Fonovisa aids probe into payola

Feds subpoena 18 distribs, 20 stations stateside

Execs from Grupo Televisa said Thursday they are cooperating with a probe by the U.S. Dept. of Justice and the Internal Revenue Service into payments made by execs at its Fonovisa record label to radio programmers in order to get its artists played on the radio.

Federal agents served subpoenas on about 18 Stateside wholesale record distributors and 20 radio stations they suspect are involved in an ongoing pattern of being paid to play records by Fonovisa artists.

Grupo Televisa execs said attorneys for Fonovisa contacted the Justice Dept. in December with concerns about improprieties in their radio promotion department. U.S. federal law prohibits radio stations from taking money for playing songs without telling listeners.

In Mexico, where paying for getting records played is common but in a gray legal area, the going rate for getting an artist’s music programmed is about $500 per month per artist, industry sources said.

No arrests have been made in the Fonovisa probe, but law enforcement sources said some radio station employees could face criminal charges for “payola,” a misdemeanor, and, presuming the under-the-table income wasn’t reported, tax evasion, which is a felony.

“Grupo Televisa has reported these activities to the U.S. governmental authorities and is cooperating fully,” the firm said in a statement Thursday. “The company has acted to assure that such payments will not be made in the future and does not believe that this matter will have a material adverse effect on its financial condition.”

Fonovisa execs are suspected of paying an independent record promoter last year who then dispersed money to couriers on the Fonovisa payroll. The couriers allegedly visited radio stations and handed packages containing cash payments, sometimes as much as $10,000 per month, to program directors who agreed to play specific Fonovisa songs.

Fonovisa, which is based in Van Nuys, releases music by Spanish superstar Enrique Iglesias and Los Tigres Del Norte.

The label accounts for about 15% of the nearly $500 million of Latin music records sold in the U.S. and grossed more than $60 million last year.

The subpoenas require the distributors and radio stations to turn over payroll records and other material that could help document improper payments to program directors and others.