Berry Gordy Jr., the former Detroit auto worker who built Motown Records into what was once the nation’s largest black-owned business, has sold the company for $61 million to MCA Inc. and Boston Ventures Limited Partnership, the companies announced Tuesday.
The sale of the company, which Gordy built in the 1960s and 1970s with such stars as Smokey Robinson and the Miracles, the Jackson 5 and Diana Ross, was concluded late Monday, although it had been expected for weeks.
MCA will put up 20% of the sale price, with the remaining 80% provided by Boston Ventures, an investment company based in Boston that includes such investors as Warner Communications and News Corp., the media conglomerate headed by Rupert Murdoch. MCA, based in Universal City, is expected eventually to buy the Boston Ventures stake, a Motown spokeswoman said.
Gordy will retain Motown’s lucrative music publishing division, including the highly profitable Jobete Music Co., and Motown’s film and television production company, which produced such specials as a 25th anniversary Motown program in 1983.
The sale by Gordy to MCA and Boston Ventures removes the Motown name from the list of the nation’s largest black-owned firms.
Motown Records’ parent company, Motown Industries, was long the largest black-owned company in the country until it fell on hard times in recent years, in part because of some unsuccessful television ventures and the loss to other record companies of some of its top artists, including Michael Jackson and Diana Ross.
According to Black Enterprise magazine, Motown in 1984 lost its ranking as the largest black-owned company to Johnson Publishing, publisher of Ebony and Jet magazines. In Black Enterprise’s most recent survey, released last month, Motown Industries fell to fifth place with an estimated $100 million in revenue.
Industry sources estimated Motown Records’ annual sales at about $20 million, although Michael Roshkind, a consultant and close associate of Gordy’s for 20 years, said that estimate is too low. He would not say what sales were.
Despite its recent troubles, Motown has long been considered important as a symbol of black business success.
“It was a story in which a black entrepreneur, at a time when capital was even more limited to blacks, was able to build a multimillion-dollar empire. Berry Gordy Jr. provided inspiration for other black entrepreneurs, in and outside of the entertainment field, to move on and build their own companies,” said Derek T. Dingle, associate managing editor of Black Enterprise.
Dingle said, however, that Motown had problems diversifying into other entertainment areas, such as “Sidekicks,” a low-rated family television show, and “Nightlife,” an unsuccessful late-night talk show starring comedian David Brenner.
There is a chance that a small chunk of the company will remain minority owned. Jheryl Busby, who heads black music operations for MCA Records, is negotiating to head Motown in a deal that would probably give him a small stake in the label, according to an MCA source who requested anonymity.
The sale includes contracts for such artists as Stevie Wonder, who signed a new agreement earlier this month, and Lionel Ritchie, who has two albums left on his current pact. And Diana Ross, who recently signed with MCA, will return to the Motown label.
MCA will distribute Motown recordings for 10 years under the agreement.