EMI Group, the world's third-largest music company, confirmed yesterday it faced a New York investigation into how music companies influence what songs are played on the radio.
"We are co-operating fully with this inquiry, which is at a preliminary stage," EMI said in a statement.
A report in the New York Times said New York Attorney General Mr Eliot Spitzer, who has already taken on the investment banking, mutual funds and insurance sectors, has served subpoenas against Universal Music Group, Sony BMG Music, EMI and Warner Music.
EMI, the only publicly traded, stand-alone music company among the four majors, was down three pence, or 1.36 per cent, at 217p, after having earlier hit a low of 208-1/2p.
The British record company said in the statement it had a strict, long-standing policy against unlawful radio promotion practices.
"EMI has no reason to believe that there will be a material financial impact on the company," it added.
Mr Spitzer has requested information on the companies' relationships with independent consultants who serve as middlemen between music companies and radio stations, according to the Wall Street Journal.
US law forbids music companies from making undisclosed payments in exchange for radio airplay.
"This seems to be a very small niche part of the market," said Investec analyst Mr Kingsley Wilson.
"I suspect it's a case of they'll put something out [ saying] 'we thoroughly believe we haven't done anything wrong', an investigation will ensue, and some agreement will be reached."
Mr Spitzer has targeted the music industry before, securing $50 million (€39.6 million) in unpaid royalties to thousands of artists in May. - (Reuters)
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