CBS Radio Pays $2 Million To Settle Payola Allegations

October 19, 2006 4:11 PM

Brian Ross and Vic Walter Report:

CBS Radio, the country's third largest radio conglomerate, has agreed to make a $2 million charitable contribution to settle allegations brought in a payola investigation by New York State Attorney General Eliot Spitzer.

Spitzer announced the settlement and said CBS Radio, formerly Infinity Broadcasting, agreed to immediately stop taking "payments and other inducements" from record labels "in exchange for airplay."

According to Spitzer, certain CBS Radio stations "openly solicited illegal financial benefits, expensive vacation packages" and other valuable items from record labels in "exchange for playing the labels' songs."

In a statement, CBS Radio said it "does not admit to any liability or violation of law."  The company said it became aware of "conduct that was inconsistent" with company policy by two employees in one of its markets.  CBS said one employee was fired and a second suspended without pay.

Spitzer said some CBS stations "accepted payola for songs that station managers acknowledged would not have otherwise been placed on the playlist." Spitzer cited "Shut Up" by Nick Lachey and "You Are My #1" by Smashmouth as two songs added by WPXY in Rochester, N.Y., in exchange for airplane trips to be used for contest prizes.

Spitzer's payola investigation has resulted in settlements with four major record labels. At least eight other radio conglomerates, including ABC, remain under investigation, according to people in Spitzer's office.

Chief Investigative Correspondent Brian Ross first reported on the allegations and investigation by Attorney General Spitzer's office on ABC News' Primetime.

Read the press release from Attorney General Spitzer's Office on CBS Radio's settlement.

October 19, 2006 in Payola | Permalink | User Comments (6)

Payola Probe Settlement

June 15, 2006 11:48 AM

Brian Ross, Vic Walter & Richard Esposito Report:

EMI Music has settled the payola lawsuit brought by New York Attorney General Eliot Spitzer for $3.75 million dollars, ABC News has learned from music industry and law enforcement sources.

EMI is the last of the global music market's four major record labels -- Warner Music Group, Sony-BMG and Universal Music Group are the others -- to settle suits for exchanging cash, bribes and goods in exchange for increased airplay of the labels' stars on major radio stations. In May, Universal Music agreed to pay $12 million to charity -- the largest settlement by any of the labels. 

Warner Music Group and Sony-BMG made the first two settlements, Warner for $5 million and Sony-BMG for $10 million.

The suit alleged that the "Big Four" deceived consumers into thinking music by popular artists was played based solely on popularity and not because of promotional gifts, cash contributions and barter for services from the recording companies to the radio conglomerates and to individual stations and station managers.

EMI's penalty appears slightly higher, proportionate to market share than either Sony-BMG's or Universal's. The Universal Music Group and Sony-BMG settlements were roughly in proportion to the companies' share of the recording industry market where Sony holds a 23.3 percent share and Universal a 31.6 percent share. Warner Music's penalty was disproportionately low when based on its market share of 18.1 percent. Warner was the first recording company to settle. EMI was the final holdout.

A related FCC payola investigation, first reported by ABC News Chief Investigative Correspondent Brian Ross, is ongoing. That probe is seeking to determine the role of the nation's largest radio stations in encouraging questionable business practices.

June 15, 2006 in Payola | Permalink | User Comments (5)

New Settlement in Payola Probe

May 11, 2006 1:15 PM

Brian Ross, Vic Walter & Richard Esposito Report:

Universal Music has agreed to pay $12 million to charity in settlement of a pay-for-play music suit brought by New York State's Attorney General--it is the largest settlement to date in Spitzer's recording industry payola probe, and only one recording company, EMI continues to hold out from Spitzer's onslaught on business practices.

Two other record companies, Warner Music Group and Sony-BMG, have already settled in the payola probe, Warner for $5 million and Sony BMG for $10 million. The Universal Music Group Recordings Inc.'s settlements appear roughly in proportion to the companies' shares of the recording industry market where Sony holds a 23.3 percent share and Universal a 31.6 percent share. Warner Music's penalty is slightly out of proportion to its market share of 18.1 percent.

A related FCC payola investigation, first reported by ABC News Chief Investigative Correspondent Brian Ross, is ongoing into the role of the nation's largest radio station owners in encouraging questionable business practices, which allegedly deceived consumers into thinking music by popular artists was played based on popularity and not because of promotional gifts, cash contributions and barter for services from the recording companies to the radio conglomerates and to individual stations and station managers.

In the Universal case, New York Attorney General Eliot Spitzer alleged the company provided trips, gifts and other bribes to increase airplay for its artists.

In the settlement, however, Universal did not admit to any wrongdoing. This was also the case in the Warner and Sony-BMG settlements.

However, in the Universal case the company did admit its employees had engaged in illegal business activities.

"UMG has illegally provided radio stations with financial benefits to obtain airplay and boost the chart position of its songs," Spitzer said in papers filed in state Supreme Court along with the settlement," according to an Associated Press report Thursday. "UMG has obtained airplay for its songs through such deceptive and illegal practices as bribing radio station employees, on occasion, to play UMG songs, providing a stream of financial benefits to radio stations, to assist with stations' overhead costs or to provide promotional support, on condition that UMG records receive airplay," Spitzer stated. UMG was also accused of "engaging in fraudulent call-in campaigns to increase airplay." UMG did not immediately comment on the settlement.

Click here for Brian Ross' original payola report.

May 11, 2006 in Payola | Permalink | User Comments (1)