King Records, Inc.

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

In THE Matrer or KING RECORDS, INC., ET AL.

CONSENT ORDER, ETC., IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION ACT Docket 7792. Complaint, Feb. 25, 1960—Decision, June 22, 1960 Consent order requiring Cincinnati, Ohio, manufacturers of phonograph records to cease paying concealed “‘payola” to television and radio dise jockeys to. have their records broadcast day after day in order to increase sales. Mr. John T. Walker and Mr. James H. Kelley for the Commission. Mr. Jack Pearl of New York, N.Y., for respondents. Init1at Decision py Harry R. Hinges, Heartnc Examiner The complaint in this matter charges the respondents with violations of the provisions of the Federal Trade Commission Act by the payment of money or other valuable consideration to induce the playing of certain phonograph records over radio and television stations in order to enhance the popularity of such records. On June 1, 1960 there was submitted to the undersigned hearing examiner an agreement between the above-named respondents, their counsel and counsel supporting the complaint providing for the entry of a consent order.

Under the foregoing agreement, the respondents admit all the jurisdictional facts alleged in the complaint. The agreement provides that the record on which the initial decision and the decision of the Commission shall be based shall consist solely of the complaint and agreement; that the inclusion of findings of fact, and conclusions of law in the decision disposing of this matter is waived, together with any further procedural steps before the hearing examiner and the Commission; that the order hereinafter set forth may be entered in disposition of the proceeding, such order to have the same force and effect as if entered after a full hearing, the respondents specifically waiving any and all rights to challenge or contest the validity of such order; that the order may be altered or set aside in the manner provided for other orders of the Commission; that the complaint may be used in construing the terms of the order; and that the agreement is for settlement purposes only and does not constitute an admission by the respondents that. they have violated the law as alleged in the complaint. The hearing examiner having considered the agreement and proposed order, and being of the opinion that they provide an ade- Order 56 F.T.C.

quate basis for appropriate disposition of the proceeding, the agreement is hereby accepted, the following jurisdictional findings made, and the following order issued:

1. Respondent King Records, Inc. is a corporation organized, existing and doing business under and by virtue of the laws of the State of Ohio, with its principal office and place of business located at 1540 Brewster Avenue, in the City of Cincinnati, State of Ohio. Respondent Sydney Nathan (erroneously designated in the complaint as Sidney Nathan) is president and treasurer of the corporate respondent, and respondent John S. Kelley, Jr. is vice president and secretary of the corporate respondent. Said individual respondents formulate, direct and control the acts and practices of the corporate respondent. The address of the individual respondents is the same as that of said corporate respondent. 2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents, and the proceeding is in the public interest.

ORDER It ts ordered, That respondents, King. Records, Inc., a corporation, and its officers, and Sydney Nathan (erroneously designated in the complaint as Sidney Nathan), and John S. Kelley, Jr., individually, and as officers of said corporation, and respondents’ 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 broadcasting of, any such records in which 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. PRINCESS ROYAL KNITTING MILLS 1547 1545 Decision 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 3.21 of the Commission’s Rules of Practice, the initia] decision of the hearing examiner did, on the 22nd day of June, 1960, become the decision of the Commission; and, accordingly :

It 7s ordered, That. respondents King Records, Inc., a corporation, and Sydney Nathan (erroneously designated in the complaint as Sidney Nathan) and John S. Kelley, Jr., individually, and as officers of said corporation, 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 complied with the order to cease and desist.