CBS Pays Out For Payola Scandal

CBS has bought its way out of the payola scandal that New York Attorney General Eliot Spitzer has been exposing to national scrutiny. Spitzer has been the spearhead behind an FCC probe into alleged payola activities at the four major radio broadcasting companies: Clear Channel Communications Inc., CBS Radio Inc., Entercom Communications Corp. and Citadel Broadcasting Corp.

While payola has evolved from direct payments to DJs to subtle gifts and favors extended to corporate heads and directors, it is still a driving force behind many of today's popular talents' success.

"It is certainly the case that payola has been a part of the promotional structure for many of the artists who are out there," Spitzer told ABC News. He said the latest version of payola involved people at the management level of record labels and radio broadcasting companies.

The 2 million dollar settlement that CBS agreed to is a disappointing figure, and well below the sum the other four major music broadcasters were required to pay. CBS is also free from admitting any culpability in illegal broadcasting practices. CBS maintains that while certain laws may have been violated in selecting which artists received airplay it was unaware of the violations, and they were the actions of a few people within the corporation, and not at all corporate policy.

CBS Radio said that it "is pleased to end this two-year music investigation without litigation" and that "this outcome is better for our company and our shareholders than protracted litigation." It added: "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."

The $2 million will go towards not-for-profit music education and other music appreciation programs.
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