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A consent decree entered into by a radio broadcaster, which included a $12,000 "voluntary contribution" to the US Treasury, demonstrates once again the FCC's concerns about sponsorship identification issues.  The week before last, we wrote about the FCC fine levied on a television broadcaster for not including sufficient sponsorship information when a "video news release" was broadcast on a local television station without disclosing that the video footage had been produced by the automobile company whose products were featured.  The recent FCC Report on the Information Needs of Local Communities (formerly known as the Future of Media report) also focused on the need for more disclosure in connection with sponsored material carried on broadcast stations and other media (see our summary here).  With a long outstanding Rulemaking proceeding on these issues that remains unresolved (see our summary here), the Commission almost appears as if it is setting its policies in these areas through case law rather than through the rulemaking process.

In this most recent "payola" case, a complaint was lodged against a Texas radio station owned by Emmis Broadcasting alleging that the host of one music program was receiving compensation from a local music club, a local record store, and a manager of local bands in exchange for featuring music on the show.  The allegation contended that other local bands could not get their music played on this show without sponsoring Station events hosted by this particular personality.  The Consent Decree does not resolve the question of whether these allegations were true, but instead requires that the licensee make the voluntary contribution, adopt procedures to make sure that Station employees are aware of the requirements of the sponsorship identification rules, and report  to the Commission on a regular basis on the actions taken by the licensee to ensure compliance with the FCC rules.  In addition to general requirements that the Station educate its employees about the sponsorship identification rules, the Consent Decree also contained conditions setting forth rules governing the relationship that station employees could have with record labels, even though the decree makes no mention of any allegations of improper consideration having come from record companies.  These conditions were ones that appear to have come from consent decrees entered into with a number of broadcasters 4 years ago in the last major FCC payola investigation (which we wrote about here).

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The FCC today announced a $1,000,000 Consent Decree with Univision Radio to settle payola investigations underway at both the FCC and the Department of Justice.  Payola, or "pay for play" as it is called in the FCC Press Release issued today, is a violation of FCC rules and Federal criminal law, which both prohibit the broadcast of program content for which payment was received without disclosing the receipt of that consideration.  The payment of money to programming employees in exchange for the playing of certain music on the radio has been the situation where pay-for-play has received the most publicity.  Where payment is made for playing a song, without acknowledging to the public that the station's decision to play the music was based on payments and not on the station's determination of the merit of the music being played, then a violation exists.  In many cases, it is station employees who receive the payment, sometime unknown to station management.  But where the station has not taken sufficient steps to guard against pay-for-play situations by its employees, the licensee can still face penalties.  The Consent Decree sets out specific steps for Univision to take to make sure that the situations alleged to have occurred at the company's stations don't reoccur in the future.

The Consent Decree is virtually identical to the $12.5 million in settlements reached three years ago with four of the country's largest radio broadcast companies.  At that time, we published an advisory that explored each of the provisions of the Consent Decree and the obligations that it imposed on the broadcasters that were involved - and suggested that all stations use it as a Guide to their operations to insure that they, too, don't find themselves facing a similar situation in the future.  As payola seems to run in cycles, check out our Guide and make sure that you are taking steps to insure compliance with the FCC rules and policies on payola.

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The FCC, after taking two years off, is looking to finish their field hearings on Localism by scheduling a hearing in Portland, Maine on June 29.  This hearing is not one of the six hearings to discuss possible new multiple ownership rules, but instead a continuation of the hearings started by Chairman Powell after public controversy over the 2003 multiple ownership rules.  In an ironic twist of fate, this public notice was released on the Friday before the National Association of Broadcasters Educational Foundation hosts their Service to America Awards Dinner to honor broadcasters and the public service commitment that they have to their communities.  Thus, while the FCC is looking in the hinterlands for evidence of the responsiveness of the broadcast industry to the needs of their listeners, some of the best evidence of that service was on display some 12 blocks from the FCC's headquarters.

The Localism hearings were part of a larger proceeding begun in response to the controversy after the 2003 multiple ownership rules.  When the Democratic Commissioners, Congressional legislators from both parties, and a variety of citizen's groups from across the political spectrum complained about how the public's input was not sought before the rules were adopted, the FCC tried to respond to some of those complaints by putting out a Notice of Inquiry on Localism.  The proceeding was to assess how well broadcasters were serving their communities, and the Notice asked for public comment on a grab bag of issues including the following:

• whether a broadcaster's public interest obligations should be quantified (bringing back obligations abolished in the 1980s that required specific amounts of the programming of broadcast stations to be devoted to news and public affairs programming), 
• should broadcasters be required to play specific amounts of local music,
• is payola a major issue,
• whether more programming should be devoted to political campaigns, 
• whether the voices of minorities were being heard on the airwaves.
• if the FCC should authorize more LPFM stations and take other steps to make airtime available to new entrants

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