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CBS Radio Settles With NY Over Payola

CBS Radio has paid $2 million to settle with the State of New York over charges of payola and has agreed not to use independent promoters to gain radio station airplay for its music. But it has not admitted to any wrongdoing and said it was settling because that outcome was better for its company and investors than a drawn-out court fight.

According to state Attorney General Eliot Spitzer, in addition to the money, CBS 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."

The settlement was actually the smallest of four that have been struck between the state and record companies over payments in cash and merchandise--vacation packages, gift cards, etc.--for getting songs spun on the radio.

The state has already settled with Universal ($12 million); SonyBMG ($10 million); Warner ($5 million); and EMI ($3.75 million).

Spitzer's office has also filed a suit against radio station owner Entercom in connection with his pay-for-play investigations. He praised the decision by the State Supreme Court earlier in the week to deny Entercom's motion to dismiss the suit.

CBS Radio said it was happy to put the investigation behind it:

"CBS Radio is pleased to end this two-year music investigation without litigation," the company said in a statement. "The Company, however, wants to make clear that in entering into this settlement, CBS Radio does not admit to any liability or violation of law.

"Prior to the Attorney General’s investigation, CBS Radio had become aware of conduct that was inconsistent with the Company’s internal policies by two employees in one of its markets. Appropriate disciplinary action was taken by CBS Radio, with suspension without pay in one instance, and immediate termination in the other.

"We believe this outcome is better for our company and our shareholders than protracted litigation, and we appreciate the spirit of mutual cooperation that guided the resolution of this settlement."

FCC Commissioner Jonathan Adelstein, who has made something of a personal cause out of pushing for a crackdown on radio and TV payola and plugola, as pleased with the settlement as well.

"I commend Attorney General Eliot Spitzer for once again achieving a breakthrough with this settlement.

"CBS Radio is leading the radio broadcasting industry by finally admitting wrongdoing [CBS conceded violation of internal policies but no legal breach] and agreeing to change its practices. This should provide new fuel to drive the FCC payola investigation to completion. Since payola saps the vitality out of radio, this is a win not only for listeners everywhere, but also for the radio industry itself."

CBS responded quickly to clarify for Adelstein that it wasn't conceding any wrongdoing:

"CBS appreciates Commissioner Adelstein's recognition of its leadership role in the industry," the company told B&C in a statement, "but must at the same time point out, as it states in the agreement itself, that in entering into this settlement, CBS Radio does not admit to any wrongdoing, liability or violation of law. "