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CEO's exit from Arista a shocker
submitted by: Lisa D.
source: The Atlanta Journal and Constitution, New York Post
Date: January 15, 2004
By Sonia Murray
Antonio "L.A." Reid's surprise departure from Arista Records, announced late Tuesday, has spawned a lot of questions about why it happened, his next move and what his exit means to the superstar Atlanta artists he nurtured.
Atlanta R&B singer Usher, one of Reid's top-selling artists, was shocked by the news. "And I had a meeting with him two days prior to this happening," he said. "But I've talked to him . . . and he will still have his hand in my career and my upcoming album."
Reid was not available for comment, nor did a statement issued offer any explanation for his exit.
But since Reid's July 2000 start as president and CEO of Arista, a cloud has seemed to hang over the position. When rumors surfaced a year earlier that BMG, Arista's parent company, was planning to replace Arista founder Clive Davis with Reid --- because of BMG's mandatory retirement policy --- the 60-something Davis protested publicly and often.
"Understand, this is very tough for me because I am following in the footsteps of someone great," Reid told The Atlanta Journal-Constitution at the time. "And I'm walking into a building where people did not come to work for me, they came to work for him. So it's an uphill battle."
If this week's Billboard charts are a measure, Reid was well on his way toward winning that battle.
Atlanta duo OutKast has the top two songs on the Hot 100 chart, and "Milkshake" from Kelis, another Arista artist, is No. 3. OutKast also has the best-selling album in the country, "Speakerboxxx/The Love Below," which earned six Grammy nominations last month, including album of the year. (OutKast was in Italy on Wednesday and unavailable for comment.)
And yet for every multimillion-selling success during Reid's tenure --- Avril Lavigne, Pink and Usher included --- there were also some pretty expensive flops. According to a Rolling Stone online report, Arista lost $100 million over the past two years.
Reid re-signed Whitney Houston, the best-selling artist on the label, to a $100 million contract in 2001, a questionable move considering her erratic behavior in recent years. The first release under that contract, "Just Whitney," has sold only 714,000 copies, according to Nielsen SoundScan --- making it the worst-selling album of Houston's career.
Of the partnerships Reid made with Atlanta talent, the most successful has been with producer-artist Jermaine Dupri. A year ago Reid made Dupri a senior vice president and signed on as distributor of Dupri's Atlanta-based So So Def Records.
"It's too early to say what all of this means," Dupri said Wednesday. "This came as a shock to me. Completely. . . . But everything still runs. I'm still a VP. So So Def goes on."
Reid's ties to Atlanta go far beyond business deals. He and Kenneth "Babyface" Edmonds spent over a decade here establishing this city's nationally recognized music scene. Their LaFace Records label --- now defunct --- was once home to TLC, one of the best-selling female groups ever, and nurtured many of the acts Reid continued to have success with at Arista.
Michael Smellie, BMG's chief operating officer, will be in charge of Arista for now.
Clive's 9 Lives - Davis Poised To Get Key Role At Music Giant BMG
By Tim Arango
Music industry legend Clive Davis is not only back after his ouster from Arista Records four years ago - he's poised to take on a much bigger role at BMG, The Post has learned.
Bigwigs at BMG, the corporate parent of Davis's RCA label, are working out details of a plan that would consolidate several of the company's labels and give Davis much broader power within the music giant, according to sources close to the situation.
The situation is in flux, but Davis is likely to get control of Arista, the label he founded in 1974 and was later ousted from, sources said.
Davis may also get control of the rest of BMG's North American operations, which includes Jive Records, sources say.
In addition, a round of layoffs at Arista is expected within the next several weeks, sources said.
Patrick Reilly, BMG's chief spokesman, said, "BMG as a policy does not comment on speculation."
On Tuesday, BMG announced that Arista Chief Executive Antonio "L.A." Reid was being given the boot.
Reid had a string of successful hit records, but the label's runaway spending forced his exit, according to sources inside the company. Despite 31 Grammy nominations last year - the most of any single label - Arista lost some $110 million, sources say.
A Davis takeover would mark a return to the pinnacle of power in the music industry for the longtime exec.
The decision to push Davis out the door four years ago turned into a public relations disaster for BMG, and in late 2002 Davis was brought back in to run RCA.
At the time, BMG bought out Davis's interest in J Records - which he had formed in partnership with BMG after exiting Arista - and put the label under the RCA umbrella.
Since taking over RCA, Davis and his top deputy, Charles Goldstruck, have enjoyed a string of hit albums by artists such as Alicia Keys, Monica, Dave Matthews and Rod Stewart.
He has also produced hit albums tied to the highly successful television show "American Idol," churning hits from idols Kelly Clarkson, Clay Aiken and Ruben Studdard.
In late 2002, when Davis and Goldstruck took over RCA, both were given five-year contracts. And under Davis's stewardship, RCA has increased its market share by more than 60 percent.
While BMG does not release financial data for individual labels, sources at BMG say the financial picture of RCA is much rosier now than it was before Davis took over.
"He's run a very good RCA Music Group," said one BMG source.
BMG currently has three albums in the top 10, by artists Alicia Keys, Ruben Studdard and Outkast.
The reshuffling at BMG comes as the company prepares to merge with Sony Music, in a deal that would create the world's second-largest music company after Universal Music.
The two companies announced their merger agreement late last year, and the deal is pending before regulators in the United States and Europe. The regulatory process could take at least six months.
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Last laugh
Clive Davis, replaced at Arista by the younger, hipper L.A. Reid, is back in the fast lane while Reid is out. A timeline:
1974 - Founds Arista and lands talent like the Grateful Dead and Whitney Houston
2000 - Arista, now owned by Bertelsmann, boots Davis but agrees to launch J Records with him.
2002 - New management at Bertelsmann decides to lure Davis back to head RCA Records, folding J Records into the label.
2003 - Davis scores recording contracts with "American Idol" stars like Ruben Studdard for J Records.
2004 - Arista axes Reid. RCA likely to merge with Arista, with Davis at the helm.
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