FCC Enforcement Advisory Issued Regarding Payola and the Sponsorship Identification Requirements

The Federal Communications Commission (FCC) under new chair Brendan Carr has issued an enforcement advisory addressing complaints that radio stations are coercing musical artists to perform for free at station events by threatening to reduce their airplay if they refuse.

The advisory warns that arrangements requiring performers to play at broadcast station events in exchange for airplay, particularly when coupled with threats of reduced airplay for non-compliance, could violate the FCC’s payola rules. These rules prohibit broadcasters from making programming decisions based on receiving anything of value without on-air disclosure of such consideration. A band’s coerced free performance could constitute such consideration and, if not disclosed during subsequent airplay, would violate payola policies.

The FCC characterized these practices as “covert manipulation of radio airplay,” noting that “[w]hen payola causes stations to broadcast programming based on their financial interests at the expense of community responsiveness, the practice is inconsistent with localism.” While commercial stations can negotiate increased airplay in exchange for event appearances, any agreement for free performances must be disclosed to listeners each time the artist’s songs are played.

The implications extend beyond music programming to advertising: all broadcast stations and advertisers must comply with the FCC’s sponsorship identification requirements. Any television or radio station receiving payment or consideration for broadcasting content must disclose such arrangements to their audience.

This includes any promotional campaign where an advertiser places their content in news or public affairs programs as part of the advertising sales contract. That financial relationship must be revealed in the newscast. Advertisers should also be careful when providing a broadcast station with pre-produced video programming that features one of their products in a manner that appears to be pushing that product to viewers.

If you have questions about the FCC’s enforcement advisory, contact Craig Gilley. For more insights into advertising law, bookmark our All About Advertising Law blog and subscribe to our monthly newsletter. To learn more about Venable’s Advertising Law services, click here. And listen to the Ad Law Tool Kit Show—a Venable podcast.