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MediaBuyerPlanner: CBS will adopt stronger policies on its stations' dealings with record labels and make a $2 million payment to New York charities as part of a settlement with NY Attorney General Elliot Spitzer over illicit pay-for-play practices.
Spitzer claimed that certain stations owned by CBS Radio openly solicited illegal financial benefits, expensive vacation packages, gift cards and other valuable items from record labels in exchange for playing the labels' songs. The stations also received funds from independent promoters, or "indies," upon agreeing to add certain songs to the stations' playlists.
In addition to settlements with all four major record companies, SonyBMG, Warner, Universal and EMI, the Attorney General's payola investigation has resulted in a lawsuit, filed last March against Entercom. Earlier this week, a State Supreme Court Judge denied "in all respects" Entercom's Motion to Dismiss Spitzer's case, allowing the lawsuit to proceed.
At least four major radio companies -- Clear Channel, CBS, Entercom and Citadel Broadcasting -- have also received requests for information from the Federal Communications Commission, which is conducting its own inquiry.
CBS acknowledged yesterday that certain of its employees had "engaged in wrong and improper conduct which violated CBS Radio policies," The New York Times reports. But the company emphasized in a separate statement that, in signing the settlement, it "does not admit to any liability or violation of law."
The company's payment is fraction of the estimated $20 million settlement that Mr. Spitzer tried to negotiate with Entercom before talks collapsed and he filed a lawsuit.
Under the terms of the settlement, CBS Radio has agreed to: undertake company-wide reforms, including the immediate cessation of receiving payments and other inducements from record labels in exchange for airplay; discontinue using independent promoters as a pass-through for securing airplay; hire a compliance officer to monitor promotion practices; and implement an internal system to detect any future abuses.
CBS Radio will also make a $2 million payment, which will be distributed through the Rockefeller Philanthropy Advisors, to New York State not-for-profit entities to fund music education and appreciation programs.
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