Gersh Expected to Leave Top Job at Capitol Label

In the latest of a series of management shake-ups at British music giant EMI Group, Gary Gersh is expected to step down this week, possibly as early as today, as president of Capitol Records--home to such huge pop acts as the Beastie Boys, Bonnie Raitt and the Beatles, sources said.

Gersh’s exit follows months of behind-the-scenes squabbling between the 43-year-old executive and his new boss, EMI’s U.S. Deputy President Roy Lott--who sources say will replace Gersh until a new candidate is named. EMI decided to oust Gersh primarily due to Capitol’s sluggish performance and differences regarding the musical direction of the landmark label, sources said.

Representatives of Gersh and EMI declined comment on Sunday.

Capitol, whose domestic market share is hovering at a meager 3%, has just seven albums on the 200-title Billboard pop chart this week, including the soundtrack from the film “Hope Floats” and collections from Marcy Playground, Everclear and Radio- head. Analysts believe that Capitol, the corporation’s flagship label that employees nearly 200 people, should be generating twice the market share.

Indeed, Capitol sold fewer records this week than EMI’s tiny Priority Records, a 10-year-old company with one-fourth the staff and roster of the legendary Hollywood label. Priority, which specializes in distributing hip-hop music by such rap stars as Master P, has the best-selling record in the country this week as well as seven other albums on the pop chart.

Much has changed in the five years since Gersh, a highly regarded talent scout who discovered rock supergroup Nirvana, was hired to rejuvenate the languishing Capitol, where past management had been criticized for relying too heavily on its old Frank Sinatra and Beatles catalog.

In 1993, the national record sales charts were ruled by alternative rock music, a field in which Gersh is considered an expert. While critics questioned whether a rock talent scout had the skills to run a label with a rich legacy in black music, EMI’s former management team believed Gersh could jump-start Capitol and quickly restore its credibility as a creative force on the West Coast.

Gersh fulfilled that mission by luring a stream of notable artists to Capitol, including Everclear, the Foo Fighters, Vic Chesnutt, Rosanne Cash, Paul Westerberg and the Jesus Lizard. And although he also negotiated additional deals with the Beastie Boys’ Grand Royale and Glen Ballard’s Java, Gersh was never able to score a major commercial breakthrough a la Hanson or the Spice Girls.

EMI’s new management regime believes that Capitol has missed opportunities to become a player in pop and black music--two thriving genres in the late ‘90s--primarily because of Gersh’s overemphasis on the alternative rock niche, sources said.

Indeed, Gersh stunned the record industry several years ago when, under orders from above, he shut down the black music division at Capitol, once home to Nat King Cole. At the time, Capitol’s black music sector was losing money, sources said.

Gersh is the latest casualty in a corporate shake-up at EMI that has been ongoing since May 1997, when the British giant promoted global music veteran Ken Berry to clean up its dormant U.S. music division. Moving to cut costs, Berry fired the management team that hired Gersh and shut down EMI’s New York corporate office as well as several of the firm’s unprofitable record labels.

Berry then replaced the U.S. head of EMI’s Virgin label and restructured EMI’s Nashville unit and its catalog division.

The turmoil continued this year with the exit of former EMI global music chief James Fifield, which followed a public feud between Fifield and EMI Chairman Colin Southgate.

In March, EMI sent a signal to Gersh regarding his fate at the corporation when it granted him a one-year extension on his employment contract--most top record executives are signed for three to five years.

Adding to the unrest at EMI, the British corporation has been rumored to be a takeover candidate for more than a year. In April, EMI’s board of directors announced that it had been approached by a suitor, believed to be Seagram Co.

Prospects for a possible sale, however, collapsed last month, when Seagram announced that it had decided to purchase PolyGram instead. There is still speculation among analysts that EMI could merge in the future with German entertainment giant Bertelsmann if the sale price dropped to the $5-billion range.

Gersh, who started 27 years ago as a clerk at a hip Los Angeles record store called Licorice Pizza, is regarded in music industry circles as a talent-friendly executive with sharp creative instincts. He landed his first record company job in 1975 at Capitol as a customer service representative who put up posters and counted albums at retail accounts.