Warner Music to pay $5 mln in NY “payola” probe

NEW YORK (Reuters) – Warner Music Group Corp., one of the
largest U.S. record companies, will pay $5 million to settle a
New York state probe into how it influenced which songs are
played on the radio, New York State Attorney General Eliot
Spitzer said on Tuesday.

The probe involved “pay-for-play” practices, commonly known
as “payola,” in which companies are accused of paying radio
stations or promoters to secure air time for songs.

In July, Sony BMG agreed to pay $10 million to settle a
related pay-to-play probe.

Warner Music agreed to stop making payoffs in return for
airplay, and fully disclose all “items of value” provided to
radio stations, Spitzer said. It also issued a statement
acknowledging its “improper conduct,” the attorney general
said.

In a statement, Warner Music said “the reforms we have
agreed to with the Attorney General are consistent with the
internal reforms that our new management team implemented
earlier this year.”

Spitzer said the financial benefits involved direct bribes
to radio programmers, including airfare, electronics, and
tickets to sports events and concerts; payments for operational
expenses; radio contest giveaways; hiring independent promoters
to funnel illegal payments to radio stations, and buying “spin
programs” to artificially increase airplay.

The $5 million will be used to fund music education and
appreciation programs, Spitzer said.

Warner Music conducted its initial public offering in May.
It was earlier acquired by media mogul Edgar Bronfman Jr., now
its chief executive, and a group of private equity investors
for $2.6 billion from Time Warner Inc.

Warner Music shares rose 5 cents to $17.45 in morning
trading on the New York Stock Exchange.