Warner Music, FTC Reach Pact on CD Pricing

Time Warner Inc.’s Warner Music Group reached a preliminary agreement with federal authorities that bars the company from requiring that retailers charge a set minimum price for compact discs as a requirement for obtaining advertising subsidies. The agreement with the Federal Trade Commission concerns an industry practice known as cooperative advertising. Companies such as Warner provide advertising money to music stores that set minimum prices for CDs in such ads. Warner would stop tying the funding to advertised price levels for a period of seven years under the tentative settlement, which was disclosed in a filing with the Securities and Exchange Commission. Warner said it has signed the consent order, which still must be approved by the FTC’s commissioners. The company reached terms with the FTC staff Jan. 19, five days before parent Time Warner said it would merge Warner with the music unit of EMI Group, the filing said. That combination would create the world’s biggest record company, with $8 billion in sales.

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