WASHINGTON — Federal regulators yesterday announced an unprecedented settlement with four radio broadcast companies under investigation for accepting cash and merchandise from record companies in exchange for airplay.

The four broadcasters will pay a $12.5 million fine and agree that their 1,653 stations won't engage in "payola" practices, according to a consent decree with the Federal Communications Commission.

The radio companies involved — Clear Channel Communications Inc., CBS Radio, Entercom Communications Corp. and Citadel Broadcasting Corp. — represent four of the nation's six largest radio station owners. They admit to no wrongdoing under the three-year settlement.

A separate agreement was negotiated by the American Association of Independent Music and the radio groups. In that deal, the broadcasters agreed to provide 8,400 half-hour segments of free airtime for independent record labels and local artists.

The free airtime, between 6 a.m. and midnight, would be granted to companies not owned or controlled by the nation's four dominant music labels — Sony BMG Music Entertainment, Warner Music Group, Universal Music Group and EMI Group. CBS will provide 800 hours, Citadel 1,300, Clear Channel 1,600 and Entercom 500, according to a list obtained by The Associated Press.

"Payola hurts musicians, the radio industry and the free flow of creative talent because music is chosen on the basis of who can pay the most — not who sounds the best," said FCC Commissioner Jonathan Adelstein, who has been largely credited with pushing the two-year investigation. "While this settlement is not a panacea to all payola woes, it requires the implementation of certain meaningful reform measures that should change corporate practices and behavior."

But Paul Porter, co-founder of media watchdog group Industry Ears, says the agreement does not go nearly far enough.

"You're basically talking about a fine and a fine doesn't stop payola," Porter said, adding that the broadcasters did not have to admit guilt and that he expects radio playlists to remain virtually unchanged. "Twelve million dollars is nothing for the big four companies."

CBS Radio and Entercom issued separate statements saying they were pleased to settle with the FCC and would continue to comply with sponsorship identification rules. CBS said many of the business practices detailed in the consent decree mirror those adopted as part of the company's previous settlement with former New York Attorney General Eliot Spitzer.

The consent decree is the second-largest penalty ever assessed by the FCC, trailing only a $24 million settlement reached with Univision Communications Inc. regarding children's television obligations.

Breaking down the fine, Entercom pays $4 million, Clear Channel owes $3.5 million, Citadel was fined $2 million and CBS will pay $3 million.

Payola has been around as long as the radio industry and was made illegal after scandals in the late 1950s, but it can be difficult to prove.

In recent years, independent record promoters have acted as middlemen to deliver payments to radio stations in exchange for airplay. Other forms of inducement include lavish prizes meant for listeners that wind up going to station employees, promises by record companies of concerts by well-known artists in exchange for airplay, and payments for promotional expenses and station equipment.

And pay-for-play investigations have been uncommon in recent years. The last time the FCC took action was March 2000 when Clear Channel-owned stations KHKS-FM in Denton, Texas, and WKQI-FM in Detroit, Mich., were fined $4,000 each.