New U.S. Chief Signals Staff Shake-Up at Warner Music : Entertainment: Expected promotion of Doug Morris will culminate long power struggle among record executives.

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Warner Music Group has promoted Doug Morris, head of its Atlantic division, to chief of North American operations, signaling the start of a dramatic shake-up at the world's biggest record conglomerate.

The move, which is expected to be announced today, culminates a months-long power struggle among the company's executives and is the first step in a sweeping realignment at Time Warner's domestic music division, home to such superstar acts as Madonna, Metallica and Snoop Doggy Dogg.

Morris, 54, who in four years transformed the firm's floundering Atlantic division into the jewel of the Warner group, will be elevated to president and chief operating officer of Warner Music-U.S., the No. 2 position under Warner Music Group Chairman Robert Morgado.

"I see Doug as a bridge connecting the past to the future--the best bridge this company has," said Morgado, whose division has dominated the record business for a decade, with $5 billion in global revenue annually and 22.5% of all record sales at U.S retail outlets.

"He's a real music man who does not bemoan the fact that the business has become more fragmented but looks on that as an opportunity," Morgado said.

Morris--a former songwriter whose credits include the Chiffons' 1966 "Sweet Talkin' Guy"--was chosen to head the new division primarily because of his strong management record and his skill at discovering talented young executives.

Global revenue at Atlantic is expected to top $900 million in 1994, thanks to successful artistic gambles made by Morris' hand-picked stable of young label chiefs, including Jimmy Iovine at Interscope, Sylvia Rhone at EastWest, Danny Goldberg at Atlantic and Rick Blackburn at Atlantic Nashville. Morris also cut profitable deals with half a dozen independent labels and set up such non-music ventures as A-Vision Entertainment and Time Warner Audio Books.

Morris' ascension is expected to set off a chain reaction among senior executives and a staff consolidation at Warner record labels on both coasts.

Indeed, Warner sources speculated that the move was orchestrated in part to hasten the departure of key figures at two of the conglomerate's major music units, Warner Bros. Records and Elektra Entertainment--rumors Morgado adamantly denies.

Under the restructuring plan, all American label chiefs will report directly to Morris--including industry legend Mo Ostin, chairman of Warner Bros. Records, and Elektra chief Bob Krasnow, whose labels have not performed as well as Atlantic's recently.

The new chain of command is not likely to please either industry veteran, especially Ostin, who in January reportedly extended his contract to 1996 after reluctantly agreeing to report to Morgado. Before that, Ostin--whose savvy business skills and commitment to artist development have been revered in entertainment circles for decades--operated with autonomy, reporting only to Time Warner top brass.

There is also speculation that Rhone, CEO at EastWest, may take the reins at Elektra later this year if the Elektra and EastWest labels are merged, as expected. Under that scenario, sources said Krasnow would take on other duties within the new Warner Music-U.S. division. Morgado declined to comment; Ostin and Krasnow did not return calls.

Sources said Ahmet Ertegun will continue as chairman of the Atlantic Group and that Goldberg will retain the title of president at the label until 1995, when he is expected to be elevated to Atlantic Records chief operating officer.

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One of the first concrete changes expected under the restructuring plan is that Warner Music Group will purchase the 50% interest in Interscope Records that Atlantic doesn't own, from Iovine and his partner Ted Field.

"This is not a rescue mission here," Morgado said. "Warner Music is the strongest company in the business, but we don't want to become complacent. I chose Doug because he has what it takes to guide us through this transition as we attempt to refocus our energies in the U.S."

The promotion is a sweet reward for Morris, a longtime Atlantic insider who cooled his heels for years awaiting his chance. He finally got it in 1990 when Morgado gave Atlantic what amounts to an ultimatum to improve.

At the time, Atlantic was considered an industry dinosaur that was living off an aging catalogue of music from such former top groups as Led Zeppelin and Crosby, Stills & Nash.

Although sharing the title of chairman and chief executive with Atlantic founder Ertegun, Morris was given the management authority.

After suffering a loss in 1991, in part because of some of the initial long-term investments Morris was making, the company rebounded in 1992 and 1993 to become one of music's biggest success stories. Industry sources have estimated the company's revenue jumped from $400 million in 1991 to about $750 million in 1993.

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