Section 317 of the Communications Act of 1934, as amended, 47 U.S.C. § 317, requires broadcasters to disclose to their listeners or viewers if matter has been aired in exchange for money, services, or other valuable consideration. The announcement must be aired when the subject matter is broadcast. The Commission has adopted a rule, 47 CFR § 73.1212, which sets forth the broadcasters’ responsibilities to make this sponsorship identification.
Although U.S. law restricts foreign governments and their representatives from holding a broadcast license directly, foreign governmental entities are purchasing time on domestic broadcast stations. Section 73.1212 also requires disclosure for broadcast programming aired through a leased airtime agreement sponsored by any entity or individual that is a foreign government, a foreign political party, an agent acting on behalf of such entities, or a U.S.-based foreign media outlet based on definitions drawn from the Foreign Agents Registration Act of 1938 and the Communications Act of 1934.
Section 507 of the Communications Act, 47 U.S.C. § 508, requires that, when anyone provides or promises to provide money, services, or other valuable consideration to someone to include program matter in a broadcast, that fact must be disclosed in advance of the broadcast, ultimately to the station over which the matter is to be aired. Both the person providing or promising to provide the money, services, or other consideration and the recipient are obligated to make this disclosure so that the station may broadcast the sponsorship identification announcement required by section 317 of the Communications Act. Failure to disclose such payment or the providing of services or other consideration, or promise to provide them, is commonly referred to as “payola” and is punishable by a fine of not more than $10,000 or imprisonment for not more than one year or both. These criminal penalties bring violations within the purview of the Department of Justice.
Thus, for example, if a record company or its agent pays a broadcaster to play records on the air, those payments do not violate the provisions of the law if the required sponsorship identification announcement is timely aired by the broadcast station. If it is not aired as required by the Communications Act and the Commission’s rules, the station and others are subject to enforcement action.
If record companies, or their agents, are paying persons other than the broadcast licensee (such as the station’s Music Director or its on-air personality) to have records aired, and fail to disclose that fact to the licensee, the person making such payments, and the recipient, are also subject to criminal fine, imprisonment or both, for violation of the disclosure requirements contained in section 507.