Radio Conglomerates in Talks to Settle Payola Probe

April 3, 2006 — -- Four major radio conglomerates under investigation for demanding payment to play records have engaged in settlement talks with the Federal Communications Commission, sources at the regulatory body told ABC News.

The largest radio conglomerate, Clear Channel, made an offer so low that it was "laughable," FCC and record industry sources said. According to one high-level FCC source, Clear Channel began the discussions with an offer of $500,000 but moved toward $1 million when its offer was rebuffed. The FCC source said Clear Channel has now suggested a willingness to settle in the $1.5 million to $3 million range. The source said two other radio conglomerates, Entercom and Citadel, have made offers of $1 million each. CBS Radio has yet to make an offer, a source familiar with the FCC talks said.

Asked to comment on the settlement offers, FCC Commissioner Jonathan Adelstein said that "any settlement offer and consent decree has to reflect the scope and nature of the alleged violations."

According to the Los Angeles Times, "Negotiations with Clear Channel Communications Inc., CBS Radio Inc., Entercom Communications Corp. and Citadel Broadcasting Corp. have bogged down over how large a fine the companies should pay and what constitutes improper on-air promotion, according to industry and agency sources familiar with the talks."

Representatives of Clear Channel, CBS, Citadel and Entercom declined to comment on the talks, Reuters reported.

The investigation into radio practices was first reported in February by ABC's Chief Investigative Correspondent Brian Ross on ABCNEWS.com and on ABC's "Primetime." An FCC source now says settlement discussions are under way following the FCC's ordering radio stations to submit records and explain their actions.

Before the FCC's investigation of the radio stations, Eliot Spitzer, the New York state attorney general, had arrived at settlements with two record companies that were part of his original payola investigation. Spitzer's investigation is what prompted the FCC to begin its probe. In his original payola probe, Spitzer said the radio stations appeared to be complicit. He confirmed to ABC that he had also expanded his investigation of the radio stations' parent companies.