FCC’s Adelstein: Probe 'Payola’

Washington— Federal Communications Commission member Jonathan Adelstein last week called for an investigation into whether cable companies and broadcasters have accepted payment to promote commercial products without adequate audience disclosure.

In a speech, Adelstein complained that news accounts have revealed that on-air talent have been paid to hawk products, turning news segments into undisclosed advertisements. He also voiced concern about product placements in soap operas and reality programs that go undisclosed.


“Some will tell you that if broadcasters and cable companies insist on further commercializing new and other shows alike, that is their business. But if they do so without disclosing it to the viewing public, that is payola, and that is the FCC’s business,” Adelstein said in a speech to the Media Institute, a First Amendment organization funded by large media companies and their trade groups.

Lack of disclosure, he said, was eroding trust in the media, claiming people were frustrated with the proliferation of “fake news and relentless marketing.”

Media companies and individuals have a legal obligation to disclose commercials ties, Adelstein said, adding that failure to do so can lead to fines and prison. He called on the FCC to launch a payola investigation without waiting for complaints and refer criminal violations to the Justice Department.

“We should immediately open investigations into these possible violations of our rules and prosecute them to the full extent of the law,” Adelstein said. Separately, he also called for an “outright ban” on ITV ads aimed at children.

Adelstein, a Democrat, compared his quest to banish payola to his fight against FCC relaxation of broadcast ownership rules in June 2003. The public outrage that he said greeted the new ownership rules would re-emerge over payola.


Adelstein said he reviewed a news account in which a gourmet chief was paid $550,000 a year by a frozen shrimp company to tell TV viewers that frozen shrimp was better than fresh shrimp.

He complained about rampant product placement in shows like NBC’s The Apprentice and Fox’s American Idol. He also argued that listeners were not certain whether they were hearing an ad when radio disc jockeys gushed about commercial products they like.

“If there was payment of any kind, they better disclose it or they should face the scrutiny of the FCC,” Adelstein said.

Disclosures, he said, should not flash across the screen in small type requiring a magnifying glass. FCC rules in this area are not clear. He said the FCC should adopt the “clear and prominent” standard used by the Federal Trade Commission to police deceptive commercial practices.