Universal to Sell Latin Record Label’s Albums

Universal Music Group, the nation’s biggest record conglomerate, has cut a deal to distribute albums from Latin music powerhouse Fonovisa Records, home to such top sellers as Los Tigres del Norte and Banda El Recodo.

The agreement, to be announced today, caps a lengthy deal-making spree by Universal, which in the last 18 months has vaulted from last place to first in the U.S. Latin music market, according to Nielsen SoundScan data.

Universal’s sales of Latin music have risen an estimated 65% in the last year.

The deal also means Fonovisa, owned by Los Angeles-based Latin media giant Univision Communications Inc., will shut down its U.S. sales force.

The contract makes Universal the exclusive seller of Fonovisa albums in the United States and Mexico.

It also allows Universal to license Fonovisa’s music in the rest of the world.

Fonovisa 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.

Just three years ago, record conglomerates including Universal, Sony Music and EMI Group had the opportunity to buy Fonovisa outright but balked at the asking price, sources said.

Univision, eager to bolster its presence in the music business, stepped up last year to buy the label in a $240-million stock deal.

Under the deal, Universal, which generated about $3.9 billion in worldwide sales through the nine months ended Sept. 30, will receive a distribution fee on all new sales from Fonovisa, which racks up roughly $100 million in annual sales.

Universal also distributes albums from Univision’s in-house Univision Music Group, a start-up that generated an estimated $20 million in its first year in business selling albums by acts such as Pilar Montenegro and Jennifer Pena.