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The audience-pulling power of wacky listener contests and other irreverent stunts may no longer be enough to keep risk management out of the broadcast booth after last month's death of a contestant in a radio station's water-drinking contest.
The morning show contest--run by on-air talent who joked during their broadcast about the health risks contestants faced--is raising concerns among the corporate parents about the level of control that they have over their liability exposures, insurance brokers say.
Not only are corporate executives concerned about civil lawsuits and possible additional coverage costs or restrictions if contestants are harmed, but also criminal charges.
In addition, stations that run contests that endanger the public could be shut down permanently by the Federal Communications Commission.
Sacramento radio station KDND-FM, owned by Entercom Communications Corp. of Bala Cynwyd, Pa., faces all of those risks in the aftermath of Jennifer Strange's death on Jan. 12.
Ms. Strange, a 28-year-old mother of three, died shortly after she participated in a water-drinking contest run by the station's morning show team. Contestants competed for a Nintendo Wii gaming system at the station's studio by consuming large quantities of water over the course of three hours without urinating.
During the bit, the morning team on the station that bills itself "107.9 The End" aired calls from listeners who warned that water intoxication could be harmful or deadly to the contestants, according to show tapes subsequently played by news media and a wrongful death lawsuit filed Jan. 25 by Ms. Strange's family. In light-hearted responses to listeners' warnings, the on-air personalities said contestants signed liability waivers and likely would face temporary illness at worst.
Ms. Strange died later that day from what a coroner's initial report attributed to complications "consistent" with water poisoning. A final report is pending.
On the same day that the family filed its suit, Sacramento County Sheriff Department homicide detectives began a criminal investigation of Ms. Strange's death.
Also on Jan. 25 in Washington, the FCC launched an investigation of the case in response to complaints filed by the Strange family's attorney and the public, an agency spokesman said. The family has asked the FCC to revoke the station's license.
According to market sources, Entercom's general liability coverage should respond to any civil claims (see related story).
Entercom as well as Clear Channel Communications Inc., Cumulus Broadcasting Inc., Ennis Communications and Viacom--all of which own numerous radio stations nationwide--would not comment on their risk management practices.
But insurance market executives and a media attorney said they were not surprised that a radio station would allow its on-air talent to conduct a contest that posed health risks to contestants.
Karen Baldwin, the Newtown, Conn.-based vp of business development for Media/Professional, said corporate risk management oversight of local stations varies widely, depending on the organization. "We always spend a lot of time on procedures at the companies we insure," Ms. Baldwin said.
At many corporate owners of radio stations, "I think you'll find there's a disconnect between risk management" and local station management "in controlling the talent," said Chad Milton, a senior vp at Marsh Inc. in Kansas City, Mo.
The problem is that risk managers do not want to restrain creativity that makes an on-air personality popular with audiences and attracts advertisers, brokers said. As a result, risk management often has been left to local station managers, they noted.
Stephen Patterson, president of media insurance broker Preston-Patterson Co. Inc. of Conshohocken, Pa., said that even when risk manager clients have wanted to nix a contest, they often have called him to obtain an insurance-related excuse rather than unilaterally reject a proposal.
For Entercom executives named in the Strange family's lawsuit, an argument that there was limited communication with the local station could minimize executives' personal liability, said attorney Jon Blake, a partner with Covington & Burling L.L.P. in Washington.
But in any FCC license review, that defense would hurt Entercom because it would show the company did not exercise its station oversight responsibility, Mr. Blake said.
As for future corporate risk management oversight of radio contests, "I think that may change," Mr. Milton said. He noted that some stations unilaterally reassessed their decency standards after the syndicated morning show "Opie and Anthony" in 2002 broadcast a couple having sex in New York's St. Patrick's Cathedral. The broadcast resulted in a $357,000 FCC fine against station owner Viacom Inc.
"Our radio clients were embarrassed (for their industry) and felt they had a need to tighten up controls on indecency" after that broadcast, Mr. Milton said.
Referring to risky listener contests, Mr. Milton said Ms. Strange's death "may have a similar impact in bringing a sense (to corporate risk management) that these kinds of stunts have to be controlled, too."
Based on recent calls from corporate risk managers, Mr. Patterson said he already is seeing that beginning to occur. Ms. Strange's death "certainly is causing broadcasters to pause and question whether they're covered for something like this."
Coverage changes for the radio industry also could encourage stronger risk management oversight of such contests, brokers said.
Some brokers suggested that insurers might require prior notification of all contests. Others said major radio station owners instead might face larger retentions or a separate retention for each contest they run.