COMPANY TOWN: MUSIC INDUSTRY SHAKE-UP : In Strange Twist, MCA Forces Out Top Record Exec : Music: Al Teller is replaced by Doug Morris, himself recently ousted from Warner by just-fired Michael Fuchs.
In a startling corporate shake-up, MCA Inc. on Thursday ousted Al Teller, the company’s longtime top record executive, and replaced him with former Warner Music Group executive Doug Morris.
Rocking the music industry, the announcement came shortly after Time Warner Inc. fired its global music chief, Michael J. Fuchs, who had fired Morris a few months ago. Morris ascended to his new position within minutes of Fuchs’ firing.
“Do I have a weird life or what?” Morris said in a telephone interview from New York. “All I can say is that this has been a very strange year.”
An MCA news release Thursday afternoon said Teller resigned due to philosophical differences with MCA’s new management team. Teller had three years left on his contract, which were bought out by MCA for an undisclosed sum.
“I’ve never seen the music industry in a greater state of flux than right now,” said Teller, who helped engineer MCA’s acquisition of Geffen Records and expanded its international operations to 23 companies worldwide. “But I’ve had seven very exciting years at MCA, and I leave knowing that the company is in good hands with the new management.”
MCA ranks fifth in domestic market share among the six major record companies and sits on top of the nation’s strongest country music division. Industry executives say the group is building an executive team that rivals the best in the business.
Since Seagram Co. acquired MCA in June, the Universal City-based firm has moved aggressively to capitalize on the chaos at Warner Music, courting five ousted Warner executives and seizing what industry watchers say is an opportunity to bolster the company’s credibility in the creative community.
MCA’s other recent recruits include former Elektra Entertainment Chairman Robert Krasnow, who signed a label deal last year after he was fired. Highly regarded Warner Music veterans Mo Ostin and Lenny Waronker also resurfaced this summer at DreamWorks SKG, the MCA-distributed entertainment combine founded by Steven Spielberg, Jeffrey Katzenberg and David Geffen.
Morris, who worked at Warner Music for 17 years and rebuilt its Atlantic Group division into one of the most profitable units in the record industry, is likely to bring along former Warner Music Chief Operating Officer Melvyn R. Lewinter to assist in running MCA’s global music sector.
Fuchs fired Morris during a period when Warner Music Group had almost two dozen albums in the top 50 and nearly twice the market share of its nearest competitor. Morris’ Atlantic Group alone cornered a 9.58% share of the U.S. market--just a sliver short of MCA Music’s total domestic take of 10.38%.
Teller, a Harvard MBA, took over MCA’s music division in 1988 after working his way up at CBS Records, where he started in 1968. Under his tenure at MCA, the music division became the entertainment firm’s biggest cash cow, generating more operating income than all of the firm’s other businesses combined.
MCA Music’s operating income last quarter totaled $38.6 million, nearly triple the $13.3 million posted during the same quarter last year. Music revenue increased 35%, to $305.1 million from $225.4 million.
Thanks to a distribution deal Teller cut last year with Radioactive Records, MCA finally had a huge alternative-rock hit when it released Live’s 5-million-album-selling “Throwing Copper.” This year, MCA also scored a massive hit with the soundtrack to “Dangerous Minds.”
Beyond the success of Live, however, Teller never really got a foothold in the crucial rock market, critics said. MCA’s once-booming black music division has also suffered in recent years. And MCA soundtrack whiz Kathy Nelson jumped ship this week to join Walt Disney Co.
Sources speculated that MCA Records President Richard Palmese will be dismissed and that headquarters for the music division will soon be shifted to New York. Of the six major music companies, only MCA is not based in New York.
Sources said MCA President and Chief Executive Ron Meyer has his eye on current Elektra Entertainment Chairwoman Sylvia Rhone to run MCA’s domestic music division. MCA is also said to be wooing controversial Interscope Records, formerly distributed by Time Warner, to join the fold.
There is also speculation in the music industry that Meyer may make a bid next year for EMI Music. If Meyer and Seagram Chief Executive Edgar Bronfman Jr. could persuade Thorn-EMI chief Colin Southgate to sell his record division, MCA would immediately be sitting on top of the biggest music conglomerate in the nation.
When Warner Music stops distributing products by Interscope Records in the spring, Warner’s total share will slip 3% to an estimated 19%. Adding MCA’s approximate 10.4% to EMI’s estimated 9.1% would catapult the combined company from fifth to first place in total album sales. It would also swiftly make the company a force to contend with abroad as well as in the United States.
Reaction in the music industry to Morris’ appointment was positive.