A&M; Records Ends Pact With CBS Subsidiary : Polydor Will Handle European Distribution

In a surprise move, Los Angeles-based A&M; Records Inc. said Tuesday that it is ending an eight-year European distribution arrangement with CBS Records International in favor of a new licensing agreement with Polydor International, a unit of West Germany-based Polygram International Holding B.V.

A&M; is the largest privately owned record company in the United States, with sales of about $80 million in 1983. Its artists include the Police, Supertramp, Joe Jackson and Styx.

The new agreement--under which Polydor will manufacture, market and distribute A&M; recordings in all European countries except Britain--commences April 1, according to an A&M; statement issued Tuesday. CBS Records International, a unit of New York-based CBS Inc., will continue to distribute A&M; records in Britain and Latin America.

Didn’t Like Terms

CBS International President Allen Davis said that, “although we had some negotiations to extend our European licensing agreement with A&M;, the terms A&M; were seeking did not make economic sense for us.” A CBS spokesman said the company had turned down A&M;’s contract offer.

But sources close to the negotiations told The Times that the parting came after A&M; decided to reject what it considered to be less desirable terms offered by CBS, the largest U.S.-based record company.

According to an A&M; source who asked not to be identified, a tentative agreement to renew the A&M-CBS; deal was reached some time ago, but CBS later reneged and new discussions began. At that point, Polydor offered A&M; terms “significantly better than CBS was offering,” the source said.

A&M; executives have previously expressed concern about concentration in the record-distributing business, which is dominated by six major companies.