Payola static over for CBS Radio

Settles N.Y. case; will pay $2 mil for music programs

CBS Corp.'s CBS Radio unit settled payola allegations under a wide-ranging music and radio industry investigation by New York State Attorney General Eliot Spitzer, the two sides said Thursday.

The deal, in which CBS Radio does not admit to any liability or legal violation, includes a $2 million payment to not-for-profit music education and appreciation programs, Spitzer said.

The size of the monetary settlement came in below amounts that the four major music labels had to pay in settling Spitzer's ongoing probe into industry practices.

CBS Radio said 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."

Spitzer said his probe had revealed that certain CBS Radio stations "openly solicited illegal financial benefits, expensive vacation packages, gift cards and other valuable items from record labels in exchange for playing the labels' songs."

Spitzer also confirmed Thursday that the New York Supreme Court has allowed his payola lawsuit against broadcaster Entercom Communications to go forward.

Entercom had said as much Tuesday, saying, "While we are disappointed by the court's decision to permit this case to proceed beyond this early stage, we continue to believe that the evidence will show that the attorney general's case is without merit."