Clive Davis Promoted to BMG’s U.S. Unit Chief

Clive Davis is having the last laugh -- again.

Davis, 70, is taking charge of Bertelsmann Music Group’s entire North American record division, a sharp turnabout for a legendary executive who only four years ago was all but driven out of the company.

In his new role, Davis will preside over a broad reorganization of the division’s three major record labels. He said Monday that he was ecstatic. “It’s thrilling; it’s emotionally very, very gratifying,” he said. “The flowers don’t stop coming in.”

Davis’ appointment as chairman and chief executive of BMG North America had been expected since the ouster three weeks ago of Antonio “L.A.” Reid as CEO of Arista Records, after lackluster financial results at the New York-based label, once one of BMG’s biggest units. Davis’ control will now reach beyond RCA Music Group, the BMG unit where he had been chairman, and will effectively put him back in charge of Arista, the label that he founded and sold to Bertelsmann in 1979.

In addition, Davis will oversee Jive Records, home to such acts as Justin Timberlake and Britney Spears. And Davis’ top lieutenant at RCA Music, Charles Goldstuck, will be promoted to chief operating officer of BMG North America.

Davis’ ascension marks the latest twist in the remarkable career of the man who discovered Santana and Janis Joplin. It also means that Bertelsmann has essentially undone almost every major management choice made by former BMG CEO Strauss Zelnick.

Zelnick -- who once held the title Davis assumed Monday -- was the one who forced Davis out as chief of Arista in 2000, after Davis rebuffed demands that he name a successor. Zelnick then installed Reid, a Grammy-winning producer who had delivered a series of hits for Davis, to take over the label, which has been home to Whitney Houston and Aretha Franklin.

Aiming to defuse the uproar Davis’ ouster sparked among artists, songwriters and others, BMG’s management offered him $150 million to start J Records, a joint venture label then consisting primarily of acts he recruited from his former Arista roster.

Under Davis, J Records got off to a fast start, scoring three debuts on Billboard’s Top 10 in less than eight months, including a breakthrough from R&B; ingenue Alicia Keys.

Meanwhile, in late 2000, Zelnick and then-BMG Chairman Michael Dornemann were shown the door amid fallout from the Davis dispute and other clashes with Bertelsmann leaders.

In November 2002, BMG’s new management brought Davis back into the fold, buying out his stake in J Records and merging it with RCA, and placing him in charge of the joint operation.

Then, BMG fired Reid, who sources say had racked up heavy financial losses despite owning a top spot on the nation’s pop chart with a double CD from rap duo OutKast. Reid is close to a deal to take over rival Vivendi Universal’s Island Def Jam unit, according to industry sources.

Davis and Goldstuck have been on a roll since taking over the joint RCA division. Last year, they revitalized the careers of a number of aging acts, including Rod Stewart and Annie Lennox, while delivering hits from such new acts as Maroon 5 and the winners from “American Idol.”

The BMG North America reorganization is likely to lead to the consolidation of several back-office operations. BMG declined Monday to discuss how many people might be laid off in the restructuring.

Davis’ promotion puts him in a better position if BMG’s planned merger with Sony Corp.’s Sony Music Entertainment is approved by regulators.

In fact, BMG’s management structure now more closely resembles that of Sony Music, where a single executive, Don Ienner, an ex-Davis deputy, oversees all U.S. operations.

Davis declined to discuss specifics about the future, but said he was looking forward to it:

“You’ve got to be pretty jaded not to understand this is really exciting,” he said. “This is a terrific shot.”