Lou Fargo

Text (OCR of the scan at left; may contain errors)

In roe Matrer or LOU FARGO TRADING AS FARGO RECORDS CONSENT ORDER, ETC., IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSSION ACT Docket 7784. Complaint, Feb. 24, 1960—Decision, June 22, 1960 Consent order requiring New York City manufacturers of phonograph records, to cease paying concealed “payola” to television apd radio disc jockeys to have their records broadcast day after duy iu order to increase sales. Mr. John T. Walker and Mr. James H. Kelley for the Commission. Mr, Manfred Ohrenstein, of New York, N.Y., for respondent. Iniriay Decision py J. Eart Cox, Hearne Examiner The complaint charges respondent, who is engaged in the manufacture, distribution and sale of phonograph records to independent FARGO RECORDS 1543 1542 Decision distributors for resale to retail outlets and jukebox operators in various states of the United States, with violation of the Federal Trade Commission Act, in that respondent, alone or with certain unnamed record manufacturers, has negotiated for and disbursed “payola,” ie., the payment of money or other valuable consideration to disk jockeys of musical programs on radio and television stations, to induce, stimulate or motivate the disk jockeys to select, broadcast, “expose” and promote certain records, in which respondent is financially interested, on the express or implied understanding that the disk jockeys will conceal, withhold or camouflage the fact of such payment from the listening public. After issuance of the complaint, respondent, his counsel, and counsel supporting the complaint entered into an agreement containing consent order to cease and desist, which was approved by the Director, Associate Director and Assistant Director of the Commission’s Bureau of Litigation, and thereafter transmitted to the hearing examiner for consideration.

The agreement states that respondent Lou Fargo is an individual trading as Fargo Records, with office and principal place of business located at 50 West 57th Street, New York, New York. The agreement provides, among other things, that respondent admits all the jurisdictional facts alleged in the complaint, and agrees 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 shall be based shal] consist solely of the complaint and this agreement; that the agreement shal] not become a part of the official record unless and until it becomes a part of the the agreement is for settlement purposes only and does not construing the terms of the order agreed upon, which may be altered, modified or set aside in the manner provided for other orders; that decision of the Commission; that the complaint may be used in constitute an admission by respondent that he has 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. Respondent waives 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 he 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 Decision 56 F.T.C.

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 is orderél, That respondent Lou Fargo, an individual, trading as Fargo Records, or under any other name or names, and respondent’s agents, representatives and employees, directly or through any corporate or other device, in connection with phonograph records which have been distributed in 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 the broadcasting of, any such records in which respondent has 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 respondent has 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 did, on the 22nd day of June, 1960, become the decision of the Commission; and, accordingly :

It is ordered, That. respondent Lou Fargo, an individual, trading as Fargo Records, shal], within sixty (60) days after service upon him of this order, file with the Commission a report in writing, setting forth in detail the manner and form in which he has complied with the order to cease and desist.

KING RECORDS, INC., ET AL. 1545.

Decision