Mike Gentile ([email protected])
Fri, 22 Jan 1999 11:09:29 PST
from BASELINE Inc. and The Hollywood Reporter
Exec: Scene like 'Dead Man Walking'
By Marc Pollack
The flag flew at half-staff on the A&M Records lot Thursday as
outgoing
company chairman Al Cafaro bid farewell to about 170 employees fired
from the
company in the midst of the biggest corporate restructuring in the
history of
the music business.
A wake-like atmosphere descended over both coasts at the offices of
Island, Mercury, Geffen, Motown and A&M, where a total of about 500 U.S.
employees were dismissed Wednesday and Thursday following the absorption
of
music giant PolyGram by Seagram Co.'s Universal Music Group (HR 1/21).
Sources said Thursday that the departures will swell to approximately
1,200 within nine months, and that figure could eventually climb as high
as
3,000 worldwide.
The cuts could amount to about 3% of UMG's 15,500-member worldwide
work
force. UMG will make as much as $150 million-$200 million in severance
payments to staffers and artists, sources said.
In addition, only about 20 of A&M's 65 acts will be kept, sources
said,
and just 25 from Geffen's 70 will make the cut. Indeed, Universal's
Interscope, into which the two labels will be folded, will cut about 20
bands
itself. At Mercury, it was estimated that 110 of a 140-act roster will
be
dropped, and at least 25 of Island's 70 acts will go.
Universal Music Group, now the largest music company in the world
after
its acquisition of PolyGram for $10.4 billion last month, is not
expected to
complete its restructuring until at least July. The move to cut staff
and
bands from the labels is intended to produce a $300 million annual
savings.
However, that didn't make the dismissal of the employees or the near
termination of such legendary labels as Geffen, A&M, Island, Mercury or
Motown any easier.
"It was a procession -- not unlike the scene in 'Dead Man Walking' --
as
people passed my office on their way to being informed of their
termination,"
said one label staffer who did not lose his job. "I feel real crappy
today."
While it was a sad day in the music business, some expressed a
feeling of
relief that the long-dreaded moment had finally arrived. "We knew this
was
coming for a while; I'm just glad that I can move on now," one fired
employee
said. He said he would not jump right back into the music industry,
choosing
instead to live off his severance package for a while.
The restructuring meant dismissal for about 115 employees from
Geffen,
about 65 from Motown, 170 from A&M and about 100 from Mercury and
Island.
Universal Music Group will also exit the audiocassette manufacturing
business, sources said. The company is also taking its Pinckneyville,
Ill.,
returns processing operation and moving it to Indiana, which will affect
more
than 250 people in the next eight months. The company's video returns
operation will be moved to Memphis, Tenn.
"Universal recently announced the new structure for the integration
of its
U.S. record labels," said the sole official statement issued by the
Universal
Music Group. "Each of the executives who have been charged with leading
the
various labels has now begun the integration process, drawing upon the
strengths of both Universal and PolyGram to build the best possible
organizations that are, first and foremost, music and artist-oriented.
"At the same time, the merger presents a unique one-time opportunity
to
create the industry's leanest and most effective firm by eliminating
broad
duplication of activities. While change is always difficult, the
restructuring of the labels is necessary for us to be more competitive,
develop artists' careers and pave the way for meaningful growth in the
future."
UMG is providing out-placement services. In New York, the company
offered
automobiles to help employees get boxes home.
At A&M in Los Angeles, Cafaro and his departing staff were joined
Thursday
by top-selling A&M artists Chris Cornell and Sheryl Crow, who
demonstrated a
welcome graciousness by visiting the La Brea Avenue studios to wish the
outgoing staffers well.
The A&M lot has been a fixture in Hollywood since the days when it
served
as a movie studio for Charlie Chaplin. Now it will house only 30 people
and
might be put up for sale.
Crow will remain an A&M artist through Interscope, but many of the
people
behind the scenes of her success at the label were fired as A&M and
Geffen
were swallowed by Interscope.
While artists of Crow's caliber have little to fear from the
consolidation, many smaller and less established acts are waiting to
learn if
they are still under contract.
Sources said that final label rosters at IGA, Mercury-Island-Def Jam
and
Universal-Motown will be determined in the coming months.
copyright 1999 The Hollywood Reporter and BASELINE Inc.
-0- (BEN) Jan/22/ 99 13:41
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