Clear Channel offer a million to the Feds

Clear Channel offers to settle payola case with FCC
Web Posted: 04/05/2006 12:00 AM CDT
Sanford Nowlin
Express-News Business Writer

San Antonio-based Clear Channel Communications Inc. has offered to pay $1 million to settle a Federal Communications Commission probe into recording-industry payola, a company official said Tuesday.
Andrew Levin, Clear Channel's chief legal officer, said the company is talking to the commission to settle an eight-month-old investigation into whether radio broadcasters took illegal contributions from record companies to increase their play of specific songs.
"We're willing to pay a reasonable amount to put this matter behind us," Levin said. "We want to go back to focusing on our business and not on ancient history."
Clear Channel, CBS Radio, Entercom Communications and Citadel Broadcasting Corp., four of the nation's largest radio broadcasters, are in talks with the FCC to settle its probe, said people familiar with the discussions who asked not to be named.
However, those people also said at least one FCC commissioner, Democrat Jonathan Adelstein, isn't satisfied with the companies' settlement offers and wants them to pay stiffer financial penalties. A spokesman for Adelstein was unavailable for comment.
Officials of CBS Radio and Entercom declined to comment on the FCC probe, while Citadel officials were not available at press time Tuesday.
News of the talks comes as New York Attorney General Eliot Spitzer conducts a separate payola investigation.
Both the FCC and Spitzer are looking into concerns that radio stations may have taken cash and goods in exchange for increased spins of particular songs, a practice that's been illegal since the late 1950s.
Clear Channel's Levin said his company has cooperated with both probes, having turned over thousands of pages of documents.
The company two years ago cut ties with independent promoters that music labels hire to boost radio exposure so it could "avoid the appearance of impropriety." In October, it completed an internal payola investigation, firing and penalizing several employees for violating pay-for-play rules.
However, Levin said authorities have sought information predating its internal efforts to crack down on payola.
"Just because we're the largest radio company doesn't mean we have the largest violations," Levin said. "We have been a model for the industry in terms of trying to put a stop to this practice."
The FCC last fined a broadcaster for engaging in payola in 2000 when it fined Clear Channel $8,000 for not disclosing payments it received to boost airplay of a Bryan Adams song.
Spitzer has blasted the FCC for negotiating settlements with the broadcasters, on Monday saying that the move would undercut his case.
Record companies Sony BMG and Warner Music Group together have paid $15 million to settle with Spitzer, and his office last month filed a lawsuit against Entercom alleging it accepted improper payments in exchange for airplay.
Previously, Spitzer had criticized the FCC for acting too slowly on the matter.
"Any time Spitzer can get $5 million and $10 million from these record companies in his investigation, you have to wonder why the FCC would let Clear Channel pay $1 million," said Paul Porter, whose activist group Industry Ears has criticized Clear Channel and other broadcasters.
But radio-industry analysts said they're not particularly concerned about the probe or a potential settlement, adding that Clear Channel, which owns 1,200 stations, faces much larger challenges as it faces competition from satellite radio and other entertainment sources.
Settling the investigation, they add, may just be a routine part of doing business.
"In the whole scheme of Clear Channel issues, this one is at the bottom of the list," said Michael Nathanson, who follows the company for Sanford C. Bernstein & Co. in New York. "For you and me, $1 million is a lot of money, but not for them."
snowlin@express-news.net
BAHRAM MARK SOBHANI/STAFF -->spitzer -->The FCC last levied a payola fine in 2000 when it fined Clear Channel $8,000 over payments to boost airplay of a Bryan Adams song. -->
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