Prior to the beginning of the hearings the FTC filed complaints against a number of record manufacturers and distributors. Those that wished to escape prosecution agreed to a 30 days Consent Order. Many of the companies found themselves back where they had started and folded.
"The cancer of payola cannot be pinned on rock and roll."
"What they call payola in the disc jockey business they call
lobbying in Washington"
In the wake of the quiz show scandals ASCAP (American Society of Composers, Authors and Publishers) urged House Oversight Subcommittee Chairman Oren Harris to look into the recording industry's practice of payola.
Variety reported that ASCAP was taking credit "for shifting the spotlight from the TV quiz rigging to the disc jockey payola."
It was ASCAP's belief that BMI licensed songs were hits only because of payola. With the breakdown in morals, ASCAP believed these records were played so often by greedy deejays causing them to become imprinted on unsuspecting teenagers. ASCAP who had always looked at rock and roll as a passing fad and with these hearings they were trying to ensure that would be the case.
The payola hearings were the second set of government investigations stemming from the television quiz show riggings.
Payola had gotten the attention of President Eisenhower. As the FCC and FTC began their investigations, Eisenhower asked U.S.Attorney General William Rogers to look into the matter.
On December 31, 1959, Rogers told Eisenhower that the statutes were adequate, but needed to be used more effectively. He suggested that the FCC and FTC clean house before legislative action was taken.
Prior to the beginning of the hearings the Federal Trade Commission filed complaints against a number of record manufacturers and distributors. Those that wished to escape prosecution were assigned a consent order agreeing to stop. Many of these companies found themselves back where they had started and would later go out of business.
Formal investigations by the government into payola began in November 1959. The most important was the one by the House Special Subcommittee on Legislative Oversight chaired by Oren Harris (Democrat Arkansas).
In addition the FCC threatened to launch its own investigation. FCC commissioner Robert E. Lee that if payola existed at the stations the owners could lose their licenses to operate even if they were unaware of their employees involvement. Lee said that payola fell into the area of "sneaky commercial," which violated the Communications Act that required that paid sponsorship be mentioned.
In mid-January Harris sent investigators Oliver Eastland, Charles Howze and James Kelly to look into payola charges in Chicago. Harris had a $410,00 budget for the hearings which were expected last a week. He added six investigators and two new clerks bringing his staff to twenty-five.
Chief counsel Robert Lishman found twenty areas of musical payola to investigate which included favored treatment of record companies in which the disk jockey held a financial interest, record hops to promote the deejay's outside interest and deejays having interests interest in artists performing on their programs
In late January the committee held closed door sessions with Clark business associates. Among them were Harry Chipetz and Bernie Lowe Clark's partners in Chips Distributing. Clark's $10,000 investment in Chips netted $23,000 at the time of his divestment. Chipetz also testified that Chips paid DJs close to $20,000 between 1958 and 1959, but added that it wasn't known that Clark was aware of this.
Lowe co-owner of Mallard Record Pressing testified that Mallard didn't own any record presses, but had a deal with Stanton Music that guaranteed Stanton one million pressings a year. From this deal with Mallard Clark grossed $800,000 from May 1958 to November 1959.
Lowe also admitted that he gave Clark 40% of the performance rights to Back To School. Congressman John Bennett asked "was he a good partner to have in business? Was he worth more in playing records than other disc jockeys?" Lowe said "I think so."
The star of the closed sessions was Tony Mammarella who testified for two days. During his restimony Mammarella frequently answered with "I cannot recall" and it is dificult to say and refused to implicate Clark in any wrong doing.
In return Clark would say that though it "seemed incredible" that he had not known that Mammarella who he "loved and respected", shared an office with, was receiving payments from record companies. He also denied "catagorically" and knowledge of improper, unethical, or illegal practices by mammarella during hi time on American Bandstand.
The committee was impressed that Mammarella had risen from switchboard operator and camera man to producer of the highest rated show on television.
But what they wanted to know was how he was on four payrolls that were playing him $753 weekly. One was as employee of WFIL, two Clark paid him for producing American Bandstand through Clark's Drexel Productions. The other two were as a 25% owner of Swan records, with Clark and Bernie Binnick and half owner with Milt Kellum of Wildcat Music Publishing. Committee investigators found eleven other record companies and distributors that paid for what Mammarella claimed was for "listening" and "consulting." There was income from Milt Kellum Music Inc, a Wildcat affiliate, Raye Products Inc., partly owned by Clark, and Startime Industries Corp with Clark that made stuffed animals Platter Puss and Cuddle Pup. There was also one-third royalties from record sales from "Butterfly" by his being list as a writer using the name Anthony September.
Prior to the hearings, it was learned that the subcommittee was taking a hard look at the deejays convention that occurred in Miami the previous May. The Disk Jockey Association was formed to counter bad publicity. Just before the hearing it issued a statement endorsing the hearings, saying "the disk jockey has a responsibility to the public and the industry, and if he's not willing to accept this responsibility he's not worthy to be part of the profession." The Association also reached out to the FTC for assistance in drafting a code of ethics.
Just before the hearings began, Congressman John Bennett proposed legislation that would provide for fines of up to $5,000 or imprisonment of imprisonment of up to two years for persons who use the airwaves to "deceive and defraud the American people."
The hearings started on February 8, 1960 with a committee made up of five Democrats and four Republicans.
Investigators for the House subcommittee, the FCC and the FTC were joined by the IRS, whose Los Angeles office were tipped off about alleged irregularities with at least one West Coast distributor
Many expected Clark to be the first witness when the hearings began, but Chairman Harris said he would come later because there was so much to investigate.
Harris's made it clear that besides disc jockeys the committee would be investigating song pluggers, promoters, distributors, manufacturers and officials of radio and television stations. Harris said that quality declines when side payments are reason songs are chosen and and such practices constitute unfair competition to fair businessmen.
After Harris's opening remarks, the committee went into closed session to hear from former Boston disc jockey Norman Prescott. In the two and half hour session, Prescott claimed he had been clean for his first ten years in the business before submitting to the"payola virus" in 1957. In the two years since he had taken $10,000 in payola before quitting his job in disgust. Prescott was aware when he was at WHDH and WBZ that management pushed certain records but, it was only when he worked at WORL that he realize how pervasive payola was. Prescott said that it was in the early fifties when he was given a new LP by Johnnie Ray. After playing it he learned that WHDH's Bob Clayton had an exclusivity deal with Columbia that entitled him to first play of their releases.
Several other Boston disc jockeys were paid under the table to service certain labels and distributors. In July, 1958 WBZ station manager Paul O'Friel sent Prescott and Bob Griel to NY to ask for free albums. They returned with 1,000 including up to 300 from Mitch Miller.
In open session that day, Boston WBZ DJ Dave Maynard admitted receiving $6000 from distributors in the previous three years. Maynard claimed the payments weren't payola, but were for promoting teenage dances that were not broadcast. Alan Dary claimed that the $400-$500 he received were Christmas gifts.
The Boston portion of the hearings ended on Tuesday, when bandleader Lester Lanin that he had been cheated while participating in a promotion sponsored by WBZ.
Subcommittee's chief counsel Robert Lishman found twenty areas of musical payola to investigate; favored treatment of record companies in which the disk jockey held a financial interest, record hops to promote the deejay's outside interest and deejays having interests interest in artists performing on their programs
Lishman brought on Joe Finan who had been fired from KYW in Cleveland. Finan admitted that he supplemented his $40,000 salary with money from record companies. He claimed the money was for services rendered including; evaluating the commercial worth of records; acting as a consultant to "verify" if the record was worth the cost of promotion" For that consulting, Finan netted $16,000 in 1958 and 1959 from 15 record companies, including $460 from Cameo to push Bobby Rydell's' Kissin' Time.
On Wednesday, Wesley Hopkins, a former Finan associate, took the stand to defend the $12,000 he received in"listening fees" from record companies, declaring but he just wanted to make sure good records "weren't lost in the shuffle." He claimed it wasn't "pay for play." Wednesday was the last day of that week's hearings as Congress went into recess.
Hearings restarted again on on February 15 as the committee again zeroed in on Boston disc jockeys, but expanded to record manufacturers and distributors too. Cecil Steen of Records, Inc.admitted that he paid $2,000 to Boston disk jockeys. Gordon Dinerstein of Music Suppliers, Inc also testified that he paid disc jockeys and record librarians, but only " to create and maintain goodwill." Some of that money involved the Am-Par, a wholly subsidiary of ABC-Paramount, which was the parent company of American Bandstand.
Am-Par president Sam Clark testified in close session that ABC-TV was careful avoid to plugging its own records "that he found it was hard to get Am-Par records played on Bandstand." Chairman Harris countered that claim with a 1959 analysis of American Bandstand that showed Dick Clark played more Am-Par records (9 records, 30 plays) than Columbia (8 records, 28 plays), RCA (8, 22) or MGM (8,21).
The subcommittee finally got some linkage to Clark on February 19, when disc jockey Joe Smith of WILD in Boston testified that he benefited from the success of 16 Candles. Smith started pushing it after Coed Records started paying him two cents for every copy sold in the Boston Area.
On December 15, 1958 George Paxton and Marvin Cane, owners of Coed Music had told a similar story. Following a conversation with Clark's assistant Vera Hodes. Cane testified that "they had surrendered without charge, complete copyright interest to January Music Company owned by Clark the royalties of Sixteen Candles with the understanding this would foster their music's promotion.
Since there was no "stipulation" that Clark would play the record, they were "more hopeful than confident" that the uncharted record would get played on American Bandstand. Clark played Sixteen Candles twenty-seven times in three months after the copyright had been given. By the beginning of 1960 it had sold 468,235 copies. Songwriter and publisher Bernie Lowe expressed gratitude for Clark's help in promoting his song Butterfly by offering Clark 25% of the publishing rights. Clark refused, but agreed to $7,000 check made out to his mother-in-law Mrs. M.M Mallery the vice-president of January Music. When she cashed the check she wrote on the back reimburse loan.
Lowe also admitted that he gave Clark 40% of the performance rights to Back To School. Congressman John Bennett asked "was he a good partner to have in business?" Was he worth more in playing records than other disk jockeys?" Lowe said "I think so."
"If you were a songwriter then and you had a song, you'd want
me to own it because I could do best by it. That's good business."
After Smith's testimony, Harris told reporters that it probably be a month before they resumed during that time the subcommittee would be briefed on the results of the FCC and FTC investigations.
Late in March a House spokesman confirmed that Clark had been subpoenaed to appear before the committee on April 21.
On April 25 the hearing resumed with a closed session with Alan Freed testifying.
Freed in his testimony claimed that the network had a dual policy, one for Clark and one for everyone else. While Clark was allowed to use a self-written narrow definition in the affidavit he signed for the network, Freed wasn't given that option.
Subcommittee counsel Robert Lishman asked Freed if he could have signed Clark's specially written payola denial with out perjuring himself to which Freed replied yes. Lishman then asked with Clark's definition, could you swear to you innocence without any hesitation?
While he wouldn't have been able to answer no to some of the questions on the network affidavit, but if he had the same option as Clark he would have come out "clean as the driven snow." Instead he was questioned about his interests in publishing and music copyrights
Freed was then questioned about his interests in publishing and music copyrights.
Congressman John Bennett then began questioning Freed. asking if he would willing to tell of his own payola involvement. Freed said that since he been denied immunity to by the New York grand jury investigating payola, that anything he told the subcommittee could be used against him for prosecution in New York. "Mr. Hogan would like to get an indictment to make somebody look like real criminals under the 439th Statute of the New York State law of commercial bribery," Freed told Bennett.
Subcommittee counsel Robert Lishman asked how many free records were given to disk jockeys by distributors and manufactures? Too many Fred answered. Referring to testimony Freed which Fred alleged at his WABC contract signing that he was "to lay very heavily on ABC-Paramount records, Lishman asked if Am-Par president Clark, no relation to Dick, ever told Freed he wasn't playing enough Am-Par records? Freed replied, Many times, telling that on occasion that Clark would send him a packet of Am-Par records and remind that was him that much to do with Freed being signed by WABC. Freed told Clark that he didn't owe him anything. Freed then told how when he didn't play a certain Am-Par record, "Clark would call any ask why I wouldn't air a particular tune'" Freed told him that he didn't because he didn't like it "and that was."
Freed claimed that he was pressured by ABC vice-president Mortimer Weinbach to "lay heavy on Am-Par Records and play only Paramount theaters" in his stage shows. Freed also claimed that Clark received preferential treatment by ABC because of the money he brought into the network. He said Clark grossed about $12 million annually for ABC, while he just brought in $250,000.
When Harris asked Freed to be specific about payments he received Freed replied that most of them were received on a monthly basis. Freed then ratted off a list of companies that he received payments from that included Atlantic, roulette and United Artists. Freed swore that WABC "did know these outside dealings."
Harris: "They were fully aware that you were on the monthly payroll of some of these companies and received annual payments from others?"
Freed: That's right. Ben Hoberman,WABC"s station manager, was aware of them, but "did not complain. He simply asked me to sign the affidavit.
Chief subcommittee counsel Robert Lishman asked how Freed could be so sure Hoberman was aware of of his outside business interests. Freed said that the "only conversation he could remember happened when he was trying to avoid paying a second $10,000 to ABC for his stage-show plugs. Hoberman "looked across the desk and winked at me," before saying, "Just a moment, Alan, you know you have a million outside deals; give up the $10,000."
Hearings resumed on April 26, 1960 with testimony from George Paxton and Marvin Kane of Coed Records in closed-door session. They told how "16 Candles" had gone nowhere on the charts until Clark obtained publishing rights and started playing the song heavily on American Bandstand.
Open sessions resumed Tuesday with Paul Ackerman Billboard's music editor. Ackerman noted that payola was embraced by the industry long before Dick Clark and jockeys appeared, but agreed that payola should be a crime and recommended that the music industry start a self-policing program.
Billboard's research director Thomas Noonan acknowledged under questioning that Dick Clark is "probably was the most important single individual" in the exploitation of records." Much of this day's hearings dealt with a detailed statistical analysis of songs played on America Bandstand.
From the start Clark had recorded the name and play date of every record he played on American Bandstand on index cards from the first show August 5, 1957 though November 11, 1959. To show the committee that his influence was far less than they thought he hired New York statistical and electronic processing firm Computech Inc. to analysis the cards and come up with a presentation for him. He also let the committee know that he had commissioned the study independently and paid its $6,000 out of his pocket.
Computech vice president Bernard Goldstein
Clarity wasn't what Clark had in mind when he had Bernard Goldstein, vice-president of Computech Inc appear before the committee
"I spent $6000 creating the biggest red herring I could find
-something that would shift the subcommittee's attention away from my scalp"
Dick Clark from Rock, Roll,& Remember
Clark hoped that the analysis would overwhelm the subcommittee with facts and numbers that would support his innocence.
"Goldstein arrived with a half dozen suitcases, stuffed with
300 pounds of information"
Dick Clark from Rock, Roll & Remember
Goldstein testified that Clark played songs in which he had a financial interest 4,230 during the two year period which come out to 27% of the songs played on American Bandstand.
Under questioning, Goldstein admitted the the numbers used included the American Bandstand theme song, which was played twice each show. The study also included the several months after the show began and before Clark had a musical empire and therefore had no songs to push. The study also omitted any songs in which ABC network or Clark's friends and business associates had an interest.
Rep. Moss called the who exercise "statistical gymnastics" designed to put Clark in the most favorable light. The subcommittee had it's own view of the 15,000 index file cards and on Wednesday brought in three other statisticians that offered other interpretations
Joseph Tyron Economics and Statistics professor at Georgetown University testified that his study of Comptech's survey led him to the "inescapable conclusion" that Clark favored records in which he had a financial interest in. Furthermore, Tyron claimed that Clark "clearly and systematically favored records in which he had an interest by first playing them more often, then playing them longer and playing them earlier relative to when they became popular. It also appeared that he favored those records the most that he the largest interest."
Morton S. Raff of the U.S. Bureau of Labor and Statistics and Joseph F. Daly of the U.S. Census Bureau noted that in its ninety-five page staff analysis of the Computech data that there were numerous statistical errors in the Computech study. The staff also pointed out that Clark often played records which had interest was in the song being played were on the B-side.
Two other witnesses on Wednesday shed light on how some of Clark's "financial interests" played out.
Harry Finfer vice-president of Universal Distributing and Jamie Records testified that Universal had paid Philadelphia disk jockeys $35,000 over a two years in 1957-1959, but Clark wasn't one of them.
Georgie Woods of WDAS received the most $6,375, but Tony Mammarella was second with $4,000. Finfer told the committee that Mammarella was paid for listening to records and offering advice, except for $500 that was a gift in honor of his newborn child.
Realizing that Clark's advice could also be valuable, Finfer offered Clark a 25% of Jamie for $123, in July 1959 Clark was then put on the payroll ,retroactive to may 1958, at $200 weekly "for giving Jamie the benefit of his expert advice and experience."
In June 1957 Clark helped Jamie to get off the ground by playing Duane Eddy's Moving and Grooving and having him appear on his show.
Because of Clark's "expert knowledge of records" allowed him to become a 25% owner by purchasing 125 shares of stock for $125. gave Clark 25% of Jamie for $125. $35,00 was given to 35 DJs biggest names Philadelphia Lloyd "Fat Man" Smith, Joe Gray, Ed Hurst, Tom Donahue, Joe Niagra, Georgie Woods, Hy Lit, Mitch Thomas, Larry Brown, Anthony Mammarella, Kae Williams, Red Benson and Jocko Henderson
Listed were 22 companies given $20,000 to promote Jamie Records to cover a wider area in Nashville, Cleveland, Detroit and Miami. Songwriter Orville Lundsford assigned the copyright of "All-American Boy" to Fraternity Records. He received word from Harry Carlson that Clark would push the record but, only if Fraternity had 50,000 copies pressed by Clark's Mallard Pressing. Only then did "All-American Boy" become a hit.
Clark held copyrights to 145 songs. George Goldner of Real Gone Records and Music gave copyrights of "Could This Be Magic,"'" So Much," " Every Night I Pray" and "Beside My Love" to Clark's Sea-Lark and January Music Company. Goldner did so "hoping that he would play my records. It was a calculated risk on my part." You did feel certain that the magic could be worked and the records played?" asked John Moss. "I had hoped for that, yes sir."
The hearings climaxed with Dick Clark's appearance.
Testifying in front of the House Special Subcommittee on Legislative Oversight
Photo courtesy Bettman/Corbis
"Gentlemen, I feel I have been convicted, condemned and
denounced before I have had an opportunity to tell my story"
Dick Clark's opening statement
Friday April 29, 1960, Clark testified with lawyer Paul Porter sitting behind him The hearing was gaveled to order and Clark proceeded to to read thirty-four page prepared statement that took forty minutes. In it Clark outline his professional career from Syracuse to American Bandstand, details of the thirty-three businesses in which he had a financial interest, explained what each did, partners and financial interest.
Subcommittee counsel Robert Lishman began hearing's questioning by looking into Clark's finances since 1957. He discovered Clark had received $167,750 in salary and $409,020 in increased stock values on $53,773 investments during the time period. When asked if he made more than $800,00 Clark claimed he didn't know
Clark told how he helped write "At the Hop" and admitted he and his wife "had inadvisably taken" jewelry as a gift from Lou Bedell of Era and Dore Records. Clark defended the Coumputech survey noting that he volunteered the information before it was requested and that he under took the analysis in good faith.
Though Clark had divested his music related interests before his appearance, two that sounded like payola hadn't been resolved.those would be the $7,000 he received from Bernie Lowe and the gifts had had got from Lou Bedell.
By the time of the hearings Clark had divested his music related interests before his appearance, but two that sounded like payola hadn't been resolved. Those two would be the $7,000 he received from Bernie Lowe foe promoting "Butterfly"and the gifts gotten from Dore Record's Lou Bedell in connection with the record "To Know Him Is To Love and the Teddy Bears appearance on his show.
Bedell was appreciative of Clark's help with To Know Him Is the Love Him. Originally it broke out in Fargo, and when a Minneapolis station began playing orders picked up in Twin Cities. Bedell wanted it to be national hit when he called Clark.
When Bedell contacted Clark asked if Universal Distributors were handling handling the distribution. Clark had no connection with Universal but, two of his partners Harry Finer and Harold Lisius owned 50% of another business that Clark had an interest in, Jamie Records.
Clark began pushing it in the third week of September began playing it hit Top 40 on the top 40 on October 11, 1958. week later #16 by late October it was #4 Two weeks later called to ask Teddy Bears on show shortly thereafter got gifts Moss "More brotherly love than any other on earth. People just can't restrain themselves giving away their wealth"
Clark admitted he received $7,000 from Lowe in royalties and played "Butterfly" until it became a hit. Clark claimed the $7,000 was given out of gratitude. Clark said that it wasn't payola because he had made no commitment. That gifts from Bedell were "simply gifts." For the fur stole given for his wife Clark insisted on paying for and gave Bedell a check for $300. Later it was learned the stole's actual cost was $1000 and it was written off as a business expense.
Bedell said if a man next door makes $150,000 for me, by golly, I'm going to buy him a Cadillac.
The next gifts were a necklace for Clark's wife Bobbie and a ring for him.valued at $3,400 these too were written off as business expenses.
Clark also defended the having talent on Bandstand for free which he claimed was standard in the industry. Clark's March Productions Company would give the artist a check for union scale, the artist would give the check to his or her record company, the record company would give a check for the same amount to Clark.
Clark also took issue with subcommittee's general counsel Robert Lishman's remarks of a fear of reprisals by potential witnesses.
"I have never in my life threatened reprisals or used devious
methods in negotiating with hundreds of artists, managers, record companies, publishers or
songwriters I have dealt with in my career. Should any man accuse me of exacting or using
coercion, that man would not be telling the truth"
Subcommittee counsel Robert Lishman began hearing's questioning by looking into Clark's finances since 1957. He discovered Clark had received $167,750 in salary and $409,020 in increased stock values on $53,773 investments during the time period.
Lishman than asked Clark to confirm that he made $800,00 in less than three years to which Clark claimed ignorance. Furthermore Clark said for some time he didn't know that firms were using payola as a promotion expense.Clark said that he disliked accounting and didn't read financial statements carefully. Clark told the committee " the only thing I failed in my life was mathematics." Congressman Derounian would say "apparently you know how to count and I think more students in the country are going to want to fail math if they can be as successful as you." When he did realized "somewhere along the line" that companies paid for play he didn't think it was "terribly important." Clark would note I'd never tell a man "how to run his business than the man in the moon, because it was his responsibility, and this was not a particularly unusual practice in the business." Was I guilty of taking payola because he didn't stop his companies from making payments? "If you own stock in RCA, Victor, or Decca, or United you are as guilty as I am."
"The public and members of the investigating committee simply
do not understand the meaning of the term payola."
When asked if he had ever taken payola, Clark said no since it didn't met his definition which was playing a specific record for a specific record. Furthermore more Clark added that he felt "convicted and condemned" before he had an opportunity to tell his story.
"You know we have had twenty or thirty disc jockeys here, and
not one ever stated that he "agreed" to take payola. It is always some kind of
telepathic understanding that if everything is going good, in appreciation for what they
are doing somehow miraculously they get their money"
Subcommittee counsel Robert Lishman
Congressman Mack called Clark " top dog in the payola field."
Interested about conspiracies to push mediocre music on an unsuspecting members committee members grilled Clark relentlessly. The one exception was Chairman Harris who had skeletons in his closet. It was discovered during the 1956-1957 by the FCC that Harris had bought with a $500 and a $4,500 promissory note, which was never paid, a 25% in a television station in KRBB-TV El Dorado, Arkansas. A after Harris bought the station it received a $400,00 bank loan and another $200,00 from RCA.
Soon after the deal, the FCC which had turned down the station's prior request for a wattage increase reversed itself. Harris soon after he sold his interest.
Congressman John Moss said a "unique facet" of the television industry was the ability to communicate without agreement, by "intellectual osmosis."
Derourian described Clark's affidavit as "A Christian Dior affidavit, tailored to meet his needs. You say you did not get any payola, but you got an awful lot of "royola"
"My only crime is that I made a lot of money out of businesses
in which there was very little investment. I had done nothing illegal or immoral.
I had made a great deal of money and I was proud of it. I was a capitalist."
Congressman Bennett suggested that ABC and Clark had "cooked up" the affidavit to assure the whole matter had been scrutinized and was now taken care of. Bennett got Clark to admit he had left American Bandstand viewers "with the impression that that you had no interest in any records you were playing."
Congressman Moss "It appears Clark took a profitable form of payola. His methods were different but he appears to explored every possible avenue of cashing in. He meticulously put together a vehicle for avoiding the appearance of payola without losing any of the benefits."
Congressman Bennett "I think it is pretty convincing that Clark was involved in payola the same as all the other disc jockeys but on a much larger scale."
Congressman Peter Mack "the only question now is determining the degree."
Derourian asked how was it that Duane Eddy, who Clark had a financial interest in, was played more than Elvis Presely. It appeared that he favored artists that he had a financial stake in. Clark countered that he played many Bandstand favorite Darin, Francis Fabian Avalon that he had no stake in. That it may have looked like he favored them but 'did not consciously favor such records no one really pointed out inconsistency of playing records and owing interest in record and music companies establish as a shrewd businessman primarily selecting music was to fatten his bank account. Clark looked at it differently calling himself "professional crystal ball gazer".
Lishman pointed out thirty records from one of Clark's businesses were played six hundred fifty times eventually rising high on charts. Clark countered that this was proof of his ability to predict hits. Lishman pulled out three large charts full of diagrams and names of people and corporations, connected by lines
Monday May 2
Before Clark's testimony the committee released transcripts of the earlier closed door sessions with New York record manufacturers and music publishers George Goldner and George Paxton. The subcommittee learned that Clark owned copyrights to hundred sixty-two songs and 90% were given to him. When asked what the difference between giving a man a copyright and a $1,000 payment, Goldner said he didn't "know the difference."
Testimony started with House investigator James Kelly telling the committee that ABC's initial statement supporting the Clark claim of any wrongdoing was inaccurate. Upon questioning by the investigators, ABC officials admitted that there had been no investigation and statement of support was based solely on Clark's denial of doing anything wrong.
Lishman spent the morning going over the charts that detailed virtually every Clark business transaction since taking over American Bandstand
Afternoon session was a discussion of Fabian's talent or lack thereof and squealing girls. Derourian and Springer spoke of his lack of basic skills one would expect singer. Clark countered that he was simply giving public what it wanted. Congressman Derourian said Fabian was created by Clark, not an eager public.
Before ABC president Leonard Goldenson's testimony the subcommittee released a detailed report on it's analysis of the 15,000 index cards songs played on American Bandstand. Staffers Rex Spanger and Bill Martin compiled the data which showed Clark gave preferential treatment to songs in which he had a financial interest.
Things began to turn around for Clark when Leonard Goldenson president of ABC's television network testified for Clark Calling Clark "upright" and of "good character." Goldenson had good reason to be proud of Clark as he had single-handedly put ABC on the daytime map. With Clark American Bandstand had reached $20 million ad revenue, while Freed's on radio was $200,000. After Goldenson's testimony the committee's attitude toward Clark began to change.
Goldenson soon found himself taking pointed questions from the committee.
He admitted that there was network investigation of Clark, but prior to its public statement of support he had never met Clark before the kerfuffle that led to Clark's divestment of his music holdings. Also that the network never investigated Tony Mammarella even though he had extremely close working relationship with Clark.
Goldenson was asked about Freed's claim that Clark's affidavit represented special treatment by the network Goldenson said there was no significant difference
Congressman Moss brought up Freed's claim that he was told to "lay heavy on Am-Par, an ABC Paramount subsidiary, records" Goldenson called Freed a liar
Moss responded by asking, "If it is necessary for a deejay to divest of music interests --why not a network?'" What's the difference?
Goldenson said that Am-Par "as a corporate, but separately and virtuously administered subsidiary of a network, would not be as susceptible."
Congressman Bennett pointed out that 4% of Am-Par gross was used for payola; Goldenson called it "promotion." Congressman Mack told Goldenson he thought with the firing of Freed, Clark out of the music business and with Mammarella gone that the matter of payola that was done. He was wrong. Later the committee would go into executive session within days and write out anti-payola legislation.
Ben Hoberman, station manager of ABC in New York, who fired Freed for not signing the network affidavit testified about the station's contract with Freed. That would have paid him $40,000 a year, but would have charged him $10,00 for on-air promotion for each of the three concerts he was planning for the coming year.
If Clark were held to the same standards for promoting records he had an interest in the New York Times reported he would have owed $25 million.
The evidence against Clark was overwhelming, much of it supplied by American Bandstand producer Tony Mammarella. However, it seemed that Clark had convinced the committee if not innocent, he wasn't a criminal.
The hearings ended with Harris saying of Clark "You are obviously a fine young man. You started in this business young and you are attractive to young people. Therefore, your responsibilities with your influence can be great. I do not think you are the inventor of the system; I do not even think you are the architect of it, apparently. I think you took advantage of an unique opportunity to control too many elements in the popular music field, through exposure of records to a vast teenage audience."
At the end of 19 days of testimony, the subcommittee released figures based on a mail survey that showed 130 record distributors had given $263,244 in payola in the last two years to two hundred-seven disk jockeys and other radio-TV personnel and twelve stations.
Variety wrote that that each of the fifty-seven witnesses were asked to define payola. During the hearings payola came to be known by other names. Chairman Harris used "plugola" to describe the practice of broadcasting plug for anything commercial without identifying it as advertising which wasn't paid for. Congressman Derounian used "royola" in reference to Clark's outside royalty interests in records he favored on American Bandstand. Lawrence Laurant, TV columnist for the Washington Post created a term that only applied to American Bandstand: Clarkola. Clark then opined that he had already been "convicted, condemned and denounced."
in June 1960 the committee wrote Communications Act Amendmentsl making payola a federal offense, prohibited quiz frauds and set fines of up to $10,000, imprisonment for up to one year, or both for broadcasters who "willfully or repeatedly" violated the Communications Statute or FCC rules. The FTC outlawed payola as unfair competition and the IRS declared that the companies that engaged in payola had committed bribery and the payments weren't deductible as business expenses. President Eisenhower signed the bill into law in September.
The law was toothless ignoring the bribers to only focus on the disk jockeys. Though several record companies signed the consent decree promising not to use payola, nothing was done to those who didn't such as Chess and Roulette Records. The investigation continued as federal and local law enforcement agencies prosecuted a number of prominent disk jockeys. Robert Lishman declared that the combined efforts of the Justice Department, FTC, and FCC should curb payola, but over all enforcement was lax.
What the hearings did was simply scapegoat to sacrifice to public opinion that rock and roll was a serious threat to the morals of American youth. Discredited the disk jockey as the decider of musical taste. It found no fault in the basic capitalist nature of the industry. blamed alone but were easiest target in given the government's role in regulating the broadcast industry once the FCC began investigating unethical behavior license cancellation was a real threat stations began revising their format toward a more adult fare.. however record sales did not decline and teens did not reject rock and roll on payola revelations.
The hearings did show that culture was not defined by aesthetics, but by political economic and social conditions that provided the context for artistic expressions. The end of the hearings marked the end of an era as independent rhythm and blues disappeared from the air.
Following the payola and quiz show scandals, U.S. Attorney General William P. Rogers issued a statement recommending that the FCC and FTC be granted more power to regulate broadcast content.