Commission Imposes Forfeitures for Violations of Sponsorship Identification Rules

Commission Imposes Forfeitures for Violations of Sponsorship Identification Rules

On October 11, 2000, the Enforcement Bureau ("Bureau") of the Federal Communications Commission ("FCC") issued Notices of Apparent Liability for Forfeiture (the "Notices"), in which it determined that AMFM Licenses, L.L.C., licensee of radio station WKQI(FM), Detroit, and AMFM Texas Licenses Limited Partnership, licensee of radio station KHKS(FM), Denton, Texas, violated the rules that require licensees to make sponsorship identification announcements whenever a station broadcasts matter in return for money, service or other valuable consideration. As a result, the Bureau imposed forfeitures in the amount of $4,000 for each violation.

1. Increased Song Airplay In Exchange for Artist's Performance at Station's Concert Required Sponsorship Identification. AMFM, in response to a Bureau investigation of its agreement with A&M Records to play Bryan Adams' song "On A Day Like Today" (the "Song") in exchange for a firm and non-cancelable performance by Bryan Adams at a WKQI concert in Detroit, admitted that it made an airplay commitment, but argued that since the concert was already promised as part of an earlier agreement, no additional consideration was provided for the airplay commitment. The Bureau rejected these contentions, holding that WKQI was obligated to air sponsorship identification announcements when it played the Song because:

• the original agreement between AMFM and A&M only provided for a "pending" concert in Detroit, but when the station agreed to increase the number of times it played the Song, AMFM received in return a "firm and non-cancelable performance," which constituted an additional benefit in return for the promised airplay; and
• the Program Director's agreement to increase the airplay of the Song, to rotate it throughout critical day parts, to add the next song to be released by Bryan Adams to WKQI's playlist, and to provide a station appearance at a local record retailer of A&M's choosing was clearly in exchange for the Detroit concert.

2. Increased Song Airplay As Quid Pro Quo for Promotional Package Agreement Required Sponsorship Identification. AMFM entered into an agreement with A&M Records under which A&M agreed to: (1) purchase commercials on ten AMFM stations (including KHKS); (ii) make Bryan Adams available for concerts; and (iii) provide CDs, concert tickets and airfare for contests, in exchange for AMFM's promotion of the Song. AMFM management exerted direct pressure on KHKS to increase the number of times that the Song was played, which the Station did. Although the AMFM/A&M agreement did not mention airplay of the Song, the Bureau found that the increased airplay at the insistence of AMFM's management was part of the quid pro quo received under the promotion contract because:

• KHKS' Vice President of Operations admitted that he would not have played the Song except for the pressure he received from AMFM management;
• AMFM's management clearly applied that pressure because of their attempt to support their agreement with A&M; and
• if not for the consideration that AMFM received pursuant to its agreement with A&M, AMFM would not have pressured KHKS to play the Song.

The FCC's rules require sponsorship identification announcements whenever "money, service, or other valuable consideration is either directly or indirectly paid or promised to, or charged to or accepted by [a] station. . . ." As these cases demonstrate, this language is broad enough to encompass the promise by a record company to provide a "firm" concert in return for playing a song, and a concerted effort by a broadcaster to increase the airplay of a song on its station as part of a promotional agreement with a record company.

It is noted that the FCC vigorously enforces its sponsorship identification rules. The base forfeiture for a single violation of such type is $4,000 and, as demonstrated by these recent cases, the FCC has declined to impose lesser fines even though it has the authority to do so.