Entercom Communications has settled a lawsuit filed by New York State's attorney general alleging that employees at Buffalo radio station WKSE-FM 98.5 and the company's other stations traded air time for gifts from record labels.
Under the consent agreement, Entercom has agreed to pay $4.25 million in fines and court costs and to make a series of reforms to prevent any future "pay-for-play" practices.
Entercom is the sixth radio conglomerate or record label to settle a suit filed by Attorney General Eliot L. Spitzer as part of a wide-ranging investigation.
"This settlement represents another important step in this office's effort to combat payola. With each agreement we end the sale of airplay, institute reforms and affirm that the public air waves are not for sale," the attorney general's office said in a statement Wednesday.
The investigation prompted Entercom to fire Kiss program director Dave Universal for accepting gifts in violation of the station's conflict-of-interest policy.
Entercom denied wrongdoing.
"In the interests of the company, our employees and our shareholders, we have chosen to resolve this matter immediately and without extensive and costly litigation," the company said in a statement. "The court did not find any liability, nor are we admitting liability with this settlement."
Entercom, based in Bala Cynwyd, Pa., owns 105 stations nationally, including seven in Buffalo.
Spitzer filed suit against Entercom in March. The suit argued that employees at Kiss and other Entercom stations systematically traded air time for cash payments, trips and other gifts from record labels and independent promoters.
Federal law bars radio stations from accepting money or gifts in exchange for playing songs, unless the payment is revealed to listeners.
Four major record companies -- SonyBMG, Warner, Universal and EMI -- and CBS Radio previously settled with Spitzer.
In addition to paying the fine and court costs, Entercom agreed to end the practice of accepting bribes of any kind in exchange for air time; to ban payments from record labels funneled through independent producers; and to hire a compliance officer to monitor promotion practices.
Universal, who was fired by Entercom in January 2005, said he is disappointed the case did not go to trial, claiming a trial would have provided further proof that Entercom encouraged employees to trade air time for cash and gifts.
"I did nothing without the company's backing," said Universal, now program director at WILD-FM 101.1.