HITS Daily Double


When the Spitzer Hits the Fan,
Will More Heads Roll?
While some insiders have complained that an investigation centered around paying a few thousand dollars for airplay is laughable compared to recent Wall Street and energy scandals that have involved fraud in the millions, that doesn’t change the fact that Sony BMG chose to settle New York Attorney General Eliot Spitzer’s case against it for $10 million, or that Spitzer’s industry-wide payola probe (organ swell, please) is ongoing and likely to secure more settlements and admissions of wrongdoing before long.

It’s unclear what further action Sony BMG will take in the coming weeks, but in addition to letting one promotion head go, the major is said to have already handed out numerous censures to other promo execs. And on the radio side, Reuters reports that Archway Broadcasting station WRHT Greenville fired its music director, Blake Larson, for accepting approximately $2,500 in gifts in exchange for airplay.

Spitzer has said he hopes the Sony BMG settlement becomes a template for the remaining majors, meaning we can expect to see three more settlements with the remaining majors. But the major radio chains may be in for even harsher treatment from the crusading Attorney General, who has said he is convinced that while the radio companies know what the law is, they have nevertheless been breaking it “willfully and pervasively.”

Clear Channel, Infinity, Cox, Emmis and Entercom have all previously been subpoenaed, and Spitzer has pointed to the damning trail of e-mail and other evidence gathered in his probe as proof that the radio companies have not been serving the public interest as required by their FCC Licenses. Insiders say to look for a major shakeup inside the radio companies as a result.

“This is just the beginning,” said one exec of the ongoing probe, noting that the mood throughout radio and the labels is more than a little uneasy. “This time it feels like it’s really big.”

Contributing to that mood is the FCC, which appears to be gearing up for its own investigation—something Spitzer has suggested should have happened some time ago. According to Reuters, FCC commissioner Jonathan Adelstein has said that thanks to the “arsenal of smoking guns” Spitzer has provided, the federal agency will be able to take more decisive action against payola violations.

“It took an attorney general’s subpoena power to blow the lid off a potentially far-reaching payola scandal,” Adelstein told Reuters. “Now it's incumbent on us to enforce our rules and conduct a thorough investigation of the allegations.”