The Federal Communications Commission and the Justice Department have together fined Univision Radio and the now-defunct Univision Music Group $1 million to resolve payola-related allegations, the government agencies announced today.

The FCC and Justice Department fined Univision Radio and Univision Services $500,000 each, respectively.

The Spanish-language radio giant is paying the fine to end an FCC investigation into bribes allegedly paid to its stations' employees from Univision Music Group in exchange for airtime for the labels' artists.

The FCC and Univision Radio have also entered into a consent decree placing specific limits on meals, trips and other gifts that labels can provide to Univision Radio employees. As part of the consent decree, Univision Radio must appoint a compliance officer and regional compliance contacts to monitor the company's efforts to adhere to the anti-payola rules specified by the decree.

The FCC's enforcement action was accompanied by a guilty plea by Univision Services, Inc. in federal district court in Los Angeles in response to a Justice Department criminal investigation of Univision Music Group. The label group, which was sold to Universal and restructured in 2008, pleaded guilty through its successor entity Univision Services Inc. to one count of conspiracy to commit mail fraud by using interstate carriers such as FedEx to send money to radio station programmers.

The payola investigations stemmed from a 2006 wrongful termination suit filed by ex-Fonovisa VP of promotions Daniel Mireles, in which he claimed he was fired from his job at the Univision Music Group label because he was unwilling to keep paying radio station personnel to play his company's music. The FCC began investigating Mireles' claims in the wake of his lawsuit.

The FCC wouldn't comment on whether it was still investigating other radio networks whose employees may have also received payments from Univision Music Group.

It is Univision Communications, not Universal, that carries the criminal liability for actions by Univision Music Group employees, and it is the label’s successor entity Univision Services that is named as the defendant in the Justice Department’s complaint.

Univision Communications released the following statement in response its guilty plea:

"The agreement announced between Univision Services, Inc. and the U.S. Attorney's Office for the Central District of California and Criminal Division of the U.S. Department of Justice concludes a three year investigation of alleged wrongdoing by certain former employees of Univision Music Group (UMG). The agreement relates to a payola scheme by an isolated group of employees at UMG that took place from in or around 2003 through September 2006. The actions of these employees were undertaken without the knowledge of anyone at Univision outside of UMG. Upon learning of these activities, Univision self-reported to the U.S. Attorney's Office and has cooperated fully with law enforcement authorities throughout the investigation process. UMG was sold in 2008."

The settlements are the highest-profile payola enforcement actions since former New York Attorney General Eliot Spitzer’s settlements, beginning in 2005, with the four major labels and several radio networks. A subsequent FCC investigation resulted in a consent decree signed by Clear Channel, CBS, Entercom and Citadel in 2007. The radio companies agreed to reform their practices in dealing with indie promoters, and to devote a certain number of hours to independent or unsigned acts.

However, Spitzer's investigation did not specifically target Latin stations or Latin labels. The new consent decree between the FCC and Univision Radio is similar in many ways to the agency's 2007 action. Among other rules, it stipulates that Univision Radio stations can only accept up to 20 concert tickets for their employees from a label (excluding radio station employees that are working the event); that labels can give radio station employees gifts worth no more than $150; and that each radio station can receive up to 20 employee trips a year from a label, with the consent of Univision Radio's compliance officer.

In the Latin music world, the last major payola enforcement took place in the '90s, when two Fonovisa executives pleaded guilty to payola-related charges. Along with the label itself, which was convicted of a tax violation in the case, the three parties together paid nearly $1 million in fines and one exec received two years' probation.

The latest Univision case is noteworthy in that the media giant, which is no longer in the business of making recorded music, was both giver and allegedly a receiver of the payola in question. But rumors of payola in the Latin music industry are rampant across radio networks and labels, and many say the practice has stifled opportunities for independent acts to receive airplay.

“The reality is, many radio stations don’t have the resources to conduct research and they look to big stations—like Univision stations—as a guiding post,” says one programmer, who did not want to be named. “So, they were following in their footsteps just because they’re the big ones, and little did they know that they’re being fooled. If you follow a station that is taking payola, that will affect your competitiveness. Sadly, audiences’ tastes are often not taken into consideration.”


Additional reporting by Leila Cobo, Miami.