Univision settles U.S. radio payola case

A three-year criminal investigation into a pay-for-play scandal at Univision Communications — in which Latin-music executives bribed radio station managers with briefcases stuffed with cash — ended Monday when Univision agreed to pay $1 million in penalties to federal authorities.

As part of an agreement with the U.S. Justice Department, Spanish-language media giant Univision pleaded guilty to one count of conspiracy to commit mail fraud. During the four-year scheme, mid-level executives and music promoters at the now-defunct Univision Music Group paid thousands of dollars to radio station programmers in exchange for increased radio air time for Univision’s songs.

In one instance, a Los Angeles-based Univision executive in February 2006 sent a Federal Express package that contained $157,800 to a New York radio station programmer, according to court documents filed with the plea agreement. Program managers in California and Texas also received bribes.

Univision executives and the record promoters then concocted phony contract invoices and payments to hide the true purpose of the payments, documents filed by the U.S. Justice Department said.

“The co-conspirator program managers would conceal from their radio stations the illegal cash consideration that [Univision Music] paid them,” the documents said. In some cases, the radio programmers would instruct the Univision employees to deposit the cash in offshore bank accounts.

None of the people who participated in the scheme were identified in the court filings.

The cash payments violated federal laws because they were made without the stations disclosing to listeners that such payments had been received.

“Illegal cash payments never make for a good business model,” Assistant Atty. Gen. Lanny A. Breuer said in a statement announcing the plea deal. “Listeners have a right to know if someone has paid for increased air time or promotions.”

Univision Services Inc. agreed to pay a $500,000 fine to the Justice Department and “cooperate fully” with law enforcement officials investigating related crimes. Meanwhile, another division of the company, Univision Radio, will provide

another $500,000 to the Treasury Department as part of a consent decree with the Federal Communications Commission, which was also investigating the scandal.

Univision also agreed to place limits on the size of gifts that its station employees could accept, appoint a compliance officer

to monitor the situation

and train programming personnel on payola restrictions.

“Payola — the idea of pay-for-play — misleads the listening public,” FCC Chairman Julius Genachowski said in a separate statement. “This agreement with Univision underscores the FCC’s focus on consumer protection and our commitment to ensuring that broadcasters play it straight with the public.”

For its part, Univision described the scheme as one orchestrated “by an isolated group of employees.... The actions of these employees were undertaken without the knowledge of anyone at Univision outside of [Univision Music Group],” Univision said in a statement. “Upon learning of these activities, Univision self-reported [them] to the U.S. attorney’s office, and has cooperated fully with law enforcement authorities throughout the investigation process.”

Univision is owned by a consortium composed of Los Angeles billionaire Haim Saban and private equity firms Providence Equity Partners, Texas Pacific Group, Madison Dearborn Partners and Thomas H. Lee Partners.

Two years ago, the owners sold Univision Music — which included the Fonovisa and Disa record labels — to music giant Universal Music Group. As part of that sale, Univision, and not the Universal Music Group, agreed to be responsible for any penalties resulting from the criminal investigation.

The scandals within Univision Music came to light nearly four years ago when a former Fonovisa promotions executive, Daniel Mireles, filed a lawsuit that alleged that he was fired from the company when he refused to offer bribes to radio station executives.

In his suit, which has since been settled, Mireles listed several allegations, including that a programmer at a top Spanish-language radio station was paid "$10,000 a month, in cash, for eight Univision records … to be played three times per day.”