Company Town : Waronker Turns Down Offer of Top Job When Ostin Leaves Warner Records in ’95

Tensions mounted Monday at Time Warner Inc.’s New York headquarters as Warner Bros. Records President Lenny Waronker rejected an offer to take control of the label in January when Chairman Mo Ostin steps down.

“As much as I love this company and its artist roster, I just can’t take this job,” said the 52-year-old executive, who sources predict will leave the flagship label of Time Warner’s $5.4-billion music division before his contract expires in 1996. “The way things are right now, it just doesn’t feel right.”

Waronker declined to comment further, but sources say he is upset about recent restructuring moves made by Warner Music Group Chairman Robert J. Morgado, which included forcing out Ostin and former Elektra Entertainment chief Robert Krasnow.

The corporate drama continued to unfold Monday behind closed doors at Time Warner as high-level meetings were called to discuss complaints about Morgado’s stormy relations with other key executives within the Warner Music Group, parent of Warner Bros. Records, The Atlantic Group and Elektra Entertainment.

Sources say top brass at the media giant has voiced concern about a wholesale exodus of executives as well as superstar acts such as R.E.M., which may soon follow Waronker out the door.

Metallica, another best-selling rock group, has already blamed Morgado’s “arrogant” behavior for a lawsuit it filed to sever its decade-long association with the firm.

Discussions held by senior officials Friday and Monday focused primarily on reducing the scope of Morgado’s powers, insiders say. Morgado could not be reached for comment.

Meanwhile, a long-anticipated restructuring of Elektra/EastWest will kick in Wednesday.

About three dozen employees and a handful of recording acts are expected to be issued pink slips as the firm’s new chair, Sylvia Rhone, seeks to streamline expenses and consolidate operations at Elektra and EastWest, which were merged in July.

Sire Records chief Seymour Stein is expected to be named president of Elektra/EastWest soon and to be joined in the transition by his highly respected sidemen, Howie Klein and Joe McEwen.

EastWest employees will vacate the label’s former suite in the Atlantic Group building on Sunset Boulevard and move to Elektra’s Beverly Hills office, which will operate as the firm’s West Coast branch.