Attorney General Eliot Spitzer announced a lawsuit against one of the nation's leading radio chains, alleging that company illegally traded "air time" for payments.
The suit against Entercom Communications Corp. is the latest in the Attorney General's ongoing effort to combat the pervasive influence of "payola" in the entertainment industry. Last year, after an extensive investigation by his office, the Attorney General announced landmark agreements under which two major record labels agreed to halt the practice, adopt sweeping reforms and pay fines. Entercom is the first company to be sued as part of the probe.
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"By accepting secret payments in exchange for air time, Entercom compromised its radio programming and violated state and federal laws," Spitzer said. "What makes this case especially egregious is the extent to which senior management viewed control of the airways as an opportunity to garner illegal payments from record labels."
In a related development, the Attorney General again called upon the Federal Communications Commission to act on payola. "Almost a year after payola was exposed in significant detail, the FCC has yet to respond in any meaningful way. The agency's inaction is especially disappointing given the pervasive nature of this problem and its corrosive impact on the entertainment industry."
The lawsuit filed in State Supreme Court in Manhattan, alleges that Entercom:
* Traded air time for gifts and other payments;
* Traded air time for promotional items and personal trips;
* Solicited and accepted payments from record labels for air time;
* Instituted corporate programs, supported and directed by senior management, that sold air time to record labels in order to manipulate the music charts.
The lawsuit cites evidence that Entercom executives were closely involved in these illegal practices. In various documents and e-mails cited in the complaint, Entercom executives discussed strategies for supplementing radio station budgets with payments from independent promoters and record companies.
In an e-mail to an Entercom executive, a station manager described how he preferred to deal with record companies instead of independent promoters because the record companies were more generous:
"As of this date I choose not to work with an 'indie." My program director Dave Universal is vehemently opposed to working with an indie.....Dave generates $90,000+ in record company annually for WKSE. I receive a weekly update of adds and dollars from Dave ....Forcing Dave to work with an indie at this time is the wrong move."
In another e-mail exchange, a program director at one radio station complained about the practice of using a CD previews program to generate payola:
"The cd preview load for this weekend is crazy!! (...) people are hearing the same songs every hour or two. Are the few dollars earned with the CD previews worth killing our TSL [time spent listening] on the weekends?"
An Entercom executive responded: "These are not optional. They come from corporate and generate millions of dollars for Entercom."
Payola is the practice by which record labels and some independent promoters offer money and other gifts in exchange for broadcast air time for particular songs or artists. The purpose of the payments is to increase air time for chosen songs and artists and manipulate the popular music industry charts.
The complaint cites evidence that Entercom executives were working with independent promoters and record labels to increase air time and chart position for various artists, including Jessica Simpson, Avril Lavigne and Liz Phair.
The Attorney General's lawsuit seeks a halt to these illegal practices, reforms to ensure that air play is determined by artistic merit and popularity, and appropriate fines and penalties.
Entercom, based in Bala Cynwyd, PA., owns and operates 105 radio stations, including seven stations in Buffalo and four in Rochester. The Buffalo stations are: WEBEN-AM; WGR-AM; WKSE-FM; WTSS-FM; WLKK-FM; WWKB-AM; and WWWS-AM. The Rochester stations are: WBEE-FM; WBZA-FM; WFKL-FM; and WROC-AM.
The investigation and lawsuit are being handled by Assistant Attorneys General Shahla Ali of the Consumer Frauds and Protection Bureau and David Weinstein of the Public Advocacy Division, under the direction of Assistant Deputy Attorney General Terryl Brown Clemons.
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