A&M; Records May Face Reorganization

A management shake-up is expected at troubled A&M; Records in the wake of the surprise announcement Monday that Gil Friesen has resigned as president of the Hollywood-based company, sources at A&M; say.

The rumored housecleaning is seen by some observers as the first evidence yet that the layoffs which hit much of U.S. industry following the merger mania of the 1980s are beginning to affect the once-high-flying record industry.

“In any industry, when there is a slowdown in sales, you can expect a reorganization. The record industry is no different,” said Paul S. Napper, an analyst at Crowell, Weedon & Co., a Los Angeles-based investment house.

Several top A&M; executives contacted were unavailable or declined to comment about possible changes at A&M; or about Friesen, who resigned under pressure last week after 25 years with the label. But A&M; has already laid off several employees who worked in the label’s distribution department. The move came after the distribution arm of A&M;’s parent company, Polygram Records, began assuming distribution of A&M; records on Monday.

“There’s a feeling here that with Gil gone, anything is fair game,” said one employee.

Not since 1978, when the record industry slumped into a five-year sales decline and laid off thousands of workers, has there been such widespread concern about job security at A&M;, which currently has only one record among the top 100 best-selling albums, several employees said.

Some insiders fear that the giant Dutch company N.V. Philips, whose Polygram Records subsidiary purchased A&M; in October for $500 million, may actually be behind the rumored cost-cutting. Philips made an initial public offering in December of about 20% of its Polygram unit, which brought in only $512 million of the $642 million Philips hoped to raise. The offering was made to defray the cost of buying A&M; and Island Records last year.

In trading Tuesday on the New York Stock Exchange, Polygram shares closed at $18, up 12.5 cents.

Alan Levy, chief executive of Polygram U.S.A., said through a spokeswoman that the company is not playing any role in the management changes at A&M.;

“We’re looking at A&M; as an autonomous label,” Levy said. “Any executive changes are the internal concerns of A&M.;”