User Submitted Blog Post: Eliot Spitzer

The news media is having a great day with the revelation that New York Governor Eliot Spitzer paid for sex with prostitutes. Behind the scenes, corporate criminals are breaking out the champagne. As Attorney General of the Empire State, Eliot Spitzer championed the consumer and feasted on white collar crooks. Not only that, Spitzer's zeal often forced those around him in government to do their jobs better, whether they wanted to or not.

To cite only one example, in the summer of 2005 Spitzer launched a campaign against radio payola. The smart set had long ago concluded that payola was inevitable. After all, the government had cracked down on it in the early 1960s, and yet here it was still around.

But Spitzer thought otherwise. He announced lawsuits against Sony Records and Entercom Communications Corporation, the latter which owns and operates 105 radio stations on the east coast. The suits charged that the firms' stations solicited payments from record companies for air time, or they traded air time for gifts, promotional items, and personal trips.

Spitzer obtained corporate emails that revealed pay-for-play deals between corporate radio stations and promoters. "Hello Lisa," one email to a promoter began. "I'm writing to confirm WBEE's receipt of a Dell computer, value $2512.08. Thank you again; we enjoyed doing the promotion with you." That exchange was mild in tone compared to correspondence between a Sony station deejay and a promoter. "I'm a whore this week, what can I say?" the jock declares. "You can say I'll give you Franz Ferdinand this week and put it in a 7PM to 6AM rotation with 18 times a week," came the reply.

As Sony, Entercom and two other firms rushed to settle, Spitzer went further. In March of 2006 he held a press conference to denounce the Federal Communications Commission for dragging its heels on the issue. He demanded that the FCC take more aggressive steps against payola.

"The agency's inaction is especially disappointing given the pervasive nature of this problem and its corrosive impact on the entertainment industry," Spitzer said. This kick in the rump obviously worked. A month later the FCC announced an accelerated investigation of the alleged payola practices of four media giants: Clear Channel Communications, CBS Radio, Entercom Communications, and Citadel Broadcasting. A year later the four culprits paid the government $12.5 million in fines. They also agreed to a new set of rules reigning in "pay for play" radio.

"Through this strong enforcement action that we take today," FCC Chair Kevin Martin officiously stated, "the Commission has provided clear guidance to licensees and sent a strong message that the practice of payola must stop for good." But the agency would not have accomplished this had Elliot Spitzer not put the fear of God into the broadcasting industry with his dramatic lawsuit, and made a public issue of the commission's laziness.

Doubtless the occupants of corporate board rooms everywhere watched Spitzers' heartbreaking press conference yesterday and grinned. An arrogant man brought down by the very flaws he decried in others, they are saying to their confidants.

Yes, Spitzer was arrogant, self-righteous, and maniacally ambitious. He needed to be those things to accomplish his work. Nice, self-effacing people do not prevail against corporate crooks and their sleazy lawyers, lobbyists, and thugs. Eliot Spitzers do. I, for one, am not laughing about his demise.

The FCC's payola rules

The government defines "payola" as the undisclosed playing of music over broadcast stations in exchange for money, gifts, or services. On April 13, 2006, CBS radio, Entercom Communications, Clear Channel Communications, and Citadel Broadcasting promised the FCC to:

• prohibit airplay for cash and goods "except under specified conditions [below] "
• put limits on gifts from big broadcasters to company stations
• appoint officers who will monitor compliance with the agreement
• train personnel on how to avoid violations of the new rules

The Consent Agreement did allow the companies the following leeway:

• Stations may ask for and receive a wide variety of on air giveaway items of value, such as CDs or airplane tickets, as long as they broadcast the value of the prizes and their donor.
• Station personnel can solicit and receive up to 20 copies of a CD "to familiarize Company employees with recordings," as well as various kinds of swag, from T-shirts to coffee mugs, as long as the value of each item does not go above $25 and the materials are used at company parties.
• Companies can ask for a receive up to 20 tickets for a single day concert or industry event "to be used by Company employees to familiarize them with the performing Artists."
• Station personnel can receive "modest personal gifts for life event, professional achievement and holidays, or gifts commemorating achievement by Company or a Record Label," as long as the value of the gift does not exceed $150, as far as the employee can tell.
• Station employees can receive meals and entertainment at a single event up to $150 in value "provided that the event is attended by a Record Label employee and has a legitimate business purpose, and any payment is consistent with the value of the meal or entertainment."
• Company stations can receive up to 20 stipends for "reasonable travel and lodging expenses" to industry events, as long as the compliance officer approves of the gift.
• Companies must maintain a database of gifts and favors received by its stations.