Update: FCC Shows Additional Renewed Interest in Payola
As we reported in a November 13, 2019 Advisory, Federal Communications Commissioner (FCC) Michael O'Rielly recently renewed interest in investigating illegal "payola" practices on broadcast TV and radio. Payola, also known as pay-for-play, involves paying commercial radio stations to broadcast particular recordings without informing listeners of the pay-for-play at the time of the broadcast. Following press reports of a continuing payola problem, Commissioner O'Rielly had sought information from the recording industry about possible violations of anti-payola laws and had asked for cooperation to stamp out these arrangements.
Consistent with our predictions in the November 2019 Advisory, on January 16, 2020, Commissioner O'Rielly wrote to various recording labels asking detailed questions "on the mechanisms put into place to prevent payola within [the] respective organizations, [the company's] understanding of the current payola rules, and what further steps may need be taken."1 Responses are due by the end of February, which could be followed by a broader and deeper probe by Commissioner O'Rielly or the FCC's Enforcement Bureau.2
With Commissioner O'Rielly's inquiry continuing, broadcast and recording industry companies that have not yet taken the opportunity to review their practices and policies for preventing payola should strongly consider doing so. Arnold & Porter attorneys with experience in past payola investigations would be pleased to assist.
*Darrel Pae contributed to this Advisory. Mr. Pae is a graduate of George Washington University Law School and is employed at Arnold & Porter's Washington, DC office. Mr. Pae is admitted only in New York. He is not admitted to the practice of law in Washington, DC.
© Arnold & Porter Kaye Scholer LLP 2020 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.
Letter from Michael O'Rielly, Commissioner, FCC, to Wade Leak, Senior Vice President, Deputy General Counsel, Sony Music Entertainment, Saheli Datta, Head of Global Compliance, Universal Music Group, and Trent Tappe, Senior Vice President, Deputy General Counsel & Chief Compliance Officer, Warner Music Group (Jan. 16, 2020).
Certain previous payola investigations have led to criminal convictions for at least one person. See, e.g., Louis Nayman, In These Times, Rock 'n' Roll Payola: Dick Clark and Alan Freed (Apr. 24, 2012), (noting that Alan Freed pleaded "guilty in 1963 to two of 99 counts of commercial bribery, was sentenced to pay a $300 fine and a six-month suspended sentence, after which he was put up on charges of federal income tax evasion").