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Monday, May 15, 2006

Payola -- the Real Problem

Many harsh things have been written and said recently about New York Attorney General Eliot Spitzer. Indeed, it's hard to open a single trade publication recently without spotting a headline and article flogging him for overstepping his bounds to wrest settlements from major record labels over "promotional consideration" paid to radio stations. One prominent newsletter dubbed him a "petty tyrant" and a "shakedown artist" and suggested that the whole scheme is to garner free publicity for his upcoming gubernatorial campaign.

The source of all this vituperation is Spitzer's frustration over what he perceived as the FCC's lethargic reaction to his investigations which found evidence of providing promotional material, covering station overhead costs and paying outright bribes in exchange for airplay, using independent promoters as conduits for illegal payments, and engaging in fraudulent call-in campaigns to skew a song's perceived popularity. Rather than fight the charges, three major labels have settled in exchange for contributing a total of $27 million to New York music-based charities. In the meantime, observers professed outrage that Spitzer had any right to meddle in matters delegated to the FCC.

Unfortunately, this is hardly the first time in recent memory that an elected official might be exceeding the powers of his or her office. As attorneys here at Womble Carlyle, we're proud to represent a wide variety of broadcasters, whose overall record of public service is truly outstanding. Yet, there's another consideration here that transcends matters of legal authority or broadcasters' actual practices - we need to consider how Spitzer's accusations appear to the 99+ percent of the public who are not directly familiar with the industry's high ethical standards and exemplary public service.

The essence of broadcasting isn't music or sitcoms but communication. After all, the basic entertainment content is increasingly available elsewhere. Radio and television thrive on - and, indeed, demand for their survival - the trust of their listeners and viewers. DJs, news anchors, sports commentators and talk show hosts all garner ratings based upon that level of trust. If audiences can't rely upon the integrity of one source, they'll quickly and perhaps permanently turn to others.

We also need to remember that ethics is largely a matter of appearance, not fact. Only slightly plausible presumptions attract lasting attention, and the taint of even a mere accusation lingers long after a final verdict of innocence. Broadcasters can't afford to place themselves in a position where they could possibly be viewed as involved in sleazy activity that compromises the crucial bonds of trust with their audiences.

We all had thought we had seen the last of the payola scandals nearly four decades ago, and the more subtle derivative abuses of the "Hit Men" as well. But how does it look to an outsider when valuable consideration is provided to a radio station by the very companies whose survival is keyed to airplay?

Few are apt to assume that there is a direct quid pro quo when stations receive "promotional consideration" (or whatever other euphemism you prefer) from a record label (as in: "Here's a thousand bucks. Now play our record.") Yet, is it really reasonable to assume that a station might not be ever so slightly more favorably disposed toward a label that showers it with gifts than toward one that doesn't? After all, playlists and programming decisions are made by people and thus are quite subjective, and it's human nature to treat others the way they treat us. Act like an arrogant jerk and doors will slam shut, but be generous and the kindness eventually will be repaid - not directly, perhaps, but somehow. Even if the connection is obscure, we all tend to do favors for those who do favors for us.

In these days of scrutiny and skepticism, broadcasting needs to distance itself from any acts that even merely suggest impropriety. It hardly matters whether Spitzer has uncovered wide-scale genuine abuse or is merely taking opportunistic cheap shots - far too much is at stake for the industry to place itself in a position where the public even suspects a reason to mistrust it. Even if there is no connection at all between consideration received and programming decisions, the whole situation simply smells bad to the public and threatens to erode the essential trust that radio and television have worked so hard to foster and upon which their future depends.


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