BREAKING NEWS: FCC TARGETS FOUR RADIO POWERS IN PROBE

The FCC has launched formal investigations into pay-for-play practices at Clear Channel Communications, CBS Radio, Entercom Communications and Citadel Broadcasting. The story was broken by Charles Duhigg in an L.A. Times Page One story. As Duhigg notes, this is the biggest federal payola inquiry since the congressional payola hearings of 1960.

The story cites two FCC officials as revealing that the FCC had requested “letters of inquiry” from the four radio powers in search of evidence that programmers had received cash, checks, clothing and other gifts in exchange for adding certain songs—which you probably realize is a violation of federal rules. If the feds can prove wrongdoing, it will impose sanctions ranging from fines to the revocation of stations' licenses.

All four broadcasters have been in negotiations with the FCC in an effort to avoid a federal inquiry and in the hopes of getting off with limited fines in exchange for discontinuing illegal and questionable practices. Indeed, it was haggling over the amounts the chains would be required to pay that caused the talks to stall. Last month, Duhigg revealed. Clear Channel had proposed a fine of about $1 million, while some commissioners were pushing for as much as $10 million, sources told the reporter.

Bryan Tramont, who served as chief of staff to former FCC Chairman Michael Powell, told Duhigg he believed the feds acted only after accumulating significant evidence of pay-for-play. "The FCC would only launch a formal investigation if they had information leading them to believe possible violations have occurred," he said. The probe could lead to the uncovering of additional evidence to go with that provided by Spitzer.

Entercom now has a pair of lawsuits to deal with, following the one slapped on the company by New York Attorney General Eliot Spitzer, who is also investigating CBS, Citadel and Clear Channel. Spitzer is sharing his evidence with the FCC.

Some in radio and the music industry had hoped that Entercom’s decision to take a stand against Spitzer would serve to hasten resolution of the matter, and thereby loosen up playlists, which have tightened significantly as programmers have reacted with caution to potential scrutiny regarding their adds (see story). But that hope is now up in smoke.