Entercom Settles Payola Suit
Attorney General Eliot Spitzer announced a settlement with Entercom Communications and six of its subsidiaries to resolve allegations of "pay-for-play" in the music industry. State Supreme Court Judicial Hearing Officer Ira Gammerman signed the court order settling a lawsuit filed by the Attorney General's office in March. The lawsuit alleged that Entercom solicited payments from record labels and traded air time for promotional items, personal trips and other items of value.
It also charged that Entercom instituted corporate programs, entitled "CD Preview" and "CD Challenge," that institutionalized the sale of airplay by radio stations – allowing record labels to pay to play their songs in the overnight hours for the purpose of manipulating the music charts.
Under the consent judgment, Entercom has agreed to undertake a series of reforms, including:
* Halting the practice of accepting payments and other inducements from record labels in exchange for airplay;
* Banning all payments from independent promoters employed as a pass-through for funds from record labels;
* Hiring a compliance officer to monitor promotion practices; and
* Implementing an internal system to detect any future abuses.
In addition, Entercom will inform radio monitoring services when songs are played through the CD Preview and CD Challenge programs so that those services do not count such "spins" toward record popularity rankings. Entercom also will make a $3.5 million payment to be distributed through the Rockefeller Philanthropy Advisors to New York State not-for-profit entities to fund music education and appreciation programs, and will pay $750,000 in costs to the state.
Entercom, based in Bala Cynwyd, PA., is the nation's fifth largest radio conglomerate, and owns and operates 105 radio stations. Eleven of those stations are located in New York State, including WBEN-AM; WGR-AM; WKSE-FM; WTSS-FM; WLKK-FM; WWKB-AM; and WWWS-AM in Buffalo; and WBEE-FM; WBZA-FM; WFKL-FM; and WROC-AM in Rochester.
The Attorney General's ongoing payola investigation has now resulted in settlement agreements with the four major record companies – SonyBMG, Warner, Universal and EMI – as well as with CBS Radio. In each instance, the settling party has agreed to refrain from the payment or receipt of payola, and to institute internal reforms to ensure compliance. The Entercom case was handled by Assistant Attorneys General Charles Smith, Henry Weintraub and David Weinstein, under the direction of Terryl Brown Clemons, Assistant Deputy Attorney General for the Division of Public Advocacy.
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