As one of his last acts as attorney general for New York state, Eliot Spitzer announced a $4.25 million settlement with Entercom Communications and six of its subsidiaries to resolve “pay-for-play” allegations.
Spitzer will become governor in January.
Under the consent agreement, Entercom does not admit guilt. Its payment includes $3.5 million to be distributed through a philanthropic organization to not-for-profits for music education and appreciation programs, plus $750,000 in costs to the state. Financial analyst Marci Ryvicker of Wachovia Capital thinks the total cost to Entercom of the settlement will be around $4.5 million, once the company’s own legal fees are included.
In the lawsuit filed in the state supreme court in March, Spitzer alleged that Entercom sought payments from record labels and traded air time for promotional items and personal trips. He also alleged that Entercom allowed labels to play their songs overnight to manipulate music charts.
Entercom agreed to institute several “reforms,” according to the AG’s office, including:
– Stopping the practice of accepting payments and other inducements from record labels in exchange for airplay;
– Banning payments from independent promoters employed as a pass-through for funds from record labels;
– Hiring a compliance officer to monitor promotion practices; and
– Implementing an internal system to detect any future abuses.
In addition, Entercom will inform radio monitoring services when songs are played through the CD Preview and CD Challenge programs so those services do not count such “spins” toward record popularity rankings.
The AG’s office has made similar settlements with CBS Radio, SonyBMG, Warner, Universal and EMI.