Record Label Fonovisa Reportedly Seeking a Buyer

Fonovisa, the Van Nuys-based record label embroiled in a payola scandal, is on the sales block, sources said.

Fonovisa President Guillermo Santiso, who is expected to plead guilty soon to a payola-related felony tax count, gave a sales presentation last month in Mexico to potential buyers, sources say, that included representatives from such global music conglomerates as Seagram’s Universal Music Group, Sony Music and EMI Group.

Fonovisa, the dominant independent label in the Latin music business, is a subsidiary of Grupo Televisa, the largest media company in the Spanish-speaking world.

Fonovisa, which dominated the Latin charts last week with recordings by Los Tigres del Norte and Noelia, is credited by many in the industry for developing the U.S. market for banda, mariachi, norteno, ranchera and other types of music that fall into the regional Mexican category.

Last month, its biggest star, multimillion-seller Enrique Iglesias, jumped ship to sign an estimated $40-million contract with Seagram’s Interscope Records division.

The company has been involved in a federal payola investigation since 1997 when lawyers representing Televisa reported improprieties within Fonovisa’s radio promotion department to the government.

Last week, the government charged Santiso with a felony tax violation, accusing him of writing $425,000 in checks to a phony company so company employees could make payola kickbacks to radio programmers, records show. It is unclear what role Santiso will play in the company’s future after next month, when law enforcement officials say he will plead guilty.

The government charged Fonovisa promotions chief Jesus Gilberto Moreno with a misdemeanor payola count for allegedly paying cash to Spanish radio station deejays to obtain airplay for Fonovisa songs, sources said. The record label was also charged with a felony tax count for allegedly false reports of promotional expenses. Moreno and the corporation are also expected to plead guilty in September.

Fonovisa escaped being charged directly with payola, law enforcement sources said, because it had reported the illegal activities to the government and cooperated fully with the investigation. Music industry sources said Fonovisa turned itself in primarily to clear up its legal problems in order to position the label for a sale.

Fonovisa declined to comment Tuesday.