Payola and Sponsorship Identification

Here are some of the FCC regulatory and legal actions of the last week of significance to broadcasters, with links to where you can go to find more information as to how these actions may affect your operations.

  • The FCC released the agenda for its June 9 Open Meeting announcing that it will consider an

Each week, we summarize some of the regulatory and legal actions of the last week significant to broadcasters – both those from the FCC and those taken elsewhere –with links to where you can go to find more information as to how these actions may affect your operations.  Here is this week’s list of significant

Last week, we started this feature of Here are some of the Washington actions of importance to broadcasters – at the FCC and elsewhere – which occurred in the last week, with links to where you can go to find more information as to how this may affect your operations.

  • The comment period ended in

The responses by the major record labels to Commissioner O’Rielly’s inquiry into allegations of payola practices (see our article here) were published last week while we were all distracted with pandemic issues.  While the responses (available here on the Commissioner’s twitter feed) were perhaps not surprising – saying that the record labels do not engage in any on-air pay-for-play practices where the payment is not disclosed – they nevertheless highlight some practices that should be observed at every radio station.  As I have said in many seminars to broadcasters around the country when talking about FCC sponsorship identification requirements, if you get free stuff in exchange for promoting any product or service on the air, disclose that you got that free stuff. As made clear in these responses, when the record companies give free concert tickets or similar merchandise to a radio station for an on-air giveaway to promote a concert or the release of new music by one of their artists, they agree with the station to reveal on the air that the record company provided the ticket or merchandise that is being given away.

The responses also indicate that these record companies do not provide musical artists to play at station events with any agreement – explicit or implicit – that the station will play those artists more frequently because of their appearance.  While that might happen naturally, it also might not (if, for instance, the band is one of many acts participating at some station-sponsored festival).  The record companies state that their contracts with stations for such events make clear that there is no agreement that any artist appearance is tied to additional airplay for that artist.
Continue Reading Record Companies Respond to FCC Commissioner on Payola – What Should Broadcasters Learn from the Responses?

In the last three weeks, we have written about actions that the FCC has taken to help broadcasters through the current crisis caused by the COVID-19 virus.  The FCC appears to realize that the business of broadcasting in the current crisis is vastly different than it was just a month ago.  The FCC has provided

Last week, FCC Commissioner Michael O’Rielly was in the news for sending a letter to the major record labels asking for information about their practices in paying broadcast stations for airing the label’s music.  The letter follows correspondence last year between the Commissioner and the RIAA (the Recording Industry’s trade group) asking for similar information, which the RIAA claimed that it did not have.  This process began after a Rolling Stone magazine article suggested that “payola” was still a common practice in the broadcast industry.  These actions, and the press reports that followed, raise a couple of interesting questions including what the FCC rules are on payola, and how broadcast practices compare to those of online companies.

The Communications Act prohibits the practice of “payola” by requiring, in Section 317, that when any content is aired on a station in exchange for anything of value, the station must disclose that “consideration” has been paid by the person or entity that pays for the consideration.  Thus, “payola” arises when a broadcast station employee or contractor receives or is promised anything of value in return for putting any content on the air, and that payment is not disclosed to the public.  Payola usually occurs when someone makes a gift or payment to a person involved in station programming (i.e., station employees, program producers, program suppliers) in exchange for favorable on-air exposure of a product or service.  While the term “payola” is most often associated with the receipt by a station announcer or music director of money, trips or other value for playing songs on the station, the same prohibition applies whenever any station programming personnel receive anything of value in exchange for airing any content where a sponsorship identification is not broadcast.  For examples of fines for airing programming for which consideration was received without acknowledging the receipt of valuable consideration, outside the context of music, see our articles here, here and here
Continue Reading FCC Commissioner Asks Record Labels for Information About Payola Practices – What are the FCC Rules?  How Do These Practices Compare to Online Music Providers?

The FCC this week issued a Notice of Apparent Liability proposing a $233,000 fine to Cumulus Media for violations of the sponsorship identification rules.  The fine illustrates not only how seriously the FCC takes its sponsorship identification rules (particularly in the context of political and issue advertising) but also the how aggressively the FCC can act for even the slightest violation of a consent decree involving a prior violation of its rules.  If the FCC catches you once in a rule violation, don’t get caught again for the same violation – and if you agree to the terms of a consent decree in connection with that first violation, by all means abide by the letter of that decree or the FCC will not hesitate to exercise its full enforcement power.

This case involves alleged violations by Cumulus Media.  Three years ago, Cumulus entered into a consent decree with the FCC agreeing to pay a $540,000 penalty after admitting that it did not include a full sponsorship identification disclosure on issue ads supporting government approval of an electrical utility project in New Hampshire (see our article here on that consent decree).  As part of the consent decree, the company agreed to a 3-year compliance program to educate its personnel about the FCC’s sponsorship identification rules, to appoint a compliance officer to oversee compliance with the rules and answer questions, and to report to the FCC within 15 days any violations of these FCC rules.  In the Notice released this week, the FCC alleged that Cumulus reported that it had in two instances aired ads without the proper identification – each set of ads running 13 times before the lack of a proper identification was caught and corrected.  In one instance, the violation was reported to the FCC within two weeks, but in the other case, it was not reported to the FCC for approximately 8 months.  Based on this instance of late reporting, and the 26 sponsorship identification violations, the FCC proposed the $233,000 fine.  How did they come up with that number?
Continue Reading $233,000 Proposed Fine for Sponsorship Identification Rule Violations – Warning, if the FCC Fines You Once, Don’t Do the Same Thing Again

We usually think of the FCC as the agency that sets the details of the broadcast disclosure obligations for political candidate’s TV ads. But the Federal Election Commission has its own rules for political advertising that are binding on the candidates, rather than on the stations. But because these ads run on broadcast stations,

In recent weeks, we’ve written about a number of legal issues that need to be considered in connection with podcasting – getting releases from guests, making sure that ownership of the podcast is clear, and considering music royalties. Another issue that I discussed in my presentation on legal issues for broadcasters entering

Last week, it was announced that Google through its DoubleClick platform, would be offering programmatic buying opportunities for advertisers looking to place audio ads into online streams. While that system is initially being rolled out among the big digital audio services, if it or other similar platforms are expanded more broadly, it could bring more advertising into internet radio, podcasting and other digital audio program channels. But, being the spoilsports that we tend to be as lawyers, we wanted to pass on some issues to consider in accepting programmatic buys – whether in online streams or in over-the-air broadcasts. The immediacy of the audience’s perception of an audio insertion into a program stream can bring unintended results – some of which may have legal consequences.

We have already written about the issues for some of the programmatic buying platforms that are inserting ads into broadcast radio and television programming. As we wrote here and here, these ads can potentially impact a broadcaster’s legal compliance – particularly in the area of political broadcasting, where these ads could affect a station’s lowest unit rate, as well as reasonable access, equal opportunities and even political file disclosure obligations. While none of these FCC issues apply directly to online ads, as we wrote here, there are potential rules on political advertising that may soon be applied to online ads, either through actions by the Federal government or by the enactment of rules to implement a recently passed New York State law that compels disclosures for online political ads similar to those required by the FCC for broadcast ads. There are other considerations as well.
Continue Reading Google Announces Programmatic Buys of Audio Ads – Looking at Legal Issues with Programmatic Sales