CBS Radio Settles Payola Allegations

Company to pay $2 million.

New York State Attorney General Eliot Spitzer Thursday (Oct. 19) revealed a settlement with CBS Radio, Inc. in his office's ongoing investigations into payola in the music business.

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.

Spitzer acknowledged CBS Radio's cooperation in resolving this matter.

Spitzer's investigation revealed 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 monies from independent promoters upon agreeing to add certain songs to the stations' playlists. The independent promoters would pay the stations with money received from the record labels.

"The sale of a station's valuable air time to the highest bidder violates state and federal laws and robs consumers of their right to know why the songs they hear on the radio are being broadcast," Spitzer said in announcing the settlement. "Our settlement with CBS Radio represents a significant milestone in our effort to reform the music industry for the benefit of the listening public."

In addition to settlements earlier this year with all four major record companies, Sony BMG, Warner, Universal and EMI, Spitzer’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.