New York Atty. Gen. Eliot Spitzer said Monday that federal regulators were negotiating behind his back with radio station groups to settle allegations of illegal payments for airplay, potentially helping the companies avoid serious punishment.
In an interview, Spitzer said the talks between the Federal Communications Commission and four radio conglomerates, which Spitzer said would result in modest fines and reforms, could undercut his efforts to force tougher sanctions and rules on the industry.
"The radio conglomerates want to settle on the cheap with the Feds and unfortunately the FCC, contrary to good public policy, has not pursued an investigation of the underlying facts," he said. "We have made repeated overtures to work with them. I'm still waiting to hear back."
FCC spokesman David Fiske said the agency would like to work with Spitzer, who is running for governor of New York.
"For many months we have been actively pursuing allegations of payola on the part of radio broadcasters," Fiske said. "We appreciate cooperation with the New York attorney general's office and look forward to working with the New York attorney general in the future."
At least one FCC commissioner, Democrat Jonathan S. Adelstein, has urged tougher penalties and fines that could exceed $10 million per company.
At least nine chains of radio stations are under scrutiny by Spitzer for allegedly accepting gifts and other incentives to air songs. Federal regulations require broadcasters to disclose paid promotions to listeners.
Last month, Spitzer sued the nation's fourth-largest radio broadcaster, Entercom Communications Corp., after the company rebuffed a proposed settlement that would have included a $20-million fine. Entercom has denied the allegations.
Some FCC officials have indicated they favor fines of less than $3 million per company. Depending on how they are worded, the settlements could prevent Spitzer from forcing companies to adopt certain reforms.
The FCC is in talks with Clear Channel Communications Inc., CBS Radio Inc., Entercom and Citadel Broadcasting Corp. over allegations that broadcasters received flat-screen TVs and cash in exchange for airplay and on-air plugs of albums and concerts.
Some radio executives involved in negotiations with the FCC said the agency had proposed that stations abide by a compliance plan similar to the terms Spitzer set forth in settlements with record companies last year, but with less onerous oversight provisions and fewer prohibited activities.
The FCC began negotiations with some radio companies in February, but has yet to formally launch an investigation by serving letters of inquiry that would compel stations to hand over documents. Spitzer has collected hundreds of thousands of documents related to alleged radio payola in the course of his investigation, some of which have been shared with the FCC.
"I would wonder why the FCC thinks they have the basis for a settlement without investigating the underlying facts," Spitzer said.
His office, he added, has not handed over all of its evidence. In the past, Spitzer's investigators have refused to share documents because they were frustrated by the FCC's slow pace.
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