Record company Warner Music Group Inc. said Thursday it was served with another subpoena by New York Attorney General Eliot Spitzer in connection with an industrywide investigation of relationships between music companies and radio stations.
Warner, the third largest record company in the country, said it is too soon to predict the outcome of the investigation. But the company said the inquiry has the potential to result in changes to the way the music industry promotes records or face financial penalties, which could hurt Warner’s business and brand value.
According to published reports, Spitzer began requesting documents and information last autumn from Warner and fellow record companies EMI Group PLC, Vivendi Universal SA’s Universal Music Group, and Sony Corp (SNE.N). and Bertelsmann AG’s Sony BMG Music Entertainment.
Spitzer’s investigation centers around independent promoters — middlemen between record companies and radio stations — whom music labels pay to help them secure better airplay.
Broadcasters are prohibited from taking goods or cash for playing songs on their stations. The allegations are that independent promoters have been paying radio stations an annual fee for song placements on future play lists.
Warner’s latest subpoena was received March 31 and the company said in a regulatory filing with the Securities and Exchange Commission that it has been producing documents for Spitzer and expects to complete its production in April.
In an earlier regulatory filing, the New York-based company said Spitzer served it with subpoenas Sept. 7 and Nov. 22, 2004, in the same matter.
Warner Music, whose labels include Atlantic Records, Elektra Records and London Records, is planning to sell $750 million of common stock in an initial public offering this year.
The group boasts a roster of more than 38,000 artists, with top groups such as Madonna, Linkin Park and Kid Rock.
In its filing with the SEC on Thursday, Warner said it plans to apply to list its common stock on the New York Stock Exchange.
Credit: AP