iHeartMedia will adopt a compliance plan to make sure its stations adhere to FCC sponsorship identification rules.
The company has agreed to a consent decree with the Enforcement Bureau of the commission, bringing to a close an investigation that began at the behest of Sen. Marsha Blackburn early last year, a theme that was amplified at the time by Chairman Brendan Carr, who said “I want to know whether iHeart is effectively and secretly forcing musicians to choose.”
iHeart will not have to pay a financial penalty.
The commission played up the outcome, releasing an announcement headlined “FCC Announces Agreement Strengthening Payola Protections for Artists.” And Carr said the consent decree “adds significant new protections” to artists.
But while welcoming the decree, iHeart reiterated that it “does not promise artists additional airplay if they perform at an iHeart music event, or less airplay if they decline an invitation.” The decree explicitly states that the company “makes no admission of liability or violation of any law, regulation or policy.” (Read the decree text.)
Details
The FCC had investigated whether iHeart violated FCC sponsorship identification laws in connection with allegations that it provided artists additional airplay on the radio in exchange for the artists’ performances at iHeart events, without disclosing it.
In question were its practices around events like the iHeartRadio Music Festival, the iHeartRadio Music Awards, the iHeartRadio Jingle Ball Tour and other programs.
Specifically, the commission looked into allegations that iHeart provided artists additional airplay on stations in exchange for performances at such events. Carr asked iHeartMedia executives to describe how the company goes about booking talent to ensure compliance with the relevant statutes and regulations regarding sponsorship identification.
In its defense, iHeart had told the FCC that it did not trade radio airplay in exchange for artist performances at company events.
Further, it said that it “takes seriously its responsibilities as a licensee to operate company stations in the public interest and to abide by FCC rules and policies,” according to the consent decree.
iHeartMedia told the commission it has policies and procedures to deter employees from engaging in conduct that violates sponsorship identification laws, including with respect to events, but that it was willing to augment its practices to reinforce the effectiveness of those efforts.
According to the FCC document, the commission and iHeart acknowledged that any proceedings that might result from continuation of the investigation would be “time-consuming and would require substantial expenditure of public and private resources.”
In order to conserve those resources, they entered into the consent decree, terminating the investigation.
As a result, iHeartMedia has agreed to a set of compliance actions, including naming a compliance officer. It must designate a senior corporate manager with requisite corporate and organizational authority to serve in the role.
The company must also designate a compliance contact for each market in which it has a station that plays music.
In addition, iHeartMedia will be required to develop a compliance plan to avoid violations and file annual reports with the company’s chief legal officer. A compliance manual will need to be instituted along with training for employees.
The company must maintain a direct-dial line with voice mail message capability and e-mail account for employees to reach the compliance officer to report potential violations. It must also implement reasonable whistleblower protections.
The company will be required to file compliance reports with the FCC within 120 days, and then at 12, 24 and 36 months.
The agreement stipulates that the company “may arrange for artists to perform at events or interviews, including under circumstances where a record label or other third party has subsidized reasonable costs related to the performance.”
However, additional disclosure statements about artists performing at company events will need to be made public.
Chairman Carr issued a statement Thursday: “The FCC is committed to ensuring that artists – especially up-and-coming ones – get a fair shake in their dealings with the broadcast industry. Artists’ talent and the listening public should determine their success. Today’s agreement adds significant new protections and offers the FCC greater transparency to ensure that artists retain their right to decide when and where they will perform. Artists have every right to ensure that the radio industry complies with the payola and showola regulations that protect them.”
In a statement sent to Radio World, iHeart said it was pleased to reach a resolution and thanked Carr and his staff for their time, focus and commitment.
“We have appreciated the recent opportunity to engage with the FCC on their questions about our live music events, including matters relating to artist appearances.
“As we have consistently noted, iHeart’s industry-leading live music events provide unique opportunities and value to performing artists by enabling them to reach their broad and engaged audiences and to enhance their careers. And as we have also noted, iHeart does not promise artists additional airplay if they perform at an iHeart live music event, or less airplay if they decline an invitation.”
