2nd lawsuit lays bribery charges on Univision
A Los Angeles-based Latino record label has sued Univision Music for more than $10 million, claiming the Spanish-language company tried to financially crush the music firm after it spurned an alleged scheme to bribe radio stations into prominently airing Univision’s music.
Platino Records’ lawsuit, filed Tuesday in Los Angeles County Superior Court, alleged that executives at Univision Music drove down Platino’s sales after the firm’s owner, Alberto Mitchell, refused to participate.
Platino’s lawsuit was the second in recent months to assert that executives at Univision Music, part of Univision Communications, tried in 2006 to bribe executives at several undisclosed Latin radio stations in Los Angeles to get better play for songs recorded by Univision’s top artists. Univision declined to comment.
The suit comes at a delicate time. Univision Communications’ new owners, including Los Angeles billionaire Haim Saban, are selling Univision Music, which commands about 37% of the Latin music market.
Saban Capital Group and its private equity partners -- Thomas H. Lee Partners, Providence Equity Partners, Madison Dearborn Partners and Texas Pacific Group -- acquired Univision in March for $12.3 billion. The partners, which recently moved the company headquarters from Los Angeles to New York, are looking to sell noncore assets, including the music division, to help pay off debt.
Major music companies, including Warner Music Group, Sony BMG Music Entertainment, Universal Music Group and EMI Group, and some private equity firms have expressed interest, according to a person familiar with the sale who asked not to be identified.
The earlier lawsuit was filed in November in Los Angeles by Daniel Mireles, former vice president of promotions for Univision’s Fonovisa Records. He claimed that he was wrongfully fired in 2006 after he refused to continue to offer radio station executives, including a programmer at a top station, "$10,000 a month, in cash, for eight Univision records . . . to be played three times per day.”
Mireles, a longtime employee of Fonovisa Records, alleged that in early 2006 a middleman in Las Vegas was given as much as $500,000 to pay executives at the various radio stations. When Mireles attempted to alert the head of Univision Music about the alleged scheme, the lawsuit said, he was told that the executive “was either busy or could not see him.”
Mireles, who started at Fonovisa in 1986 as a warehouse worker, was fired from his $225,000-a-year job last summer.
The Justice Department has been made aware of the allegations, according to two people familiar with the matter, although it is unclear whether an investigation has been opened. A department spokesman in Washington could not be reached.
The allegations in the Platino Records lawsuit echo those in the Mireles suit. The Platino suit contends that in January 2006 a Univision Music executive asked Mitchell to draft a list of radio station program directors to approach.
“Mr. Mitchell became enraged and demanded to speak to the president of defendant Univision Music to complain about such behavior,” the suit said. “Management of defendant Univision Music apologized to Mr. Mitchell at that time.”
The suit alleged that after Mitchell testified in Mireles’ case, Univision Music stopped promoting Platino’s bands. As a result, the lawsuit said, Platino’s record sales plummeted.
Platino has a distribution deal with Univision Music. Univision paid his firm as much as $2.4 million a year in advances against future music sales of its artists, including such lesser-known performers as Adolfo Urias and the band La Nobleza de Aguililla.
“They effectively reduced the distribution of his records,” Platino’s attorney, Jay Coggan, said. “Their sales dropped precipitously, more than 50% and as much as 80% in some months. There are no market conditions or business justifications for such a steep drop in sales.”