Indecency: Clear Channel settles with FCC

Radio giant Clear Channel Communications is set to make a $1.75M payment to the US Treasury in order to lay to rest its indecency fine vulnerability with the FCC. That would be in addition to $755K paid earlier to settle indecency tab run up by Bubba the Love Sponge, bringing total payment to over $2.5M. The agreement is called a Consent Decree by the FCC - - under its terms, Clear Channel "...admits that some of the material it broadcast was indecent..." It also promises to take company-wide action to prevent further violations. In return, CC gets a clean slate.

The settlement is similar to the one arrived at between the FCC and Infinity Radio back in 1995, when multiple assessments against Howard Stern were in contention. Infinity paid $1.7M to the Treasury on that occasion. One difference is that on that occasion, Infinity did not admit any guilt.

The agreement cleans the slate for Clear Channel. According to the FCC release, "The Consent Decree resolves all pending Notices of Apparent Liability, Enforcement Bureau investigations, and third-party complaints against Clear Channel for possible violations." The already-assessed portion amounts to $797.5K, "including $247,500 NAL released March 12, 2004 [Elliot in the Morning], a $55,000 NAL released March 18, 2004, and a $495,000 NAL released April 8, 2004 [Howard Stern]."

Clear Channel would have a clean slate prior to any possible action by Congress, which has bills in the hopper which would drastically increase the FCC's price list when issuing indecency fines. The House of Representatives has already passed a measure which would raise fines to as high as $500K. A similar measure has made it out of committee in the Senate but is currently stalled.

Clear Channel Radio President/CEO John Hogan said, "The settlement allows Clear Channel to close the chapter on indecency and move forward with our business. This has been a complicated and controversial issue but it has also proven that we can provide compelling, entertaining and informative programming without being indecent."

CC's EVP/Chief Legal Officer Andrew Levin explained the company's view of the legal implications, saying, "It was a tough negotiation, but a fair resolution. We didn't agree that all the complaints were legally indecent, but some clearly crossed the line and for those we have taken full responsibility. No broadcaster has taken stronger steps to ensure its broadcasts comply with the law and we intend to keep it that way."

RBR observation:

Clear Channel once again is playing it safe. Financially, that may be an excellent idea. Even though the Decency Act of 2004 is stalled, that doesn't mean that a fine-increasing rider won't hitch a lift on a must-pass bill before this Congress adjourns - - if such a thing does occur, Clear Channel could be saving millions on the pending cases now said to be resolved.

We're waiting for the other Stern shoe to drop, and when it does, it's expected to land squarely on Infinity, now owned by Viacom. Stern is more or less an in-house talent there (through related Westwood One), and is on numerous Infinity-owned radio stations - - way more than the six Clear Channel stations which generated a $495K indecency finding on their own. Viacom's Mel Karmazin, a settler in 1995, has vowed to be a fighter this time around - - but for all intents and purposes, he's gone now. Any way you slice it, FCC vs. Viacom promises to be a much more spectacular fireworks show than this one, fiery though it is in its own right. Stay tuned.