In April, the FCC agreed to Consent Decrees calling for fines totaling $12.5 million from four of the country’s largest radio broadcasters in order to settle allegations that these companies had engaged in violations of the FCC’s payola rules. Recently, another public radio company stated in one of its SEC filings that it had received an inquiry from the FCC about practices at its stations, and rumors have been heard in Washington that there have been letters of inquiry on the subject sent out to other broadcast companies. With this atmosphere, we thought that an analysis of the terms of the Consent Decrees, which imposed very specific operating conditions on these broadcast companies, was in order. Thus, we have just published a detailed analysis, A $12.5 Million Teaching Tool – The Payola Consent Decrees, here. This memo details provisions of those Consent Decrees which impose conditions on these companies requiring, among other things: limits on gifts that their employees can take from representatives of record companies, reporting requirements about their dealings with music companies, and requirements for the education of these companies employees about the requirements of the payola rules. As set out in the memo, these Consent Decrees can serve as a set of best practices for all broadcasters in complying with the payola rules.
With the FCC restarting its Localism proceeding, about which we wrote yesterday, which asked for public comment on payola practices of broadcasters, the FCC’s focus on payola has not abated with the $12.5 million fines imposed by the Consent Decrees. So broadcasters should be assessing their policies to make sure that, if they get an inquiry letter from the FCC, they are able to provide responses that would lead to trouble. We hope that this memo helps with that assessment.