Music stars rally behind embattled Arista chief Davis
By Franklin Paul

NEW YORK (Reuters) - Music superstars rallied behind Clive Davis, Arista Records' embattled leader, amid speculation on Friday that Arista's parent would force him from his empire, home to such stars as Whitney Houston and Kenny G.

The industry has been abuzz this week with talk that Davis, the legendary head of Bertelsmann Music Group's Arista, may be in his last days as the unit's president and chief executive.

BMG is a unit of German media group Bertelsmann AG.

Reportedly at issue is BMG's wish to buy LaFace Records, the successful R&B/rap label partly owned by Grammy-winning musician Kenneth "Babyface" Edmonds, and replace Davis, who at 66, is far older than many of the young guns who are his peers.

BMG chief Strauss Zelnick could replace Davis with LaFace co-owner Antonio "L.A." Reid, according to reports.

But Davis, in a press statement, stated that at his age, "I am absolutely at the peak of my powers," adding that he has no plans to retire and that Arista has never been more profitable.

Indeed, for the year ending June 1999, Arista, whose roster also boasts Aretha Franklin, Sarah McLachlan, Santana and Alan Jackson, reported sales of over $425 million, amassing 69 gold, platinum or multi-platinum discs -- respectively signifying sales of 500,000, 1 million or more than a million copies.

It is BMG's strongest U.S. label, accounting for about 33 percent of BMG's market share.

Grammy-winning singer Whitney Houston, in her own statement, defended Davis and scolded BMG for its actions.

"It hurts me to think he's being treated with disrespect," she said of Davis. "He deserves total honor and respect from everyone including BMG. And as far as his age is concerned, he's younger than me, so maybe I should be retired."

Sean "Puffy" Combs, chart-topping rapper and music business mogul, also voiced support for Davis.

"For more than 25 years, Clive Davis has been one of the most respected individuals in the music industry who has built a $3.5 billion empire," said Combs, whom Davis helped launch Hip Hop label Bad Boy Records. Bad Boy has sold some 12 million albums in five years.

"I will always stand by him whatever the path he may choose," Combs added.

Aretha Franklin called Davis "the greatest, one of the real record men left in the industry."

On Friday, a spokeswoman for BMG reiterated the company's refusal to confirm or deny a report that the BMG board met Thursday in New York to approve the $100 million purchase of LaFace.

Davis, who has a contract with Arista running through to June, said in a statement he intended to honor his contract with the label. But he will also mull BMG's offer to support "a new public media company that I would be forming."

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. Davis brokered the deal that married BMG and LaFace.

Reuters/Variety

REID IT & WEEP, CLIVE
By ALLYSON LIEBERMAN

L.A. Reid isn't just about to get the top job at Arista Records -- he's about to get a whole lot richer.

As part of a deal he's working to join Arista, Arista parent BMG is negotiating to buy the 50 percent of his company that it doesn't already own for some $100 million.

That deal, which will likely be inked in the next several weeks, would earn Reid some $50 million and make him head of Arista -- leaving reigning Arista king Clive Davis' role up in the air. Reid co-owns 50 percent of the Atlanta-based LaFace with Kenneth "Babyface" Edmonds.

Talks between BMG and LaFace began about two weeks ago, according to a source familiar with the deal.

The 66-year-old Davis, who has been faulted for failing to groom a No. 2, was not ready to share the limelight.

Davis' contract is up in June 2000, and while he stated he would see it through, many in the industry believe he'll take the money and run.

"He's very upset over any contemplation of a successor," said one music insider. "An array of options were outlined to him, but the only option he'll consider is to remain head of the show." Davis, however, claims he is considering all his options, including launching a new entertainment media company with BMG, which one insider billed as "some kind of Internet venture."

Whatever it is, insiders agree that Davis' days in the business are far from over.

Both Zelnick and Davis said they are bound to a confidentiality agreement and they could not comment. Reid, 43, declined comment.

Antonio "L.A." Reid founded LaFace Records 10 years ago with singer/songwriter Babyface, after writing and producing hit songs for Whitney Houston, Bobby Brown, and Paula Abdul.

The label has since become a major player in the industry, grossing about $100 million annually. BMG's Zelnick is hoping Reid's talents in finding and developing new artists will ease Arista into the 21st century.

Arista -- home to Sarah McLachlan, Santana and most recently, The Artist Formerly Known As Prince -- is currently experiencing its best year ever, topping $500 million in sales.  

Power Play
Clive Davis may be replaced by L.A. Reid at Arista. The change would make Arista the highest-grossing record company to be headed by an African-American
by Craig Seymour

The record industry was sent spinning on Wednesday in the wake of rumors that Clive Davis, president of Arista Records, may be replaced by L.A. Reid, president of Arista subsidiary LaFace Records. If the rumors pan out, Arista will become the highest-grossing record company to be led by an African-American in the history of the business. (Arista posted $425 million in sales last year; sales at labels like Elektra, Def Jam, and No Limit, all run by African-Americans, hover at around $200 million.) This news puts the spotlight on the relatively unknown Reid, who didn't even appear on EW's recent list of the top 20 most influential minority executives in entertainment.

As president of LaFace, which grossed $75 million last year, Reid guided the careers of Toni Braxton and TLC, multi-platinum acts that have boosted Arista's fortunes. He also brought two pivotal players into the Arista camp: Dallas Austin, the producer behind TLC and budding Arista diva Monica, as well as Sean ''Puffy'' Combs, whose Bad Boy Records is also an Arista subsidiary. As early as 1995 Austin said, ''L.A. had the vision to bring youthful urban producers, songwriters, and artists to Arista when they weren't even thinking about it.'' Combs, whose Bad Boy Records made $130 million dollars in 1997, has said: ''If it wasn't for L.A., I wouldn't be at Arista.''

Davis, who has admitted that he'll ''never get rap music,'' has credited Reid with helping him stay current with hip-hop and R&B. But they haven't always seen eye to eye. The moguls disagreed about whether ''Waterfalls,'' one of TLC's biggest hits, should even be released. ''He didn't like 'Waterfalls,''' Reid said earlier this year. ''He didn't understand why I wanted to release it or why I wanted to spend this huge amount of money on the video. He didn't quite believe in it.''

According to the Wall Street Journal, BMG has offered Davis the choice of staying at Arista in a newly created advisory position as Chairman or undertaking a new-media venture backed by BMG. But it doesn't look as if he's going to step down willingly. ''I would like to make it clear,'' he said in a press release on Wednesday, ''that I have no plans whatsoever to retire.''

For the time being, Reid is keeping quiet. Last month, he told the Cincinnati Enquirer, ''All the success and all, I certainly don't take it lightly... But now, I'm more concerned with having peace and just happiness in my life.'' Of course, there's nothing like a great new job to put a smile on your face.