Laurie Records, Inc.

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In rue Marrer or LAURIE RECORDS, INC., ET AL.

CONSENT ORDER, ETC., IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION ACT Docket 7695. Complaint, Dec. 18, 1959—Decision, Feb. 9, 1960 Consent order requiring New York City manufacturers of phonograph records which they sold to independent distributors for resale to retail outlets and juke box operators, to cease giving concealed ‘‘payola”—payment of money or other valuable consideration—to disk jockeys to increase sales of their records by “exposure’—broadcasting day after day and several times daily—on radio and television programs. Mr. John T. Walker and Mfr. James H. Kelley for the Commission.

Rosen, Seton & Sarbin, by Mr. Charles B. Seton, of New York, N.Y., for respondents.

Iniria Decision By J. Eart Cox, Heartnc Examiner The complaint charges respondents with violation of the Federal Trade Commission Act in the distribution and sale of phonograph records by disbursing “payola,” i.e., the payment of money or other valuable considerations to disk jockeys of musical programs on racio and television stations, to induce, stimulate or motivate the disk jockey to select, broadcast, “expose” and promote certain records in which respondents have a direct financial interest, on the express or implied understanding that the disk jockey will conceal, withhold or camouflage the fact. of such payment from the listening public.

After the issuance of the complaint, respondents, their counsel, and counsel supporting the complaint entered into an agreement containing consent. order to cease and desist, which was approved by the Director and an Assistant Director of the Commission’s Bureau of Litigation, and thereafter transmitted to the hearing examiner for consideration.

The agreement states that respondents Laurie Records, Inc. and Abel Productions, Inc. are corporations organized, existing and doing business under and by virtue of the laws of the State of New York, with their offices and principal place of business located at 1755 Broadway, New York, N.Y., and that individual respondents Allan Sussel, Gene Schwartz, Eliot Greenberg. and Robert. Schwartz are president, vice president. secretary, and treasurer, respectively, Decision 56 F.T.C.

of both corporate respondents, their address being the same as that of said corporate respondents.

The agreement provides, among other things, that respondents admit all the jurisdictional facts alleged in the complaint, and agree that the record may be taken as if findings of jurisdictional facts had been duly made in accordance with such allegations; that the record on which the initial decision and the decision of the Commission shal] be based shall consist solely of the complaint and this agreement; that the agreement shall not become a part of the official record unless and until it becomes a part of the decision of the Commission; that the complaint may be used in construing the terms of the order agreed upon, which may be altered, modified or set aside in the manner provided for other orders; that the agreement is for settlement purposes only and does not constitute an admission by respondents that they have violated the law as alleged in the complaint; and that the order set. forth in the agreement and hereinafter included in this decision shall have the same force and effect as if entered after a full hearing. Respondents waive any further procedural steps before the hearing examiner and the Commission. the making of findings of fact. or conclusions of Jaw, and all of the rights they may have to challenge or contest the validity of the order to cease and desist entered in accordance with the agreement.

The order agreed upon fully disposes of all the issues raised in the complaint, and adequately prohibits the acts and practices charged therein as being in violation of the Federal Trade Commission Act. Accordingly, the hearing examiner finds this proceeding to be in the public interest, and accepts the agreement. containing consent order to cease and desist as part of the record upon which this decision is based. Therefore, It 7s ordered. That respondents Laure Records, Inc., a corporation, and Abel Productions, Inc., a corporation, and their officers, and Allan Sussel, Gene Schwartz, Ehot. Greenberg. and Robert Schwartz, individually and as officers of said corporations, and respondents’ agents, representatives and employees, directly or through any corporate ov other device, in connection with phonograph records which have been distributed im commerce, or which are used by radio or television stations in broadcasting programs in commerce, as “commerce” is defined in the Federal Trade Commission Act, do forthwith cease and desist from: 1. Giving or offering to give, without requiring public disclosure, any sum of money, or other material consideration. to any person, directly or indirectly, to induce that person to select, or participate in the selection of, and broadcasting of, any such records in which BAYUK CIGARS INC. 881 S879 Sylabus respondents, or any of them, have a financial interest of any nature ;

2. Giving or offering to give, without requiring public disclosure, any sum of money, or other material consideration, to any person, directly or indirectly, as an inducement to influence any employee of a radio or television broadcasting station, or any other person, in any manner, to select, or participate in the selection of, and the broadcasting of, any such records in which respondents, or any of them, have a financial] interest of any nature. There shall be “public disclosure” within the meaning of this order by any employee of a radio or television broadcasting station, or any other person, who selects or participates in the selection and broadcasting of a record, when he shall disclose, or cause to have disclosed, to the listening public at the time the record is played, that his selection and broadcasting of such record.are in consideration for compensation of some nature, directly or indirectly, received by him or his employer.

DECISION OF THE COMMISSION AND ORDER TO FILE REPORT OF COMPLIANCE Pursuant to Section 8.21 of the Commission’s Rules of Practice, the initial decision of the hearing examiner shall, on the 9th day of February, 1960, become the decision of the Commission; and, accordingly :

It ws ordered, That respondents Laurie Records, Inc. and Abel Productions, Ine., corporations, and Allan Sussel, Gene Schwartz, Eliot Greenberg, and Robert Schwartz, individually and as officers of said corporations, shall, within sixty (60) days after service upon them of this order, file with the Commission a report. in writing, setting forth in detail the manner and form in which they have comphed with the order to cease and desist.