Sep 28

September 28, 2012 | By Ed Christman, New York
Below is the story “Lyor Mulls Next Move” — an in-depth look at the options facing Lyor Cohen who this week stepped down as CEO of WMG’s recorded music and how WMG may fill the vacancy — from this week’s edition of Billboard Magazine, which also features a cover story on superstar Bruno Mars who gives an exclusive preview of his wide-ranging second album Unorthodox Jukebox. Also, a special section on Kenny Chesney and Tim McGraw’s “Brothers of the Sun” Tour and how it made country music history; a guide to ad agency music supervisors; an up-close look at both Universal’s acquisition of EMI and how the deal may hinder the digital market; and a piece on how Clear Channel’s direct deals with labels could hurt Pandora, as well as our incomparable columns and charts, and much more. You can buy a copy of the issue here, and subscribe here.

With Lyor Cohen’s sudden exit from Warner Music Group as chairman and CEO of recorded music the industry rumor mill has been working overtime naming his replacement, but insiders say that CEO Stephen Cooper may stay in place running the company and just have the labels heads reporting into him, as they are doing since Cohen resigned.

Warner Music’s parent company Access and Cooper are not into layers of management, says one Warner Music Group insider. “Cooper, besides being frugal, likes to have the shortest point between people,” says that executive. “But I don’t think this [Cohen’s departure] was planned.”

In the beginning there was a rocky start between Cooper and Cohen, but it seemed like they were finally working things out and that they would be walking down the road together. So we were all shocked when it happened.”
Lyor Cohen Stepping Down as Warner Music Chairman/CEO
When the Warner Music Group had company meetings in Germany two weeks ago, “Cohen was acting very strong, very presidential, very much in charge, which is why I was really surprised” when he left, says one Warner Music Group executive.

So what happened to turn things around? All along sources have been saying that the key sticking point had been Cohen’s contract, which a year after Len Blavatnik and his Access Industries had acquired WMG, still hadn’t been signed to take into account his promotion to chairman of recorded music on a worldwide basis. According to company insiders, the problem didn’t so much concern a money dispute as to how bonus and incentives based on performance can be worked out in the absence of a publicly-traded stock, which is how Cohen’s previous contract and pay was structured. But others say that Access had a problem with the industry’s executive high payment schemes. Two people close to the situation said there had been disagreements over future company structure and strategy, which would give him a modified role he was not keen on.

Warner Music and Cohen declined to comment.

Some industry executives still believe Cohen could wind up at Sony Music as Doug Morris’ successor or helming Capitol Records; others, including WMG executives, say its more likely that he will align with a private equity firm and start a management company or maybe even become one of the bidders for the record label catalogs being divested by the Universal Music Group.

As one executive who is familiar with Cohen put it, “Lyor is an entrepreneur and he could only deal with so much of corporate.” That executive bets that Cohen will start a management firm/label operation, rather than wind-up at one of the other majors.
Billboard Power 100: Lyor Cohen
A Daily News story on Sept 27 said Cohen has been secretly working on building a management company for the last two years and would continue to pursue that opportunity.

“Lyor’s forte is to ‘move artists’ as he and [Atlantic Group chairman/COO] Julie [Greenwald] like to say,” another executive says. “If there is no room at UMG or Sony, Lyor may have to turn to private equity and build a new company.”

For their part, sources at Universal and Sony say there is no room for Cohen, although they officially decline to comment.

While the press have been working overtime in installing soon-to-exit EMI boss Roger Faxon as Warner Music CEO, sources within WMG say that is not happening. They say that while Faxon would be a good replacement for Cooper, he could never handle Cohen’s job because he doesn’t have the A&R chops. He also does not have the close relationship with Blavatnik that Cooper does. But while some executives question if Cooper has the vision to run a major record company, WMG insiders say it doesn’t appear he is going anywhere.

One music industry executive, who says he knows Cooper and his limitations says, “you need a music guy in the top spot and Access is crazy not to have one there.”

But a WMG insider said the move makes some sense. “If Cooper wants to stay, why should they replace Cohen? You cut out a big chunk of overhead, and if you feel the separate record companies are running well why do you need to bring in someone else?”

Atlantic Records’ team of Greenwald and chairman/CEO Craig Kallman receive a lot of praise from executives within WMG. But they add, the jury is still out on Warner Bros. management team comprised of chairman Rob Cavallo, co-president/CEO Todd Moscowitz and co-president/COO Livia Tortella.

One possible money-saving solution would be to give Greenwald, Kallman and Warner/Chappell Music Publishing chairman/CEO Cameron Strang more responsibilities, suggests another WMG executive. With Big Jon Platt recently joining the publishing company as president of creative for North America that could free up Strang, if he was needed.


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