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                                  Federal Communications Commission FCC 07-28

                                  STATEMENT OF

                       COMMISSIONER JONATHAN S. ADELSTEIN

   Re: CBS Radio, Inc., File No. EB-06-IH-1109, Order

   Re: Citadel Broadcasting Corporation, File No. EB-06-1H-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.