Warner Settles in Payola Probe
Warner Music Group will pay $5 million to settle a payola probe by New York Attorney General Eliot L. Spitzer, becoming the second company to resolve allegations of bribing radio station programmers to get airplay.
Warner agreed to stop giving payoffs and gratuities, including electronics and tickets for airfare, concerts and sporting events, Spitzer said. The $5 million will be distributed by Rockefeller Philanthropy Advisors to nonprofit groups in the state.
The Federal Communications Commission has begun its own probe of music industry "pay-to-play" practices. An FCC commissioner, Jonathan S. Adelstein, above, said the Warner settlement "adds more dirt to the mountain of evidence that payola is pervasive in the music business."
In July, Sony BMG Music Entertainment agreed to pay $10 million to settle with Spitzer.
Guilty Plea Set in Adelphia Case
Former Adelphia Communications vice president Michael J. Rigas, right, is expected to plead guilty today and avert a retrial on securities fraud charges, a court official said.
Rigas is scheduled to plead guilty before U.S. District Judge Jed S. Rakoff in New York, said the judge's law clerk, Andrew Woolf. Jurors deadlocked at Rigas's first trial last year and convicted his father, John, and brother Timothy of conspiracy and securities fraud.
NYSE Clears New Sovereign Deal
Sovereign Bancorp won New York Stock Exchange approval to sell a 19.8 percent stake to Santander Central Hispano without a shareholder vote after changing the deal's terms. Among the changes, Santander ceded a veto over the choice of chief executive and 10-year guarantees that board members could keep their seats.
Several major Sovereign shareholders had argued that the NYSE should reject the deal or put it to a shareholder vote. They said Sovereign decided on the 19.8 percent stake to skirt NYSE rules that require a shareholder vote on the sale of 20 percent of a listed company.
The bank's biggest shareholder, San Diego-based Relational Investors, said it may appeal the NYSE's decision to the Securities and Exchange Commission.
Accounting Board Reduces Budget
The Public Company Accounting Oversight Board reduced its budget to $128.4 million for 2006, a year after the Securities and Exchange Commission forced the auditing board to cut its planned expenses. The 2006 budget, which was approved by the PCAOB, was about $8 million less than the 2005 budget. Last year, the SEC forced the board to cut its 2005 proposal by $16 million because it would have given employees an average raise of 30 percent.
Plan Conversion Ruled Legal
A U.S. district judge in Pennsylvania, joining federal courts in Indiana and Maryland, ruled that a conversion of a traditional pension to a hybrid "cash-balance" plan does not violate federal law. The decision came as Judge Legrome D. Davis dismissed a claim brought by current and former employees of PNC Financial Services Group that PNC's 1999 switch violated the 1974 Employee Retirement Income Security Act. Two years ago, a federal judge in Illinois reached the opposite conclusion in a case involving International Business Machines. An appeal is pending in that case.
H.J. Heinz said its second-quarter profit rose 2 percent compared with the year-ago period, to $203.8 million, on a tax gain and the acquisition of the Lea & Perrins sauce business. Sales increased 6 percent, to $2.34 billion.
Deere said fourth-quarter profit skidded 35 percent, to $232.8 million. The farm-equipment maker reported a drop in sales, to $5.18 billion from $5.21 billion.
Compiled from staff and news service reports.