasting Corp., File No. EB-06-IH-1108, Order
Re: Clear Channel Communications, Inc., File Nos. EB-05-IH-0059,
EB-05-IH-0144, Order
Re: Entercom Communications Corp., File No. EB-05-IH-0033, Order
Pay-for-play broadcasting cheats consumers, musicians and the law. It
denies consumers choice in what they hear, it deprives musicians of the
exposure they need to survive and it is illegal. It is also insidious,
because just as soon as one payola hole is plugged, another is opened and
the payola band plays on. Today the Commission takes action against
payola. While not a lethal blow, this action makes real, tangible
progress against unacceptable pay-for-play practices. It opens some
long-denied access for independent musicians who have faced tough times
getting their songs on the airwaves in markets long dominated by
pay-for-play. And it is good news for listeners who have been drugged by
years of standardized, homogenized music playlists. Who knows, if this
works well a listener driving coast-to-coast might actually hear some good
local and regional music along the way instead of the same 20 songs. Just
as importantly, today's action--rightly implemented and monitored--can be
good news for the radio business, putting it back in touch with the roots
from which its earlier successes sprang. These agreements remind us of
the special community medium and artistic treasure that free, over-the-air
radio can be.
While we celebrate these efforts, we cannot forget what led us down this
road. How we got here--how we allowed music on free, over-the-air radio
to be hijacked by a band of pay-for-play promoters--is a tale worth
telling. If I were to give this tale a title, I would call it "The Way
the Music Died." It didn't happen in a day or a month or a year. But two
culprits combined to all but slay local and independent music on the radio
dial.
First was payola itself. Payola is by no means a recent arrival on the
music scene. From the days of Alan Freed the quid pro quo of cash for
airplay has lurked behind commercial radio. The times may have changed,
but the basic mechanics of payola have not. If an envelope stuffed with
cash motivates what gets played, musical merit falls by the wayside. When
only artists represented by big labels can afford to play the game,
independent and home-grown voices lose out. Payola by itself is bad
enough.
But we put the pernicious effects of payola on steroids when we allow
excessive consolidation among the licensees of our airwaves. Here, then,
is the second culprit: media concentration. The Telecommunications Act of
1996 eliminated the national radio cap, leading to a tremendous wave of
consolidation in terrestrial radio. The top ten radio conglomerates now
control 2/3 of the total U.S. radio audience. As a result, the payola
kingmakers must grease only a relative handful of palms in order to get
their anointed commercial artists on the air. This makes an ugly
situation uglier. It makes for radio that sounds the same everywhere. It
is why in so many places the same handful of songs by the same small crop
of artists is in heavy rotation, while local and independent voices never
get a spin. What a price we pay. Musical genius in this country runs
deep and wide. But, by and large, our airwaves do not reflect it.
Concentration of radio ownership has ushered in a new and especially
challenging age of payola. But don't just take my word for it. As the
American Federation of Television and Radio Artists puts it bluntly:
"[b]ecause the radio industry is so consolidated, it is more difficult
than ever for artists to get airplay on commercial radio."
This is why I believe these agreements are a starting point, not an end.
They address payola in some of its guises, but ignore the harms inflicted
by consolidation. And, sadly, they also fall short of acknowledging
culpability. Nonetheless, I remain optimistic that the progress made here
is real. So we will give this effort a play. If, one year from now, we
are hearing more independent voices on the radio, we'll know that the
progress is real. If, in one year, we are hearing more local musicians
instead of the same slim crew of nationalized fare over and over again,
we'll know we advanced the ball. And if, in one year, we can say that
free, over-the-air radio is the place to go for fresh new sounds and
dynamic voices, we can all be proud of what we claim to have accomplished
today.
I intend to closely monitor what happens next. I hope my colleagues will,
too. But what I really want to know is how consumers take the measure of
these commitments. So I urge listeners to contact the FCC. Tell us how
you think these commitments are being implemented. Let us know if you're
hearing more and better music. We don't need a formal document from you,
just e-mail us at fccinfo@fcc.gov (with "Payola" in the subject line) and
tell us how you think it's going.
In closing, let me note that this agency's payola work is built on the
historic efforts of former New York State Attorney General Eliot Spitzer.
We owe him a debt of gratitude for his path-breaking efforts to stomp out
pay-for-play. He awoke a new generation of music lovers to the persistent
harms of payola and raised in listeners a belief that we can do better by
our airwaves. Let me also thank my colleagues, in particular Commissioner
Jonathan Adelstein who pushed this matter front-and-center here and did
yeoman's work to see these consent decrees through. Finally, let me also
thank musicians, other creative artists, independent companies and
consumers across the land who helped us see the light and who suggested
remedies to confront the problem. I appeal for their continued vigilance
to make sure that the commitments which have been made are carried out
comprehensively and faithfully--and also to keep their watchful eyes open
for any evidence of new pay-for-play practices designed to perpetuate a
crime that never seems to go away.
STATEMENT OF
COMMISSIONER JONATHAN S. ADELSTEIN
Re: CBS Radio, Inc. File No. EB-06-IH-1109, Order
Re: Citadel Broadcasting Corporation, File No. EB-06-IH-1108, Order
Re: Clear Channel Communications, Inc., File Nos. EB-05-IH-0059 and
EB-05-IH-0144, Order
Re: Entercom Communications Corp., File No. EB-05-IH-0033, Order
Today, a unified Commission sends a resounding message to the radio
industry: payola, in any form, has no place in radio and will not be
tolerated by the FCC. Payola deprives the listening public of the
country's freshest music, denies local and independent artists a fair
chance to get heard over the public airwaves, and saps the vitality of
radio. In short, payola hurts musicians, the radio industry and the free
flow of creative talent because music is chosen on the basis of who can
pay the most - not who sounds the best.
This agreement is a breakthrough and a milestone in the long fight against
payola in this country. It ends an era of laissez faire pay-for-play and
signals that the cops are back on the beat to enforce the law.
The Consent Decrees and the private agreements between the broadcasters
and the independent music community, particularly the American Association
of Independent Music (A2IM) and Peter Gordon, represent the culmination of
a series of lengthy negotiations among people who care deeply about the
future of radio and the music industry. I personally appreciate the
efforts made by the four companies which negotiated the Consent Decree
with me in good-faith and displayed a genuine willingness to strengthen
their relationships with local, unsigned and independent musicians. Each
company's commitment to showcase the talent of local and independent
artists for more than 4,000 hours indicates dedication to localism, music
diversity, and the public interest.
I am also thankful for the patience and support of my colleagues,
specifically Chairman Martin for his leadership in initiating the
investigation and securing significant monetary contributions,
Commissioner Copps for sharing my insistence on meaningful oversight and
business reform measures, and Commissioners Tate and McDowell for their
interest in this issue.
Today's historic settlement with four major broadcasters - CBS, Citadel,
Clear Channel and Entercom -- is the first of several steps that the
Commission will take to address the allegations of rampant violations of
our sponsorship identification laws, specifically pay-for-play practices
in the radio industry. I strongly encourage other broadcasters who are
implicated or subject to license renewal holds for alleged sponsorship
identification violations to enter into similar agreements with the
Commission and the independent music community. Today's agreement is just
the first wave of this investigation - more waves are coming.
Since 1927, before the FCC was even created, Congress has maintained an
unwavering requirement that broadcasters must announce who gives them
valuable consideration to air anything. The federal sponsorship
identification laws impose an unequivocal, legal obligation - up and down
the chain of production and distribution - to disclose all forms of
consideration. These rules are based on the basic principle that listeners
and viewers are entitled to know who is seeking to persuade them so they
can make up their own minds about the content.
For years, I have been hearing from local and independent artists in
different parts of the country that they could not get airplay on their
local stations. And listeners have complained that that commercial radio
sounded more and more homogenized and generic. As a huge fan of music and
radio, I could not help notice that commercial radio - which was once a
unifying force in local communities - had become increasingly like a
coast-to-coast public address system, often devoid of soul, vitality, and
local favor.
Nearly every American music genre began with local artists getting played
on local radio shows. Motown, grunge, Elvis and rock n' roll, hip hop,
country, bluegrass, and the Nashville sound began as local music being
promoted by local, independent musicians and labels on local radio. While
each began in a different region of the United States, they all succeeded
because they started getting heard on local radio and then broke out
nationally and internationally. That path to success, and musical
innovation, is hindered by payola since local artists without major
financial backing get crowded out. American radio listeners are the first
to suffer, but music lovers nationwide, and indeed all around the world,
are deprived of new sounds when radio playlists become generic.
Homogenization is good for milk, but bad for radio.
Despite many allegations about widespread payola practices, the FCC had
never investigated those claims, nor had we ever received credible
evidence until then-Attorney General of New York State, Eliot Spitzer,
launched a widespread investigation. He uncovered an arsenal of smoking
guns, involving hundreds of radio stations - FCC licensees -- and the four
major record labels. He aggressively pursued the problem and found vast
numbers of potential violations of federal law.
At my urging, the FCC launched a similar investigation and decided to
focus first on the corporate practices of four large radio station groups
- Clear Channel, CBS, Citadel and Entercom - concerning potential payola
violations. The results of these investigations have enabled us to create
a template for addressing other pending allegations and payola violations
in the future.
While this settlement is not a panacea to all payola woes, it requires the
implementation of certain meaningful reform measures that should change
corporate practices and behavior. The companies commit to enforcing high
standards with respect to the sponsorship identification laws to avoid
violations and the appearance of impropriety in the process of music
selection. Specifically, the companies commit to implement numerous
safeguards, including commitments to:
* maintain a database containing a record to identify all items from
record labels that exceed 25 dollars;
* maintain a company hotline for employees to call the Compliance
Officer to obtain advice and report violations;
* appoint a Corporate-level Compliance Officer who is responsible to
ensure compliance with the Consent Order, and all sponsorship
identification laws;
* designate a Compliance Contact for each market; and
* conduct annual training for all programming personnel and supervisors
The corporate culture of radio should not encourage or promote the use of
the major record labels to subsidize the operating costs of radio
stations. That is why the Consent Decree limits the numbers of electronic
copies of songs and concert tickets, and the permissible value of personal
gifts, meal and entertainment, and travel and lodging expenses. Some
dishonest employees may continue to take money "under the table." While
you can outlaw theft, that doesn't mean stealing will stop. The good news
is that station owners are agreeing to send a clear message that such
practice will not be tolerated by first eliminating some of the more
blatant and abusive practices in the industry.
I believe that these compliance and business reform measures, which are
consistent with the reform measures developed by the New York State
Attorney General's office, will change behavior in certain respects.
Sunshine is truly the best disinfectant. There is a compelling need for
greater and more effective governmental oversight. The FCC should play a
role in ensuring the industry has sufficient safeguards in place. In that
regard, the companies are required to submit annual compliance reports to
the Commission. Additionally and, perhaps, more important, the Consent
Decree provides the Commission with the unequivocal authority to gain
access to the databases upon request.
I applaud the voluntary efforts of the broadcasters and the independent
music community to develop a meaningful way to build and protect a healthy
future for radio. With these efforts, more new music should surface on the
airwaves, and our country's rich cultural diversity can continue to
flourish and enrich the lives of everyone. I believe the good faith
platform these reforms were built upon are sturdy and will develop over
time, but the ultimate success of this initiative depends on the
cooperation of a great number of people. This is a work-in-progress and
will take considerable effort to fully realize. So, even as we take this
critical step, I stand ready to help, whenever necessary, to ensure its
ultimate success.
STATEMENT OF
COMMISSIONER DEBORAH TAYLOR TATE
Re: CBS Radio, Inc., File No. EB-06-IH-1109, Order
Re: Citadel Broadcasting Corporation, File No. EB-06-IH-1108, Order
Re: Clear Channel Communications, Inc., File Nos. EB-05-IH-0059,
EB-05-IH-0144, Order
Re: Entercom Communications Corp., File No. EB-05-IH-0033, Order
Coming to the Commission, as I do, from Nashville, Tennessee - home to
more than 80 record labels, 180 recording studios, and some 5,000 working
union musicians - I have been particularly concerned by allegations that
payola, or "pay for play," practices are prevalent in the commercial radio
industry. I am pleased that, in consideration of the conclusion of our
investigation into these allegations, each of the four companies has
agreed to make significant contributions to the U.S. Treasury and
committed to implement consequential business reforms to ensure full
compliance with our rules.
Artists and radio listeners should be even more pleased, however, by the
voluntary, private agreement crafted by the companies and the American
Association for Independent Music, a trade organization representing the
independent music sector. Pursuant to this creative accord, born of good
faith negotiations, the companies have agreed in principle to basic
guidelines, "rules of the road" covering future interaction between their
stations and record labels, which concentrate on equal access and
transparency. They have also committed to provide 8,400 half-hour blocks
of airtime to independent music, to the benefit of all. I challenge other
radio companies to follow their example.
STATEMENT OF
COMMISSIONER ROBERT M. MCDOWELL
Re: CBS Radio, Inc., File No. EB-06-1H-1109, Order
Re: Citadel Broadcasting Corporation, File No. EB-06-1H-1108, Order
Re: Clear Channel Communications, Inc., File Nos. EB-05-1H-0059 and
EB-05-1H-0144, Order
Re: Entercom Communications Corp., File No. EB-05-1H-0033, Order
I am pleased to support these Orders, which adopt the consent decrees
entered into between the Commission and each of the above companies. The
Commission takes seriously its responsibility to enforce the law governing
sponsorship identification. The allegations of payola being pervasive in
the industry undermine public confidence in radio broadcasting and are of
great concern to me. I am pleased that each company has agreed to
implement a compliance plan and meaningful business reforms for the
purpose of ensuring compliance with our rules. I am also pleased to hear
that the companies have voluntarily committed to take additional actions,
including collectively airing over 4,000 hours of programming featuring
local and independent artists and endorsing rules of engagement regarding
the interaction between their stations and record labels to improve the
ability of new and emerging artists to have their music aired.
I thank the Chairman and Commissioners Adelstein and Tate for their
leadership on this issue.
See 47 U.S.C. SS 317, 508.
See 47 C.F.R. S 73.1212.
See 47 U.S.C. SS 154(i), 154(j), 503(b).
Dollar amounts in this section may be adjusted for inflation based on the
Consumer Price Index.
Federal Communications Commission FCC 07-27
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Federal Communications Commission FCC 07-27
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