RADIO STAFFERS OBJECT TO AOL ADVERTISING DEAL

Requires DJs to Include Product Plugs Within Editorial Content

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NEW YORK (AdAge.com) -- A $15 million advertising and promotional deal between Viacom's Infinity Broadcasting Corp. and struggling online service America Online is raising hackles as some
Radio stations receive free broadband service in return for on-air plugs within editorial content.
radio staffers perceive a breach of the separation between editorial and advertising content.

185 stations
The deal, brokered by Len Short, America Online's executive vice president of brand marketing, consists of two parts, a $15 million ad buy and a barter-like content arrangement whereby stations receive the AOL for Broadband service in exchange for DJs and other talent promoting the broadband offerings. The deal, which began June 1, involves the bulk of the company's 185 stations.

It is the requirement that DJs make on-air reference to AOL content that has agitated some. A staffer who insisted on anonymity at KMOX-AM, a talk station in St. Louis, said all three Infinity stations there participate in the promotional deal.

'Blurring of the line'
The staffer commented: "It is somewhat a blurring of the line, most definitely. ... The biggest difference between this and almost anything else is that [in other situations] you would say 'sponsored by' or 'brought to you by.' That's not showing up in this at all."

A spokeswoman for AOL said the arrangements did not extend to news departments, and that it targeted DJs "where schmooze is the order of the day." The KMOX staffer, who confirmed the spokeswoman's comment, said the deal with that station is slated to last for two years.

An Infinity spokesman said news stations could opt out of the deal, and that "enhanced guidelines" were being prepared for stations to address the concerns raised by the KMOX staffer. "Those guidelines make it clear this is a marketing partnership," he said.

Charlie Lake, program director for oldies station WJMK in Chicago, said the deal is "as straightforward as the running of commercials."

"I don't have any problem with it," Mr. Lake said. "It's advertising. They are paying us for it, and that's that. I'm not aware of any controversy."

AOL's evangelists
The AOL-Infinity deal also involves Detroit news station WWJ-AM. That situation was first reported in the Detroit weekly Metro Times, which reprinted on its Web site a memo from WWJ Operations Manager Georgeann Herbert that included the line: "While AOL would LOVE [sic] us to be 'evangelists' for their product, do stay close to your comfort zone when it comes to promoting material." (Ms. Herbert did not respond to a call seeking comment.)

The memo said the station had to refer on-air to content on AOL for Broadband six times a day and send at least three mentions per week back to AOL. The staffer in KMOX described a roughly similar system.

The deal was brokered by Mr. Short and Dave Goodman, Infinity's senior vice president of marketing promotions. A call to Mr. Goodman's office was referred to an Infinity spokesman.

Struggling online service
AOL continues to struggle to find its footing in general and, more specifically, to hatch a credible broadband strategy. In early June, Wayne Pace, chief financial officer of AOL parent AOL Time Warner, told financial analysts that the online service has lost more than 1 million dial-up customers -- its core cash-cow business -- since late 2002. AOL has about 26 million subscribers.

Media consolidation
The AOL-Infinity deal went into effect one day before the Federal Communications Commission moved to broadly deregulate aspects of media ownership, which would allow a company in a medium-size market to own a daily newspaper, two TV stations, eight radio stations and the local cable system. Foes of that move cited concerns over the integrity of local news and information as one reason for opposition.

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Elizabeth Boston and Tobi Elkin contributed to this report.

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