Wednesday, March 08, 2006

"The first thing we do, let's kill all the lawyers" Second Part of King Henry VI, Act IV, Scene II. Shakespeare

The words of Dick the butcher came to mind when hearing about Eliot Spitzer's lawsuit against Entercom. From the full AG press release here...

The lawsuit filed today in State Supreme Court in Manhattan, alleges that Entercom:

• Traded air time for gifts and other payments;
• Traded air time for promotional items and personal trips;
• Solicited and accepted payments from record labels for air time;
• Instituted corporate programs, supported and directed by senior management, that sold air time to record labels in order to manipulate the music charts.

The lawsuit cites evidence that Entercom executives were closely involved in these illegal practices. In various documents and e-mails cited in the complaint, Entercom executives discussed strategies for supplementing radio station budgets with payments from independent promoters and record companies.

In an e-mail to an Entercom executive, a station manager described how he preferred to deal with record companies instead of independent promoters because the record companies were more generous:

"As of this date I choose not to work with an ‘indie." My program director Dave Universal is vehemently opposed to working with an indie.....Dave generates $90,000+ in record company annually for WKSE. I receive a weekly update of adds and dollars from Dave ....Forcing Dave to work with an indie at this time is the wrong move."

Seems to me this is another fine mess caused by lawyers and their greedy clients. Lawyers working for indie promotion firms, lawyers employed by labels and lawyers engaged by major broadcast corporations each appear to have been directed to review, if not discover or invent, "legal" ways for station owners to accept payments. The seductive lure, and allusion, of easy money. Is it against the law to work in collaboration with labels to game the reporting systems? Against the law to do any of the things the AG claims in making his case? At this point I only know what I read. While the charges may fail on merit, the revelations are nonetheless somewhat stunning if not plainly embarrassing. This is not just about Entercom, this is about owners who seem to have lost their way, owners who appear to have prized dollars above ethics, above morals, above common sense. Too clever by half.

Is it possible - with encouragement, a wink, a nod and some creative reading from their lawyers - broadcast corporate managers thought they had found a creative, totally legal way to generate millions of dollars in cash? Is it possible that this represents a lapse in judgment wherein a public trustee has simply forgotten their responsibilities and directed those in their employ to "go for it"? At one time holding a broadcast license was a trust, it required the owner to be accountable; the concept of being "fit" to hold and to renew a license was a serious matter. My guess is the FCC will get involved in this mess. Further, the commission will take action. The action could lead to another September 2, 1976 but my sense is that won't happen again. That was the day owners of KOIL and KISN, having been found "unfit" by a 6 to 1 commission vote, were ordered off the air by the FCC. Two stations ordered to go "dark" was one of the darkest days in the history of broadcasting, however, it served to be an effective wakeup call to owners back in the day. Today only one commissioner has said these matters deserve commission attention (the others have remained silent) so we don't have a good or even interesting game of chicken at this point. Moreover, Entercom has not doubt secure in the opinions of their lawyers.

Being a public trustee should demand more than a robust pe ratio, it should demand that owners do not what is merely legal but they do what is right.

It's time to pay for the play. It has been proven possible and profitable to operate in the public interest, the standard of being "fit" to hold a license is beyond any simple "legal" standard. Let us hope the commission revisits and reboots the broadcast license renewal process as a result of any payola investigation and subsequent rule making. Let us hope the second to lose their jobs work not in the field, but at headquarters. Let us hope the first to be fired are the lawyers involved, the ones involved in the abuse of a public trust. As Eddie Ruben was found of saying "the fish stinks at the head first"