Seagram to Start Overhaul With Layoffs in L.A., N.Y.

D-Day.

That’s what everyone inside Seagram Co.’s Universal Music Group is calling Thursday--the day the corporation is expected to unveil the names of employees and artists slated to lose their jobs during the first phase of the biggest restructuring in the history of the record business.

On Thursday, nearly 500 employees and 250 artists in Los Angeles and New York are expected to get pink slips as Seagram begins to downsize 15 record labels into four major U.S. music groups, sources said.

The entire reorganization, which will take at least until July to complete, is expected to produce savings of $300 million annually by integrating businesses and firing 3,000 employees at Universal and PolyGram, which Seagram bought last year for $10.4 billion. Severance packages for staff and artists could total more than $150 million, sources said. The employees will leave almost immediately; the artists will be shed over several months.

In Los Angeles, about 300 workers will lose their jobs as Universal folds the Geffen and A&M; labels into Interscope Records to form IGA Group. Only 20 of A&M;’s 65 acts and just 30 of the label’s 200 employees will survive the consolidation, sources said. At Geffen, the roster will be slashed from 70 to 25 acts and the staff cut from 145 to 30 employees, sources said. About 20 artists will be pruned from the 70-act roster at Interscope.

MCA Records Group employees and artists will survive the restructuring virtually unscathed.

Seagram is kicking around the idea of moving its entire West Coast record operation--IGA, MCA and the Universal Music corporate headquarters--into a rented office complex in Santa Monica.

Sources say top brass at Universal have discussed the possibility of selling the historic A&M; lot and Geffen Records’ building in Hollywood.

In New York, Universal Records Group will fold Motown under its umbrella and slash Motown’s staff from 75 to seven employees, sources said. In a surprise move, superstar R&B; act Boyz II Men will exit Motown to join Universal, which will also pick up Mercury rock act Texas after it trims two dozen acts from its roster, sources said.

Mercury will be combined with Island and Def Jam to form Seagram’s other major outpost on the East Coast. At Mercury, an estimated 60 of its 150-person staff and about 110 of its 140-act roster will be laid off, sources said. At Island, about 40 of its 100 employees will lose their jobs and at least 25 of its 70 acts will be cut, sources said.

No acts or employees are expected to be cut at Def Jam, which sources say could soon end up becoming the black music arm of the Mercury/Island Group. Seagram is negotiating to purchase the 40% of Def Jam it does not own but has been unwilling to pay the $110 million currently being asked by Def Jam executives Russell Simmons and Lyor Cohen.

In the months ahead, Universal also plans to cut the work force in its music publishing division from 370 to 250 employees worldwide, sources said. The merged company’s sales force is expected to be slashed from 600 to 400 employees, sources said.

Analysts suggest that the massive restructuring is likely to cost Universal a slice of its 25% global market share, but will provide the corporation with unparalleled economies of scale guaranteed to boost operating margins and position it for strong revenue growth over the next three years.