Warner Music Slashes Jobs, Ousts Bigwigs
By SETH SUTEL
The Associated Press
Tuesday, March 2, 2004; 11:46 AM
NEW YORK - Warner Music Group announced 1,000 job cuts and a shakeup of top management on Tuesday, one day after Edgar Bronfman Jr. closed a deal to buy the company from Time Warner Inc.
The company is also consolidating the back-office functions of its Elektra and Atlantic labels. The job cuts, which are equivalent to 20 percent of Warner Music Group's global work force, will take place over the next month.
Three senior executives will also be leaving the company: Val Azzoli, the co-chairman of Atlantic Records; the label's co-president Ron Shapiro, and Sylvia Rhone, the chairman of Elektra.
Ahmet Ertegun, the founder of Atlantic Records, will be staying with the company but his exact role has yet to be determined, according to company spokesman Will Tanous.
The company said it was still in negotiations with Roger Ames about a senior management role. Ames was chairman and CEO of Warner Music when it was still part of Time Warner.
The Elektra and Atlantic labels will be overseen by Lyor Cohen, the former head of the Island Def Jam Music Group, until a final management structure is put in place there. Cohen came on board Warner Music Group in January.
Warner Music said in a statement it was taking the restructuring steps to better compete in the "challenging business environment of today's music industry." Warner and other major music companies are struggling in the face of widespread downloading of music files and declining sales of CDs.
Bronfman and an investor group that includes Thomas H. Lee Partners, Bain Capital and Providence Equity Partners, agreed to pay $2.6 billion for Warner Music Group in November after London-based EMI Group PLC pulled its own bid.
The purchase, which also includes Time Warner's Warner/Chappell Music publishing business, creates one of the world's largest independent music companies, with an artist roster that includes Kid Rock, Madonna, Faith Hill, and Metallica.
The deal marks a return to the music business for Bronfman, who had overseen Universal Music Group as the former head of Seagram Co. Seagram later merged with the French media company Vivendi, but Bronfman later left that company as the merger unraveled.
"While the restructuring necessitates some painful changes, they are vital to creating a more agile organization that will allow us to remain competitive in the rapidly evolving marketplace," Bronfman said in a statement. The company declined to make Bronfman available for further comment.
Associated Press Business Writer Alex Veiga contributed to this story.
© 2004 The Associated Press