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"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."
—-Eliot Spitzer on Entercom case


Entercom the First Radio Chain to Have Its Dirty Laundry Aired in Public

Game on. Now it's radio's turn.

New York Attorney General Eliot Spitzer has filed the first official lawsuit in his investigation of radio payola and the defendant is Entercom, from now on known as the former employer of ex-WKSE PD Dave Universal, the self-proclaimed poster boy for the practice.

Said Spitzer in announcing the suit this morning: "By accepting secret payments in exchange for air time, Entercom compromised its radio programming and violated state and federal laws. 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."

Previously, two of the big four companies, Sony BMG ($10m) and Warner Music ($5m) settled their cases with Spitzer by agreeing to pay fines before they reached court.

The NY AG’s office made available on its site a 67-page document containing dozens of incriminating emails, and, unlike previous gatherings of evidence in the Sony BMG and WMG settlements, the names of the senders and recipients have not been obscured.

Spitzer also criticized the FCC for failing to follow his lead in eradicating 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 today 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, with documents of executives discussing 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 station PD complained about the practice of using a CD previews program to generate payola: "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."

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, a veritable who's-who on the charts.

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 Cywyd, PA., owns and operates 105 radio stations, including 11 in New York state, seven in Buffalo and four in Rochester.

In response, Entercom issues the following statement: "Entercom is a company that believes in playing by the rules and does so. We have firm policies prohibiting payola and requiring compliance with the federal sponsor identification rules and we enforce them. We have cooperated fully with the Attorney General's office in this investigation. Now that the Attorney General has filed this civil action we are confident that the issues will be fully and fairly resolved by the court."