1999: Nippy News Release Articles

Clive Davis Still In Talks With BMG
submitted by: Lisa (webmaster)
source: Los Angeles Times, New York Post, Wall Street Journal, Reuters
Date: November 18, 1999

BMG Deal for Label Signals Ugly Showdown
Music Group's chief reportedly plans to install a new president at Arista Records, headed by Clive Davis. Davis sees it as a bid to oust him, sources say.

By CHUCK PHILIPS, Times Staff Writer

The entertainment board of Bertelsmann Music Group is gathering this morning in New York to give the green light to the purchase of LaFace Records--a move that is likely to force an ugly showdown with Clive Davis, head of BMG's Arista Records division and one of the record industry's most respected figures, sources said.

Upon completion of the estimated $100-million deal, BMG chief Strauss Zelnick is expected to name LaFace co-founder Antonio "L.A." Reid as president of Arista. Davis, who built that booming label from scratch, sees Reid's elevation as a move to push him out the door, the sources said.

Competitors are comparing the dispute to a 1994 power struggle between Time Warner music chief Robert Morgado and Warner Bros. Records' Mo Ostin, which began as a demand for a succession plan but evolved into a corporate blood bath that devastated the music group and led to an exodus of dozens of top executives as well as a massive erosion of market share.

The latest battle pits Zelnick, a 42-year-old executive who rose to power in the movie industry and has never run a music label, against Davis, a 66-year-old music icon who has been intimately involved in the success of such stars as Whitney Houston, Patti Smith, Janis Joplin and Santana.
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If Davis quits when his contract expires in June, competitors predict that it would dramatically destabilize Arista, which accounts for about a third of BMG's market share and is considered the strongest asset in its U.S. repertoire. BMG is a unit of the German conglomerate Bertelsmann.

This is the second time in two months that Zelnick has locked horns with a top label chief at Bertelsmann. Five weeks ago, he went to war with Zomba Group chief Clive Calder, accusing him of luring pop sensation 'N Sync away from BMG's RCA division with an improper contract offer. That move is expected to drive Calder, whose label accounts for another third of BMG's current market share, to exit the corporation when his deal runs out early next year.

Reaction to the drama in music industry circles on Wednesday was overwhelmingly critical of Zelnick. Musicians and executives who have worked with Davis over the years expressed outrage over reports that Davis' days at Arista may be numbered.

"What is it with these corporations?" said songwriting whiz Diane Warren, who has crafted blockbuster hits for nearly every pop star in the business. "Why would a company drive out the guy who created everything that the label stands for--and at the very moment when he is at his peak? Clive Davis is Arista Records. It just doesn't compute for me. Are they out of their minds?"

Five years ago, BMG rewarded Davis with an unusually rich $50-million contract for transforming his tiny pop label into a diverse powerhouse that dominated the sales charts with a string of rap, R&B, light jazz and country hits.

Davis has maintained a phenomenal track record as a hit-maker for decades and BMG has allowed him to run Arista with no interference from anyone inside the corporation.

But Zelnick, who came to BMG nearly 14 years after Davis, has never seen eye to eye with the stubborn music entrepreneur, sources say.

Davis essentially tells Zelnick and other corporate superiors that he'll deliver the financial numbers they want but otherwise runs the label the way he wants, sources say.

Davis, who 10 years ago convinced Reid and his partner Kenny "Babyface" Edmonds to start a joint venture with BMG, also has done nothing to address demands by Zelnick and his bosses that he develop a successor plan at Arista.

The seeds for the battle over Arista's future were planted about two years ago when Zelnick quietly pitched the presidency of the label to Reid as part of a plan to buy the rest of LaFace, sources say. Zelnick's boss, Bertelsmann chief Michael Dornemann, signed on to the plan soon after, but Davis resisted the idea and never took it seriously, sources say.

Two weeks ago, Zelnick brought up the topic again during contract negotiations with Davis, but Davis rejected the idea and left the room. Sources say Arista's employees and artists are furious about Zelnick's plan and that morale at the company has been devastated.
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Zelnick declined comment, but addressed the issue in a statement released on Wednesday.

"My strong desire is to do right by Clive Davis," Zelnick said. "I have nothing but the highest regard and deepest respect for Clive and what he has accomplished for Arista and the industry.

"As CEO I have a responsibility to make decisions based on what's right for the company, and that includes making sure that we have an appropriate succession plan in place at Arista.

"While we generally do not comment on contract negotiations, everyone at BMG--especially me--hopes that Clive will stay on to continue building his legacy and ensuring Arista's continued success in the decades ahead."

Davis was traveling in Europe and could not be reached for comment, but sources said that he is unwilling to accept reduced power or pay at the label.

In a statement released Wednesday, Davis said he would not retire and intended to work at Arista until his contract ends in June (when sources say he will receive a large payout based on the label's performance).

"I will be weighing BMG's offers to me which involve both preserving my legacy and, ironically, major support of a new public media company that I would be forming," Davis said. "I am very moved by the overwhelming outpouring of support from my artists, the officers and employees of Arista and those in the industry."

Copyright 1999 Los Angeles Times

DAVIS, BMG HOLDING CLOSED-DOOR TALKS ON MAJOR NEW MEDIA OUTLET
By ALLYSON LIEBERMAN

Clive Davis may be out at Arista but parent company BMG says the door is open for a new, Davis-run venture within the company.

In a statement released yesterday, the 66-year-old Davis said: I will be weighing BMG’s offers to me which involve both preserving my legacy and, ironically, major support of a new media company that I would be forming.

The details of the new company, however, are not being disclosed by Davis or BMG.

They’re still talking, said one source familiar with the negotiations.

It’s yet to be decided but it will be a big entertainment company, the source added.

Davis’ words came two days after the stunning news that his boss, BMG’s chief Strauss Zelnick, was looking to bring in up-and-coming music mogul L.A. Reid to run the show at Arista.

I would like to make it clear that I have no plans whatsoever to retire, Davis continued.

The veteran music man has been Arista’s president and CEO since he founded the company 25 years ago. His contract with BMG is up in June 2000.

Zelnick, apparently under fire from parent company Bertelsmann to find a successor for the aging Davis, said in his own statement yesterday that he is looking out for BMG’s best interests by bringing in the 43-year-old Reid.

As CEO I have a responsibility to make decisions based on what’s right for the company, and that includes making sure that we have an appropriate succession plan in place at Artista,” Zelnick said.

While we generally do not comment on contract negotiations, everyone at BMG especially me hopes that Clive will stay on to continue building his legacy and ensuring Arista’s continued success in the decades ahead, he added.

Davis, while building up Arista into a $500 million label with big name artists like Whitney Houston, Sarah McLachlan and Santana, has often been faulted for his refusal to groom a No. 2.

But that still hasn’t harmed his reputation among his colleagues, who rarely shy when it comes to rival bashing unanamously rallied behind the music legend.

When I first started out, I could only hope to come close to achieving some of Clive’s success, said Sony Music chief Tommy Mottola. His work in this industry is unrivaled. Everybody in this business looks up to him.

Noted rival Universal Music head Doug Morris: Clive is incredible. You can’t replace a Clive.

Arista's Clive Davis Is Likely To Take a New Role in June
By MARTIN PEERS
Staff Reporter of THE WALL STREET JOURNAL

NEW YORK -- Clive Davis, one of the legendary figures of the music industry, is expected to step down as president of Arista Records when his current contract expires in June, but may stay on in a new role at the company, people familiar with the situation said.

Mr. Davis is in discussions with Arista's parent, BMG Entertainment, about a new position at the company, possibly as chairman of Arista, a company he founded in the mid-1970s. While BMG wants Mr. Davis to maintain contact with major artists, the company also has proposed backing Mr. Davis in a new media venture. Some top record executives said Mr. Davis would be eagerly sought out by others in the industry if no agreement could be reached with BMG.

Arista, the label of Whitney Houston, Santana and Aretha Franklin, has long been a mainstay of BMG's U.S. music business. So far this year, the label accounts for about one-third of BMG's current-album market share, according to industry tracking firm SoundScan Inc. BMG has the second-highest current-album market share in the U.S. Mr. Davis's latest success is Santana's hit record "Supernatural."

BMG, a unit of German media giant Bertelsmann AG which acquired Arista in 1979, has been keen to put a succession structure in place at the company for several years, a proposal Mr. Davis, who is in his late-60s, has previously resisted. The looming expiration of Mr. Davis's existing contract has prompted BMG Chief Executive Strauss Zelnick to recently begin talks on a new management structure, according to published reports this week.

BMG is in talks to appoint Antonio Reid to take over as president of Arista, responsible for day-to-day management, people familiar with the situation said. Mr. Reid is co-president of LaFace Records, an Atlanta company 50%-owned by BMG. A spokesman for Mr. Reid declined to comment.

Mr. Zelnick said he had "nothing but the highest regard and deepest respect for Clive and what he has accomplished for Arista and the industry. As CEO, I have a responsibility to make decisions based on what's right for the company, and that includes making sure that we have an appropriate succession plan in place at Arista." Mr. Zelnick added that he "hopes that Clive will stay on."

Mr. Davis said he has "no plans whatsoever to retire" and fully intended "to live up to my contract ending June 30, 2000." He added that he "will be weighing BMG's offers to me, which involve both preserving my legacy and, ironically, major support of a new public media company that I would be forming." A spokesman for Mr. Davis declined to elaborate.

Rival music executives are closely watching the situation. "Of course I would hire him," said Doug Morris, chairman of Universal Music Group, a unit of Seagram Co. "We need more Clive Davises."

"He is absolutely one of the most brilliant music executives that we have ever had. One thing I will say I never knew that age had anything to do with hearing a hit or identifying a star," said Thomas D. Mottola, chairman and chief executive of Sony Music Entertainment.

BMG, Arista Chief Davis Spin Contract Talks
By JILL GOLDSMITH, Reuters

NEW YORK--A flurry of statements surrounding the future of Arista Records president Clive Davis heightened Wednesday as Davis insisted he has no plans to retire and suggested he might start his own media company.

Davis' boss, Strauss Zelnick, the CEO of Arista's parent company BMG Entertainment, stated publicly that he wants to keep Davis on but that Arista badly needs a successor to the 66-year-old music veteran.

BMG, sources said, intends to tap L.A. Reid of LaFace Records as Arista's new president and CEO. Davis could be bumped up to chairman and continue at Arista with more limited oversight of its day-to-day operations if he so chooses.

LaFace, home to such acts as TLC and Usher, is a joint venture with Arista. Reid wouldn't start until Davis' current contract expires June 30.

"My strong desire is to do right by Clive," Zelnick said. But, "As CEO I have a responsibility to make decisions based on what's right for the company, and that includes making sure we have an appropriate succession plan in place at Arista."

"Everyone at BMG -- especially me -- hopes that Clive will stay on to continue building his legacy and ensuring Arista's continued success in decades ahead," he added.

While the successor talk has been interpreted by some as a power play by Zelnick, insiders said the desire to install another key player within Arista runs right up through the ranks of BMG and its giant parent company Bertelsmann AG, which requires most of its high-level execs to retire by age 60.

The group, based in Germany, is privately owned and plays things very close to the vest, which makes the current hail of statements highly unusual.

Reuters/Variety

BMG reported in bid to squeeze Davis out of Arista

NEW YORK (Reuters) - A showdown was brewing Thursday between Bertelsmann Music Group and Clive Davis, the legendary head of its Arista record label, over BMG's bid to buy LaFace Records, the successful R&B/rap label partly owned by Grammy-winning musician Kenneth "Babyface" Edmonds.

A spokeswoman for BMG, a unit of German media group Bertelsmann AG, declined to confirm or deny a report that the BMG board met Thursday in New York to approve the $100 million purchase of LaFace. BMG already owns 50 percent of LaFace, home of some of the biggest R&B acts such as chart-topping female trio TLC and singer Toni Braxton.

According to the Los Angeles Times, BMG chief Strauss Zelnick wants to replace Arista president Davis with LaFace co-owner Antonio "L.A." Reid.

Davis, 68, built Arista into one of America's major labels, accounting for about 33 percent of BMG's market share. He has been involved in the careers of major artists such as Aretha Franklin, Whitney Houston and Janis Joplin.

Davis also got in on the ground floor with Bad Boy Records, the highly successful hip-hop music label launched by generation X mogul Sean "Puff Daddy" Combs. Arista co-owns the label.

His latest feat is Arista's released this week of the new album -- "Rave Un2 the Joy Fantastic" -- by the singer who used to be called Prince.

Davis, who 10 years ago persuaded Reid and Edmonds to start the Atlanta-based LaFace joint venture with BMG, has a contract with Arista running through to June. He was traveling in Europe this week, but said in a statement he intended to honor his contract with the label.

Zelnick said in a statement Wednesday: "My strong desire is to do right by Clive Davis.

"As CEO, I have a responsibility to to make decisions based on what's right for the company and that includes making sure that we have an appropriate succession plan in place at Arista."

The Los Angeles Times cited sources saying Zelnick had pitched the idea of Reid taking over from Davis about two years ago. Davis resisted the idea and when the subject was raised during his contract renegotiations two weeks ago, he walked out.

Reuters/Variety