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Warner Drops Independent Record Promoters

March 3, 1986

NEW YORK (AP) _ Two giants of the record industry said Monday that they will stop using independent record promoters, while the industry association confirmed that it has been subpoenaed by a federal grand jury.

Warner Communications and RCA/Ariola both announced they were dropping the independents, although RCA stressed its action was a temporary one while various ″payola″ investigations proceed.

The Recording Industry Association of America Inc. has been ordered to produce all documents, tapes, notes and memoranda related to what the subpoena called ″an investigation into the role of independent promoters in the record industry and related topics,″ said association spokeswoman Patricia Heimers.

The association was ordered to appear before the panel Thursday, Ms. Heimers said. The subpoena was received last week, she said.

Geoffrey Holmes, a vice president of Warner Communications, said the decision to drop independent promoters involves all Warner labels: Warner Bros. Records, Atlantic, Elektra-Asylum-Nonesuch and Geffen.

He declined to say whether that was related to reports of grand jury probes of allegations of ″payola,″ or bribes to secure air play for selected records. The Wall Street Journal, quoting unidentified industry sources, said that at least three grand juries have begun investigations, but Ms. Heimers said she knew of only one inquiry, by the grand jury in New York.

NBC also reported last week allegations of possible ties between some independent promoters and organized crime.

″There isn’t a lot to say. We haven’t been subpoenaed or anything,″ Holmes said. The company is aware of the allegations but ″whether or not they are correct we don’t know.″

″We know of no wrongdoing in the activities of the independent promotion firms we retain,″ said Elliot Goldman, president and chief executive officers of RCA/Ariola, the parent company for the RCA and Arista record companies.

″However, as a major distributor of recorded music, we are concerned about the perception of our industry by the public. Therefore the RCA and Arista record companies are immediately suspending their use of independent promotion firms until the various investigations presently under way are completed and the facts are known.″

RCA and Arista will use their own promotion people in New York, Nashville and Los Angeles for the time being, said Robin Ahrold, vice president- communications for RCA/Ariola. He said he was not aware of any subpoenas being served on the company or its executives.

At CBS Records, spokesman Robert Altschuler said Monday that the use of independent promoters was ″under very serious study, and we expect to have an announcement shortly.″

Two other major companies, Capitol Industries-EMI and MCA Records, announced last week that they were dropping at least some independent promoters.

Warner says its labels ranked No. 1 in record sales and profits in the United States in 1985. Worldwide, the company ranks third in sales, Holmes said. RCA/Ariola is among the top five companies, Ahrold said.

Warner dropped independent promoters in 1981. Its record sales dropped from $811 million to $750 million in one year, and the company resumed using them in 1982.

″We felt the competitive pressure, and started to use them again,″ Holmes said. ″We have always preferred not to use them, and we think this is the appropriate time to discontinue.″

Last week, Bhasker Mennen, chairman and chief executive officer of Capitol- EMI, said it was dropping all independent promoters to ensure that the company doesn’t ″unwittingly contribute to any problems that may exist.″

RIAA, which represents all major record labels, said in a statement Friday:″We have no knowledge that any firm or individual with whom our companies do business is engaged in any illegal activity.″

The association said ″immediate and decisive corrective action″ would be taken if law enforcement agencies informed the group of illegal acts.

″Until such time, we find it unjustified and distressing that the recording industry is so indiscriminately maligned by insidious innuendo,″ the statement said.

Another major recording company, Polygram, said Monday that its use of independent promoters ″is constantly under review″ but that no change in policy had been made.

″At this time, there is really not much to say,″ said Polygram spokeswomn Sherry Ring Ginsberg.

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