MCA, Investment Group Reportedly Will Buy Motown

Motown Records Corp.--once the record industry’s most inspiring success story but lately fallen on hard times--is on the verge of being sold to MCA Inc. and the investment group Boston Ventures Limited Partnership for $61 million, according to sources close to the deal, which has been rumored for weeks. The terms of the agreement call for MCA to put up 20% of the purchase price and retain distribution of Motown recordings for 10 years through MCA’s music entertainment division. Boston Ventures will pick up the balance of about $48.8 million.

An announcement of the deal is expected any day, but a spokesman for Boston Ventures cautioned that “this has been an on-again, off-again thing for some time, and a lot of people have been to this altar before and come away with no ring.”

In fact, MCA was poised to buy the company once before--in January, 1987--when Motown Industries Chairman Berry Gordy Jr. changed his mind and pulled out of the deal at the last minute.

If the current deal goes through, MCA and Boston Ventures will get one of the most prestigious names in the history of the music business. Founded 29 years ago by Gordy, a former auto worker turned songwriter, the Detroit-based label exploded onto the music scene in the mid-1960s with a phenomenal string of hits by such local discoveries as Smokey Robinson, the Supremes, Stevie Wonder, Marvin Gaye, the Temptations, the Four Tops, Gladys Knight and the Pips, and the Jackson 5. In 1966, the company scored 22 Top-20 hits, earning it the nickname “Hitsville U.S.A.”

“The name Motown is the most important name in American music,” said Dick Griffey, chairman of Dick Griffey Productions, which operates Solar Records and Constellation Records. “There is no Warner Bros. sound, no CBS sound, no MCA sound. But the Motown sound was so successful that they now call Detroit ‘Motown’--they named the city after the company! That’s worth something.”

How much it’s worth these days is a matter of debate, however. Not included in the sale is what many consider to be Motown’s major asset--its music publishing arm, Jobete Music, which owns the rights to nearly all of Motown’s hit songs. Experts estimate that Jobete is worth about $100 million. Gordy will also hang on to Motown Productions, a television and film production unit, and the company’s recording studio, called Hitsville.

The record company that MCA and Boston Ventures are trying to buy is a pale shadow of its former self. According to knowledgeable sources, the company is losing money, with sales currently running about $20 million a year, down from more than $60 million just a few years ago.

‘Nothing on Charts’

Most of Motown’s former big stars--Michael Jackson, Diana Ross, the Four Tops--have left the label, and the company has failed to develop a new generation of artists with the same broad appeal. The company scored only two gold albums--with sales of at least 500,000 copies--in 1987. In the current issue of Billboard magazine, only one Motown album is ranked on the Top 200 chart of best-selling records and tapes--Stevie Wonder’s “Characters” album at No. 125.

Wonder, Smokey Robinson and Lionel Richie are the label’s only remaining major stars. Both Wonder’s and Richie’s contracts with the company call for only two more albums each. According to sources, Wonder’s contract also contains a clause that allows him to leave the company if Gordy sells it. Few in the industry expect Richie, whose 1983 album “Can’t Slow Down” sold a reported 15 million copies, to sign again with the struggling label.

“Right now, the company has nothing on the charts, it’s internally shot, people are looking to get out. It’s a sad ending to a good piece of American history,” said the president of a competing record company. He put the blame for Motown’s decline on the fact that “Berry Gordy is a great creative guy” but is not a strong “manager.”

Another chief executive agreed, saying: “The worst thing that ever happened to Motown was moving to Los Angeles from Detroit (in 1971). That’s when Berry became an absentee landlord living in Bel-Air.” In recent years, Gordy has not been active in the day-to-day running of the record company. Last August, when Motown announced that it was launching a $38-million campaign aimed at developing new artists, many in the record industry felt it was a case of too little, too late.

Crucial History

Dick Griffey, who made an 11th-hour bid to match any offer that Gordy received for Motown “up to $100 million,” said he still hopes to acquire the company in the future. “Maybe Boston Ventures will sell me their share,” he said.

“Berry Gordy has worked hard for 30 years, and he has a right to cash in on that work and sell to anyone he wants to,” Griffey said. “But I would like to keep the ownership of Motown in the black community. I would not like to see that important part of our history disappear into corporate America.”