PAYOLA: What Every Radio Broadcaster Should Know

| February 19, 2015

By Steven J.J. Weisman
TALKERS
Legal Editor

weismanBOSTON — For many years it has been a violation of both federal law and FCC regulations for radio stations to neglect to inform the listening audience when someone has provided payment, services or something else of value in return for getting something on the airwaves.  This practice of paying for play has come to be known as “Payola” although the term does not specifically appear in any of the laws or regulations.

Payola has a rich and colorful history that includes both Congressional hearings and comments in 1960 by President Dwight Eisenhower who referred to Payola as an issue of public morality and called for laws to make Payola a crime.

Payments were common to disc jockeys in the 1950s in return for playing particular records.   Cleveland disc jockey Wesley Hopkins testified at a Congressional hearing that he received $12,000 for what he called “listening fees” from record companies.  Hopkins, like the other disc jockeys who testified before Congress, denied that these fees in any way affected his choice of which records to play.  However, another disc jockey, Stan Richard’s denial of payments affecting his choice of the records he played seemed to contradict his testimony when he said, “This seems to be the American way of life, which is a wonderful way of life.  It’s primarily built on romance – I’ll do for you what will you do for me?”

Today, what we refer to as Payola is governed primarily by sections 317, 507 and 508 of Title 47 of the United States Code which require broadcasters to disclose to their listeners and viewers if anything is being aired in exchange for money, services or other valuable consideration.  The law also requires that when someone does provide something in return for content being broadcast that this disclosure must be done in advance of the broadcast.

It is important to note that the FCC specifically acknowledges that it is absolutely legal for a record company or anyone else to pay for music or other content, however, in that event, the fact of such payment must be disclosed before the start of the program.  The FCC requires that all sponsored material must be explicitly identified at the time of the broadcast as having been paid for and must identify who has made the payment unless it is entirely clear that the mentioning of a particular product or service constitutes that product or service as a sponsor of the show.

In 2014, the FCC took action four times in Payola matters, mostly through orders and consent decrees entered into with the particular stations.  In one instance involving Las Vegas television station, KTNV, the FCC wrote, “The Sponsorship Identification Laws establish the general obligation of a broadcast station to air sponsorship identification announcements whenever any ‘money, service or other valuable consideration’ is paid or promised to the station for the broadcast of program material.  The Commission has noted that the Sponsorship Identification Laws are ‘grounded in the principle that listeners and viewers are entitled to know who seeks to persuade them.’  The disclosure required by the Sponsorship Identification Laws provide listeners and viewers with information concerning the source of material in order to prevent misleading or deceiving those listeners and viewers.  The Commission has warned that it would take enforcement action against broadcast stations and cable operators that did not comply with these disclosure requirements.”  This particular case dealt with payments made by local automobile dealers for the production of “special reports.”

The FCC went on to say in its order “KTNV-TV accepted payment from the dealerships to produce and air several versions of what KTNV-TV called a ‘Special Report’ about the liquidation at the dealerships.  The ‘Special Reports’ were formatted in the style of a news report and featured a KTNV-TV employee who, in the manner of a news reporter, questioned representatives of the dealerships about their ongoing liquidation sales events.  The ‘Special Reports,’ however, were not in fact news coverage, but instead paid advertisements.”

In another case last year involving radio station KRXA-AM of Carmel Valley, California an order and consent decree was issued where the station aired a regularly scheduled call-in talk show without disclosing that the host had paid for the show.

So although the term “Payola” has a distinctly negative connotation, the truth is that there is nothing that bans such payments that help determine what is aired on radio or television so long as the public is advised of the financial connection between the aired content and the person or company making the payment.

tbugk3

Steven J.J. Weisman is a practicing attorney, legal editor for TALKERS magazine, a professor of Media Law at Bentley University in Waltham, Massachusetts and publisher of the website www.scamicide.com.  He can be e-mailed at: stevenjjweisman@aol.com.  Steven J.J. Weisman is available as a guest to discuss legal matters and the subjects of identity theft and scams. Meet Steven J.J. Weisman at Talkers New York 2015 on Friday, June 12.  To register call, 413-565-5413. 

 

Tags: , , , , , , , , , , ,

Category: Legal