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Warner Music to pay $5 mln in NY "payola" probe

Posted on: Tuesday, 22 November 2005, 12:01 CST

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.

Source: REUTERS

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