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Sony BMG settles NY radio probe for $10 million

Posted on: Monday, 25 July 2005, 11:18 CDT

NEW YORK (Reuters) - Sony BMG, the world's largest music company, will pay $10 million to settle a New York State probe into the way the music company influenced which songs were played on the radio, Attorney General Eliot Spitzer said on Monday.

Spitzer has served the four top record companies -- Universal Music Group, EMI Group Plc, Warner Music Group Corp. and Sony BMG -- with subpoenas demanding information on so-called payola, sources familiar with the matter have said.

The investigation centers on a long-standing practice of paying independent promoters to help secure valuable airtime for songs -- also known as "payola." Under the Sony BMG settlement, the company agreed to stop making payments to radio stations in exchange for airplay, Spitzer said.

"Our investigation shows that contrary to listener expectations that songs are selected for airplay based on artistic merit and popularity, air time is often determined by undisclosed payments to radio stations and their employees," Spitzer said at a press briefing.

Spitzer also issued subpoenas to radio companies, such as Clear Channel Communications Inc., Viacom Inc.'s Infinity Broadcasting, and Cox Radio Inc. All three have banned the use of independent promoters.

Asked for comment, an EMI spokeswoman referred to a statement by the company in its annual report, which confirmed Spitzer's investigation into the promotion of records on New York stations and said it was cooperating with the inquiry.

"EMI has a long-standing, strict written policy prohibiting unlawful radio promotion practices," the company said. "EMI is not currently aware of any reason for believing that there will be a material financial impact on the Group."

Clear Channel said, "We are cooperating fully with Mr. Spitzer's office, and expect our practices will be found to be completely compliant with the law." Infinity declined to comment other than to say its stations do not use independent promoters. Cox Radio was not immediately available to comment.

Source: REUTERS

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