Record Company CEO Assembles Legal Team to Fight Parent Company
By Phyllis Furman, Daily News, New York
Knight Ridder/Tribune Business News

Nov. 20--Amid a chorus of support from the biggest stars in the music business, embattled Arista Records chief Clive Davis has assembled a top legal team to handle his fight against label parent BMG Entertainment.

The music legend, who is being pushed from the top post at Arista, is sparing no expense. Sources said he's enlisted the aid of his longtime counsel, entertainment powerbroker Allen Grubman, whose client list includes Madonna, Elton John, Michael Jackson and Sony Music chief Tommy Mottola.

Also on the Davis legal team are two more show biz movers, Atlanta-based music lawyer Joel Katz, as well as the Arista chief's own son, entertainment lawyer Fred Davis, the sources said.

Grubman, Katz, and Fred Davis declined to comment.

Davis' mounting legal fight came yesterday as his celebrity friends and colleagues continued to express support and outrage over BMG's plans to replace the 66-year-old music luminary with La Face Records chief Antonio (L.A.) Reid.

"Clive and I are family," said Arista superstar Whitney Houston. "It hurts me to think he's being treated with disrespect. He is on top as he has always been. He deserves total honor and respect from everyone including BMG ... Clive is my partner."

The Queen of Soul, Aretha Franklin, also an Arista artist, said, "Clive is priceless and he's the greatest, one of the real record men left in the industry."

Carlos Santana, whose career Davis recently revived with megahit album "Supernatural," said Arista Records without Clive Davis "is like the Chicago Bulls without Michael Jordan."

Record industry insiders expect Davis' departure to rock Arista, BMG's strongest U.S. record label, accounting for one-third of its market share.

There were reports yesterday of dismay among Arista's executives, all of whom have been lured to the label by Davis.

Meanwhile, Strauss Zelnick, chief executive of BMG, has said he "has the highest regard" for Davis, but is simply working to insure an "appropriate succession" plan for Arista.

Two weeks ago, Zelnick raised the issue of hiring Reid during contract talks with Davis, whose current deal expires in June 2000.

BMG is approving the acquisition of La Face, which is currently a joint venture label -- a deal crafted by Davis.

Insiders said Zelnick has been grooming Reid to succeed Davis for two years and sent him to Harvard Business School to prepare him for the job. But Davis, who has always operated autonomously without interference from BMG, is unwilling to sacrifice any of his power.

Davis said in a statement that he will not retire and that he expects to honor his contract. The Arista chief gets a big payout when his current deal expires, sources said.

Under one scenario, Davis might start a publicly held company with the financial support of BMG.

The music legend, who remains passionate about the business, is said to want to remain on board over the next several months as Arista approaches its 25th anniversary. It will be celebrated with a TV music special.

Industry Legend Is Shown the Exit as Arista Records President
By Phyllis Furman, Daily News, New York
Knight Ridder/Tribune Business News

The song's not over yet for Arista Records chief Clive Davis. Insisting he is at "the peak of his powers," the defiant music legend, who is being forced aside by Arista parent BMG Entertainment, said he has no plans to retire and will remain at the music label until his contract expires next year.

"BMG has called Arista its 'crown jewel' for many years and that crown has never shined more brightly, with more new artists breaking and more established artists reaching new peaks than ever before," Davis said.

The music luminary, who has launched such industry giants as Janis Joplin, Whitney Houston and Bruce Springsteen, also said he is weighing several proposals from BMG, including an offer to start a publicly held media company that would be funded by the German media giant.

Davis, 66, spoke out yesterday for the first time since learning two weeks ago that BMG has offered the presidency of Arista to Antonio (L.A.) Reid, co-founder of La Face Records, a BMG joint venture label.

His remarks came as performers and industry executives rallied in his support. "My allegiance and my heart is with Clive. I came to Arista because of him," music great Carlos Santana told the Daily News yesterday. His latest album, "Supernatural," has topped the charts in recent weeks.

"He is one of the finest and most talented executives in the history of the record business," said Doug Morris, chairman of Seagram-owned Universal Music Group, the world's largest record label.

"He deserves to be able to continue. Who is better than Clive?" Morris said.

"He is the past, present and future of Arista and anyone who doesn't recognize that needs to have their head examined," said former EMI Records chief Charles Koppelman.

L. Londell McMillan, an attorney who represents the Artist (formerly known as Price), who recently signed a record deal with Arista, called Davis' situation "a corporate media assassination at best and at worst, age discrimination."

Davis is restricted from revealing too much about his present standing at BMG, out of fear that he could jeopardize a lucrative back-end payout that is due when his contract expires in June, 2000, insiders said.

In the meantime, Reid has agreed to accept the post, but BMG is still negotiating the terms of his contract, insiders at the company said.

Davis fully expected to continue to run Arista as he has for 25 years -- as a solo act. "In his mind he is 25 years old," said one BMG executive. "He's not."

Looking to contain the furor, BMG chief executive Strauss Zelnick, who is handling the succession plan, said in a statement yesterday that he has "the highest regard and deepest respect" for Davis.

But Zelnick added that as a chief executive he has "a responsibility to make decisions based on what's right for the company."

Insiders said Zelnick has for a long time seen Reid -- who has enjoyed major success with La Face artists Toni Braxton and TLC -- as a natural replacement for Davis and sent him to Harvard Business School several years ago to groom him for the job.

While Zelnick publicly praised Davis, the cost-cutting CEO is said to be disappointed with the bottom line performance at Arista. The BMG chief is said to be under pressure from his German bosses to make a change, especially in light of Davis' age.

Nonetheless, Zelnick's timing could be way off. His empire is already highly vulnerable as the result of a dispute with independent record label Jive, which recently walked off with one of BMG's most lucrative acts, teeny bopper act 'N Sync.

Jive is now threatening to sever its distribution deal with BMG, which would seriously hurt the record giant's market share and profits.