Improper promotional payments by Fonovisa had a dramatic impact last year on the radio airplay of Latin music, according to an analysis by The Times.
Fonovisa, the largest independent Latin music label, ruled the Spanish radio airwaves for 30 consecutive weeks in 1997 with a string of No. 1 hits by singers Enrique Iglesias and Marco Antonio Solis on the "Hot Latin Tracks" chart in Billboard magazine, the music industry's leading trade publication.
In fact, Fonovisa monopolized the top three positions on Billboard's weekly Latin music airplay chart for the first five months of last year, regularly cornering about 14 of the 40 slots available. At times, the label locked down as many as six of the top 10 rankings on the chart, which is based on an electronic sample of airplay from 97 U.S. radio stations by Billboard's sister company, Broadcast Data Systems.
Towering over such entertainment giants as Sony and EMI Group, the tiny Van Nuys-based label dominated the Latin airplay chart until October--the month that sources say Fonovisa allegedly quit paying programmers cash to play its songs. (Federal law prohibits cash payments to radio stations to play specific songs, unless the radio broadcaster announces the sponsorship.)
After the kickbacks ended, Fonovisa's presence on the chart fell by half, with the company accounting for just seven or so of the top 40 positions by late November.
Last week, Fonovisa had just four songs on the entire "Hot Latin Tracks" chart--none of which ranked higher than No. 15.
A representative for Billboard said Fonovisa's ratings plunge also coincided with a change in the chart methodology employed by Billboard. In September, Billboard began giving more weight to radio stations with larger audiences, though it's unclear what the impact would have been on Fonovisa's artists.
Radio airplay is considered the most powerful promotional tool for record companies. Record executives have long believed that music fans buy albums based primarily on what they hear on the radio.
However, a survey of Billboard's national Latin 50 sales chart indicates that Fonovisa's payments to radio programmers had little impact on what listeners actually purchased. Throughout 1997, Fonovisa trailed Sony and EMI, racking up only about seven of the top 50 albums sold each week, according to SoundScan, a Billboard-affiliated firm that electronically monitors record sales.
Fonovisa--which is credited with developing the U.S. market for banda, mariachi, norteno, ranchera and other types of music that fall into the regional Mexican category--accounted for about 16% of the nearly $500 million in Spanish music sales last year north of the border.
Mexican media giant Grupo Televisa, which owns Fonovisa, has acknowledged that its record division "made certain promotional payments in apparent violation of applicable laws" and is cooperating fully with a federal payola investigation. Televisa said it "has acted to assure that such payments will not be made in the future."
This week, nearly two dozen broadcasters throughout the Southwest--including KLAX-FM (97.9), one of the top 10-rated radio stations in Los Angeles--must turn over documents in connection with the investigation of payola in the booming Latin music business. The subpoenas demand that broadcasters surrender payroll records dating back to 1994 as well as other data that could help authorities document inappropriate payments to program directors and others, sources said.
Information gathered from the subpoenaed documents and follow-up interviews will be presented to a federal grand jury in the months ahead and could lead to a wide-scale probe of promotional practices among other Latin music labels and perhaps throughout the $12-billion U.S. music industry.
KLAX, one of the stations whose playlist is monitored to gather data for Billboard's "Hot Latin Tracks" chart, declined to comment.
Sources at KLAX's parent company, Miami-based Spanish Broadcast Systems, said the station was not a target of the probe and that it will comply with the subpoena by giving authorities any documents they request.
The payola investigation began seven months ago after lawyers representing Fonovisa contacted the Justice Department to report improprieties within its radio promotion department.
Sources close to the probe said the kickbacks were allegedly paid last year by using couriers on Fonovisa's payroll who handed packages containing cash, sometimes as much as $10,000 per month, to radio program directors who agreed to play specific Fonovisa songs.
Much of the cash was dispersed by an independent promoter to whom Fonovisa had written a series of checks, sources said. More than a dozen independent distributors have also been served subpoenas requiring them to turn over documents related to the investigation.
Federal agents are expected to compare the bank accounts, assets and lifestyles of station employees with their salaries.
Fonovisa is so far the only record label being investigated in the probe--although it is unclear whether the company or any of its executives will be charged.
Although no arrests have been made in connection with the probe, law enforcement sources said radio station employees and record company employees are being investigated for payola, a misdemeanor, and tax evasion, a felony.
Times staff writer Kevin Baxter contributed to this report.
A Shift in Tempo
The number of Fonovisa songs that made it onto Billboard magazine's weekly list of the 40 "Latin Tracks" played most by U.S. radio stations, from January 1997 to January 1998:
Sources say Fonovisa paid radio stations for airplay through late October.
Sources: Billboard magazine, Times research