Two Top Sony BMG Executives Step Down

Only months after resolving a bitter battle over the company’s top executive slot, Sony BMG Music Entertainment announced Thursday the departure of two of its senior-most executives.

Don Ienner, an 18-year veteran of the company, stepped down as chairman of Sony Music Label Group U.S. less than three months after being promoted to the position.

Michele Anthony, who joined Sony Music in 1990, resigned as president and chief operating officer.

Company insiders said the two were forced out.

Neither Ienner nor Anthony returned calls seeking comment. Sony BMG declined to comment beyond a news release announcing the resignations.

The departures are the latest management realignment to rock Sony BMG, the world’s second-largest music company and a joint venture of Japan’s Sony Corp. and Germany’s Bertelsmann.

In February, Sony BMG named a new chief executive, Rolf Schmidt-Holtz, who had been serving as a Bertelsmann director. He stepped in after the Bertelsmann board forced his predecessor, Sony-affiliated Andrew Lack, into the less-powerful chairman’s position.

One of Schmidt-Holtz’s first decisions was to promote Ienner -- a move some insiders speculated was designed to show Schmidt-Holtz’s new boss, Sony Corp. Chief Executive Howard Stringer, that Sony Music executives wouldn’t be sidelined. But sources said it wasn’t long before Schmidt-Holtz and Ienner clashed over issues of leadership, strategy and business practices.

Thursday’s announcement that Ienner would be leaving and that he would be replaced by Stringer’s brother, Rob, are seen as a consolidation of Schmidt-Holtz’s authority and an attempt to unite what are now sharply divided Sony and Bertelsmann camps. Rob Stringer is a 20-year veteran of Sony Music and current head of Sony BMG’s British and Irish divisions.

Ienner was the focus of a Los Angeles Times article last year about a regulatory probe that concluded that some Sony Music executives had been involved in pay-for-play scams that exchanged cash and gifts for radio airplay of particular artists.

Sony Music includes Columbia Records Group, Epic Records and Sony Urban Music and is home to such artists as Beyonce, Jennifer Lopez and Three 6 Mafia.

Sony Music, once one of the industry’s strongest labels, had only two albums among this week’s 10 bestsellers and one album in last year’s top 20 sellers. A recent Sony Music release by Bruce Springsteen failed to sell well.

That has contributed to a companywide slowdown. In the last 12 months, Sony BMG’s U.S. market share dropped to 26%, from 28% a year earlier, according to Nielsen SoundScan.

“This company is undergoing a much-needed radical restructuring,” said one Sony BMG senior executive who requested anonymity for fear of angering superiors. “There was a new perspective on this company’s direction, and a new team was needed to execute that vision.”

Sony Music insiders said the company’s mediocre performance was not due to a lack of effort.

Ienner is described as an intense and savvy marketer who drove his staff to discover and break out hit songs and artists. In 1989, Ienner was one of the youngest executives ever to head Columbia Records when he was named to the post at 36. Within a handful of years, he remade the struggling company into the industry’s No. 1 hit machine.

In an attempt to reclaim that success, Ienner in recent months had consolidated Sony Music’s operations and put allies into key leadership roles, dismissing some popular label executives.

But Ienner and Schmidt-Holtz repeatedly clashed. Ienner pushed for the removal of Steve Greenberg, president of Columbia Records, but was overruled by Schmidt-Holtz.

Then in May, Sony BMG closed Epic Records Nashville and fired about 20 employees. Ienner reportedly was not informed of the decision until the night before it was announced.

Top Sony BMG executives said Ienner’s departure signaled the company’s plan to decentralize labels’ operations.

Insiders also said competition between Sony Music and Bertelsmann’s BMG, the merged company’s other major music division, had become destructive. The rivalry stemmed from long-standing tension between Ienner and Clive Davis, BMG’s legendary music head.

“BMG is running things right now,” said Bob Lefsetz, publisher of a widely read music newsletter. “Their guy is in the chief executive’s chair and they have all the hits. So they are ushering out the people they don’t like.”