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www.latimes.com/news/printedition/front/la-fi-fcc20apr20,1,2083645.st
ory?coll=la-headlines-frontpage
Documents are sought from Clear Channel, CBS, Entercom and Citadel,
sources
say. The agency’s step comes after settlement talks stall.

By Charles Duhigg
LA Times Staff Writer

April 20, 2006

The Federal Communications Commission on Wednesday launched formal
investigations into pay-for-play practices at four of the nation’s
largest
radio corporations, the biggest federal inquiry into radio bribery
since
the congressional payola hearings of 1960.

Two FCC officials with direct knowledge of the matter confirmed that
the
agency had requested documents from Clear Channel Communications Inc.,
CBS
Radio Inc., Entercom Communications Corp. and Citadel Broadcasting
Corp.
over allegations that radio programmers had received cash, checks,
clothing
and other gifts in exchange for playing certain songs without
revealing the
deals to listeners, a violation of federal rules.

The FCC requests, known formally as “letters of inquiry,” are the
first
step in investigations that could result in sanctions ranging from
financial penalties to the revocation of stations’ licenses.

An FCC spokeswoman declined to comment. Representatives of the four
radio
companies could not be reached for comment.

In the past, radio executives at firms including Clear Channel, the
nation’s largest station owner, have said that company policies
prohibit
accepting gifts for airplay and that internal probes have not revealed
widespread wrongdoing.

The four broadcasters have been negotiating with the FCC for weeks to
forestall a federal inquiry by offering to discontinue certain
practices
and pay limited fines. But those talks stalled last month over the
issue of
how much the broadcasters should pay.

Clear Channel proposed a fine of about $1 million, according to people
with
knowledge of the negotiations. Some commissioners were pushing for as
much
as $10 million, those sources said.

“We were in the process of trying to reach settlements, but when talks
were
inconclusive, we decided we needed more information,” said an FCC
official
who spoke on the condition of anonymity because the investigation was
continuing. “We will continue to speak with the parties and to hold
those
who have violated commission rules accountable.”

The FCC requires that radio listeners be informed anytime there is an
exchange of items of value for airplay of specific songs.

The FCC’s action comes amid New York Atty. Gen. Eliot Spitzer’s
pay-for-play probe, launched in 2004, which has alleged wrongdoing by
both
music and radio companies. In February, Spitzer sued Entercom,
alleging
that high-ranking executives had implemented scams to trade cash for
airplay of songs by such artists as Avril Lavigne, Liz Phair and
Jessica
Simpson.

Entercom has denied the allegations.

The other three radio companies are also under investigation by
Spitzer,
who has shared his evidence with the FCC.

Radio programmers at stations around the country say that fear of
regulatory scrutiny has scared them into airing fewer new songs.
Instead,
many stations are sticking to less diverse playlists.

Bryan Tramont, who served as chief of staff to former FCC Chairman
Michael
K. Powell and is now an attorney in private practice, said the inquiry
appeared to be more than a fishing expedition.

“The FCC would only launch a formal investigation if they had
information
leading them to believe possible violations have occurred,” he said.

Other FCC insiders said this new stage of investigation could put
broadcasters more at risk of previously undiscovered evidence of
wrongdoing
being found. The investigation could give the FCC access to millions
of
previously unexamined documents. It could also expand to include
stations
and radio executives across the nation.

“Until now, we’ve been limited to the evidence Spitzer gave us, but a
formal investigation will compel the radio companies to answer certain
questions, which are usually pretty exhaustive,” said another current
FCC
official familiar with the inquiry. “It will all be on the record now,
and
once we start demanding documents, we can keep on going until we’re
convinced we’ve found everything.”

Spitzer has been critical of the FCC’s negotiations with radio
companies,
saying that if the federal government allowed stations to settle it
would
undercut his efforts to force tougher sanctions and rules on the
industry.

“Unfortunately the FCC, contrary to good public policy, has not
pursued an
investigation of the underlying facts,” Spitzer said in April. His
representative could not be reached for comment.

The last time the FCC took action on pay-for-play allegations was in
2000,
when it fined two stations in Texas and Michigan $4,000 each for not
disclosing payments received from A&M Records in exchange for playing
songs
by Bryan Adams.

But the investigation launched Wednesday was evidence of the FCC’s
vigilance, said federal officials.

“The chairman has always taken these allegations seriously,” said one
FCC
official, referring to FCC Chairman Kevin J. Martin. “We’re not
worried
about criticisms.”

The FCC’s new investigation is the largest federal radio bribery
inquiry
since Congress opened hearings on pay-for-play in 1960. Those
inquiries
resulted in the first federal “payola” laws and killed the career of
famed
disc jockey Alan Freed, who pleaded guilty to two counts of commercial
bribery and was fined $300.


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