CBS Settles Spitzer Probe

CBS Radio Inc. officials agreed October 19th to pay $2 million to settle New York Attorney General Eliot Spitzer’s two-year-old payola investigation of the company’s stations in Rochester, Buffalo and New York City.

“The sale of the 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.

CBS, one of the largest radio corporations in the country, is the latest to settle in the investigation into radio stations accepting perks such as concert tickets or trips, used for on-air contests or by employees, in exchange for adding an artist to a station’s play list.

Spitzer reached multimillion-dollar settlements with EMI, Sony BMG, Universal and Warner earlier this year.

The investigation said that songs by Nick Lachey and Smash Mouth were on the radio stations’ play lists as part of the pay-for-play scenario, where airplane trips were reportedly given to the stations to be used for contest giveaways.

CBS Radio spokeswoman Karen Mateo said the company does not admit to any wrongdoing by entering into the agreement and that disciplinary measures have been taken against two employees who violated company policies.

“Appropriate disciplinary action was taken by CBS Radio, with suspension without pay in one instance, and immediate termination in the other,” Mateo said. “We believe this outcome is better for our company and our shareholders than protracted litigation.”

Meanwhile, New York State Supreme Court Judge Ira Gammerman ruled that Spitzer’s lawsuit against Entercom Communications Corp. for fraudulent and deceptive business practices can go forward despite Entercom’s attempt to get the case dismissed, according to Buffalo Business First.

In a statement, Entercom officials said they believe the evidence will exonerate the company.

“This ruling was not an assessment of the merits of the case, but rather of whether the allegations were sufficient to avoid dismissal at the outset of the case. Entercom continues to comply with federal sponsor identification rules, and we continue to enforce our policies prohibiting payola,” the statement said.

The company has 20 days to respond to the judge’s ruling, which will move the case into the discovery phase if unchallenged.