Layoffs
likely in City after big music merger
By PHYLLIS FURMAN
DAILY NEWS BUSINESS WRITER
Music giants Sony and BMG are hooking up - and
sharpening their knives.
Heavy layoffs and mogul turf battles that
could drag in some of the biggest names in
show biz, including music legend Clive Davis,
are next on the playlist following yesterday's
announcement that the two record companies
have formalized their merger plans.
If the deal gets regulatory approval, the new
boss of the company to be called Sony BMG -
Sony Music chief Andrew Lack - aims to cut
between $300 million and $360 million from the
annual payroll of the merged music giant,
insiders said yesterday.
Bertelsmann-owned BMG Entertainment is
expected to take a much bigger hit than its
partner, because Lack has already cut a lot of
fat at Sony, letting go 1,000 employees this
year.
The bloodletting will be especially heavy in
New York where both have their U.S.
headquarters.
Some of BMG's units are expected to be merged,
with fingers pointing to Britney Spears label
Jive Records as a candidate to be folded into
another BMG division.
Lack will closely scrutinize BMG's Arista
Records, run by music hotshot L.A. Reid,
sources said. Arista is scoring on the charts
with hits from acts like Outkast. But the
label's spending heavily and was forced to
take big writeoffs on the contracts of
underperforming artists like Whitney Houston.
There will be big changes at Sony's
headquarters, too, where buzz was heavy
yesterday over Don Ienner, the music veteran
who was elevated to Sony's North America chief
under Lack.
Insiders said they expect Ienner will hold a
comparable corporate title at the new company.
And that would create an uncomfortable spot
for bigwigs like Davis, who runs BMG's RCA
Group. Years ago, Ienner reported to Davis
when the music legend was running Arista.
Execs at Sony and BMG declined to discuss
their plans yesterday and sources said an
integration plan for the two music giants has
yet to be formalized.
Bertelsmann and Sony see a merger as the best
way to cope with a dramatic decline in music
sales prompted by rampant piracy and illegal
downloading.
Their union would create the second largest
music company in the world boasting such
superstars as Beyonce, R. Kelly, Barbra
Streisand, Bruce Springsteen and Jennifer
Lopez.
Reporting to Lack will be BMG COO Michael
Smellie, who got the job over Sony Music No.2
Michele Anthony, a music power broker and one
of the few high ranking women in the biz.
The deal is seen as a coup for Lack, a music
industry novice who spent his career in
broadcasting, where he ran NBC News. Rolf
Schmidt-Holtz, currently CEO of BMG, would
serve as chairman of the new company. But Lack
would run the show and report to the board.
Resource(s):
New
York Daily News
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SONY,
BMG TIE THE KNOT