Changing Its Tune : Sound Moves Turn MCA's Music Business Around

By CHUCK PHILIPS

Nov. 15, 1996 12 AM PT

TIMES STAFF WRITER

Power is shifting rapidly in the $12-billion record business, with MCA Music emerging as one of the industry’s most potent players.

With four albums in the top 20 and a string of potential blockbusters due out before Christmas, the Universal City-based corporation, long a music-industry laggard, is on a roll and poised to post a record fourth quarter.

MCA’s dramatic turnaround is the result of a massive restructuring plan implemented by Seagram Chief Edgar Bronfman Jr. and MCA President Ron Meyer, who moved aggressively last year to capitalize on the chaos at Warner Music by luring five fired music veterans into the MCA fold, including Doug Morris, who was installed as MCA’s record chief.

Much of MCA’s current standing can be attributed to the spectacular success of Interscope Records, the controversial label MCA purchased at Morris’ urging after Time Warner dumped the hot label after a rap lyrics controversy.

MCA’s new credibility as a rock powerhouse also has been bolstered by strong performances from Almo and DreamWorks, two start-ups, as well as hits from stalwart Geffen Records and the corporation’s country and R&B; divisions.

Analysts say that MCA is likely to dominate the market-share race throughout the industry’s traditionally lucrative fourth quarter.

Some sources say the company is angling to buy rival EMI, a move that would cement a long-term lock as the No. 1 music distributor in the U.S.

The undisputed industry leader in the domestic market remains Warner Music Group, which has a deep catalog, rich music publishing arm and thriving international division. MCA remains weak in each of those areas.

But current album market share is a useful barometer for determining how tuned in a company is to contemporary consumer tastes. It is not necessarily a gauge of current or future profitability. If a corporation spends too much money acquiring record labels, promoting music or otherwise fattening its overhead, it will generate very little profit on even its best selling albums, no matter how large its share of the market.

Since the beginning of the year, MCA has moved from last to first in current weekly album market share.

Although analysts predict that it will take several years to determine whether MCA’s investments in Interscope and other new companies will pay off, Morris is confident that his record division is on its way to becoming an industry leader.

“I know the skeptics out there are going to say that this was just a one-week wonder, but it ain’t,” Morris said in an interview from his New York office. “We’ve made great strides to upgrade the credibility of this company, and our goal is to be No. 1.”

Since Seagram Co. acquired MCA last year, Bronfman and Meyer have made it no secret that they believe music could be one of the corporation’s biggest profit centers. In the last year, MCA recruited practically every top executive fired by Warner. Besides Morris, other recruits include Henry Droz, Melvyn Lewinter and Bob Krasnow. Highly regarded veterans Mo Ostin and Lenny Waronker resurfaced at MCA-distributed DreamWorks.

“Music is of great importance to the future of MCA--equal in our view to the importance of the motion picture business and the recreation business,” said Meyer, president and chief operating officer of MCA Inc. “I think our timing was excellent in rebuilding the music division, including the Interscope deal. Judging by the recent results, it is clear that Warner’s loss was our gain.”

Time Warner Chairman Gerald Levin has been widely criticized in the music industry for his handling of the company’s music division. In addition to stripping away a series of respected music executives, Levin decided to dump Interscope, whose revenue for 1996 is projected at more than $200 million.

Interscope is having its strongest year since the Westwood-based record label’s 1991 launch by record producer Jimmy Iovine and film producer Ted Field. Defying opponents of gangsta rap, MCA Inc. purchased half of Interscope Records last February for $200 million. Nine months later, the controversial label is going strong.

Once branded as a “gangsta rap” company, Interscope is dominating the pop charts with a string of hits by such rock and R&B; acts as Bush, No Doubt, Nine Inch Nails, the Wallflowers and Blackstreet. Interscope still distributes controversial rap music by Death Row Records, which has the No. 1 album in the nation this week.

“Jimmy Iovine is a genius,” Morris said. “In my opinion, he has had the same impact on MCA Music that Steven Spielberg had on MCA pictures.”

Sources said MCA will soon purchase the remaining 50% of Interscope and install Iovine as president of the corporation’s music sector. Morris and Iovine declined comment.

Before the arrival of Bronfman’s new management team, MCA had never really had a foothold in the crucial rock market. Outside of its affiliation with industry powerhouse Geffen Records, the corporation was known primarily for its hot country and R&B; sectors.

The firm, however, has done an about-face in the last year, quickly establishing itself as a major presence in the alternative rock market. Interscope, which distributes for the Trauma, Nothing, Death Row and Aftermath labels, isn’t the only source of such acts.

Almo Records, which is run by industry veterans Jerry Moss and Herb Alpert, had chart toppers in rock newcomers Garbage and drew critical acclaim for signing folk singer Gillian Welsh. DreamWorks is generating a huge buzz with its recent signing of the Eels, whose new album is getting wide exposure on MTV and alternative radio.

MCA is expanding its Latin division, and it recently cut a deal with hot R&B; producers Jimmy Jam and Terry Lewis, who have churned out dozens of hits for such artists as Prince and Janet Jackson.

“The last few years have been so strange for me,” said Morris, who worked at Warner Music for 17 years, building it into one of the most profitable units in the record industry before he left the company after an internal battle.

“It was so hurtful to me when I got fired. I was so fortunate that MCA gave me this opportunity. The amazing thing about the management team here is that they are so bold. I mean these guys just gave me the ball and told me not to stop running until we get across the goal line. And that’s what we’re going to do.”

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The MCA Music Makeover

MCA, long ridiculed as “The Music Cemetery of America,” jumped this week to first place in the current album marketshare race, ahead of usual industry leader Warner Music Group. MCA’s new management has taken bold steps over the last year to restructure its music division, luring controversial Interscope Records and a bevy of top executives and hot acts into the fold--giving the company an instant jolt of credibility in the pop world. Current album marketshare is not a direct gauge of corporate profitability and Warner remains ahead in year to date sales and in catolog sales.

Current albms only, week ended Nov. 10

MCA: 20.7%

WEA: 15.2%

Sony: 14.6%

BMG: 11.9%

PGD: 9.0%

EMD: 7.2%

Other: 21.4%

Current albums only, week ended Jan. 7

WEA: 21.2%

Sony: 14.0%

BMG: 12.4%