Company Town : Geffen Enters Breast-Beating Fray

With the beginning of each new year comes an annual music industry tradition: breast beating.

Companies jockey for attention by proclaiming unprecedented results. Usually left unsaid is any proof that the results can be justified as a record, the fact that booming foreign sales means virtually everyone is doing more business than before, and whether in the end a decent profit was ever made.

The ritual has any number of purposes. For one things, it affords an opportunity to publicly stroke executives and artists.

By no coincidence, it often is timed to generate publicity just before executive contract negotiations start with parent companies.

Entering the fray for the first time this year is Geffen Records, which today will announce that its revenue leaped to $505 million in 1994 from only about $315 million in 1993 and $320 million in its previous record year of 1992.

No information on profits will be released, although the company is said to be returning a fat 20% on its operations, which translates to about $100 million.

It's no secret that the company has been hot for a relatively small label, due in part to such veteran rock acts as Aerosmith and the Eagles as well as a live album by Nirvana released after the suicide of group leader Kurt Cobain.

More important, Geffen is showing it is developing the kind of breakthrough acts and critical darlings such as Counting Crows, Weezer, Beck and Hole that will be critical to its future.


Needless to say, what makes the Geffen announcement most interesting is the timing.

This is, in effect, Chairman David Geffen's swan song at the company he founded amid industry skepticism back in 1980 and which made him a billionaire due to the company's sale to MCA and MCA's subsequent purchase by Japan's Matsushita Electric Industrial.

Geffen is a sure bet to leave when his contract expires in four months, at which point he starts another label in his new venture with former Walt Disney studios chief Jeffrey Katzenberg and director Steven Spielberg.

Geffen won't discuss his imminent departure to Team Dream--or his widely expected recruitment of recently departed Warner Bros. executives Mo Ostin and Lenny Waronker. The reasons are said to be tight legal restrictions on what he can say publicly about his future.

Geffen says he was eager to get the numbers out because they were "extraordinary, amazing results," especially for a company that focuses narrowly on alternative music and rock.

Indeed, the $505 million in sales came on only 33 record titles, including 24 international. And Geffen isn't modest about the company's new acts.


"We've broken as many acts or more acts than some of the biggest record companies in the world," he said.

Some of the reason for the announcement, various sources note, is simply the frustration Geffen executives experience at seeing music companies whose performance is comparatively lackluster regularly boast about their results.

There's also a clear message being sent that the company is healthy and will survive post-Geffen under capable executives led by President Ed Rosenblatt, who operates out of the bright spotlight the media shines on Geffen.

Still another reported aim: to counter industry backbiting triggered by such events as a resolved lawsuit with Eagle co-founder Don Henley, and Geffen executive departures such as that of Gary Gersh, who left to run Capitol Records in 1993. Late last year, executive John David Kalodner jumped ship for Columbia Records. In a rub-it-in-your-face style of announcement, the news media received a picture of Kalodner in a shipping crate, made to look as if he had been shipped to Columbia by Rosenblatt.

Another theory is that Geffen is eager to send a message to MCA parent Matsushita, which is embroiled in a disagreement with MCA Chairman Lew Wasserman and President Sidney J. Sheinberg over whether the two will be able to make the kind of strategic acquisitions MCA needs to compete with large rivals. Geffen, Spielberg and Katzenberg are considering affiliating their company--officially titled DreamWorks SKG, it was learned Thursday--with MCA, but only if Wasserman and Sheinberg stay.

Other sources suggest that Geffen, whose name is typically prefaced with "billionaire" and little else, wants to remind the entertainment industry that he isn't just another billionaire with a Gulfstream jet. He wants people to know he has built companies from scratch before, and aims to do it again.


Dream Team Part II: The name DreamWorks SKG is expected to be publicly revealed today. Spielberg and Katzenberg, speaking to TV reporters Thursday, said the two are still checking out sites that have a campus-like setting.


Stepping down: Radio & Records magazine founder Bob Wilson is stepping down as publisher of the venerable radio trade journal, a position he has held for two decades.

Chief Operating Officer Erica Farber will continue to oversee the daily operations of the company.

R&R;'s core business has been providing radio airplay information to the music industry. It was hammered by new competitors in recent years and a decline in advertising.

Wilson said he wants to do new things and will continue to work out of the publication's offices.


We're No. 1 (we think): A battle is brewing over who had the top-selling videocassette in 1994. As is often the case, Walt Disney Co. and MCA Inc. are at the center of the dispute.

Earlier this week, VideoScan put out an announcement saying that MCA's "Jurassic Park" outsold Disney's "Snow White and the Seven Dwarfs."

Now two other research firms, Chilton Research and Alexander & Associates, are on the verge of announcing that they figure "Snow White" was the top seller.


Chuck Philips contributed to this column.

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