Does Spitzer Have A Case? Some Lawyers Say No
March 10, 2006 at 11:30 AM (PT)
Following NEW YORK Attorney General ELIOT SPITZER's release "Radio Giant Named In Payola Lawsuit" (ALL ACCESS 3/8), some attorneys are questioning his authority to go after ENTERCOM in what appears be a federal and FCC matter of payola.
ALL ACCESS asked WASHINGTON-based law firm KAYE SCHOLER and Special Counsel JASON SHRINSKY about the situation. "As the AG, SPITZER does have the right to enforce state laws, but from all I can tell this is a federal law, and he's filing a payola suit at the state level to enforce a federal payola law," SHRINSKY told ALL ACCESS.
he's going well beyond the bounds of NEW YORK STATE law, and what he's classifying as payola is not payola, consistent with federal statutes and the FCC's rules.
"While I've not seen the lawsuit itself, I do question his legal rationales and authority in this matter. In my opinion his strategy is that he's bullying these public companies into settlements, and that in the end some will settle, other won't. I also feel that he's going well beyond the bounds of NEW YORK STATE law, and what he's classifying as payola is not payola, consistent with federal statutes and the FCC's rules.
SHRINSKY was an FCC lawyer in the 1960s and has been involved with payola matters since that time, going into private practice at KAYE SCHOLER and representing clients who were subpoenaed by the FCC who were called to testify in those hearings during the 70s.
He defines payola as "something that's broadcast over the air for compensation without proper sponsorship identification. If you paid me to play a song, I could play it as long I disclose it.
"Again, SPITZER's tactics are to go after publicly traded companies. He's trying to get them to settle to mitigate the public image that his accusations are having on the company, and its stock price. The bigger issue is he is tainting the radio and record industries without proving his case."
SHRINSKY concluded by saying "my prediction is that I suspect that ENTERCOM will fight this matter. All of the spin programs he's pointing to are legal -- he may not like them and what they point to but they are legal."
Goal: Getting FCC's Attention
Another prominent entertainment lawyer, speaking on condition of anonymity, told ALL ACCESS that "SPITZER has the right to file this suit. It's not frivolous on its face, but it appears that the real goal is to get the attention of the FCC. He has couched the issue in his press release as a payola issue which would be a Federal and not State issue and he would have no jurisdiction over a Federal issue.
"He alleges violations of NEW YORK STATE law, which have to do with bribery, consumer fraud and deception which are different than payola. In this case, SPITZER is alleging that Programmers were given money to play songs while the public was assuming it's the best song being played, and the public being unaware that the music was actually bought airtime.
"From a Federal standpoint, payola is primarily an issue of nondisclosure. Receiving a payment is OK if it is disclosed on air. This is not the same as making a business deal for good product placement with a grocery chain. Even though radio companies are not government owned, they are still subject to Federal payola laws and must operate in the public good with additional restrictions that do not control most private companies.
It seems that SPITZER has scared people from conducting legitimate business practices. The attorney added, " I would predict that SPITZER will lose at the state level, and the FCC will do little if anything as the industry has already addressed the problem on its own. The point is not to be punitive, but to clean up the situation and go forward. It's really now a moot point."
Calls to SPITZER's offices in ALBANY and MANHATTAN have gone unreturned.