MCA, Motown settle

The acrimonious lawsuits between MCA Records and Motown ended quietly yesterday with an out-of-court settlement that will see Massachusetts investment firm Boston Ventures purchase an additional stake in Motown.

Both sides were mum about terms of the settlement, issuing a joint one-paragraph statement.

The pending litigation between MCA and Polygram, which took over Motown’s distribution in September 1991 following the MCA-Motown split, may also be near settlement, according to the joint statement, although a Polygram spokeswoman said yesterday that no agreement has been reached.

Boston Ventures has agreed to purchase MCA’s 18% stake in Motown, adding to BV’s previous 70% stake in the company. The remaining 12% is shared by Motown president/CEO Jheryl Busby and artists Stevie Wonder and Diana Ross.

No purchase price was announced, but the amount would have to include an accounting for the 20-year distribution agreement sources say existed between Motown and MCA, which consisted of the original 10-year agreement plus two five-year options. That agreement included distribution, music publishing, special markets and some foreign distribution.

Motown founder Berry Gordy, who built the label into one of the largest black-owned companies in the U.S., sold it to MCA and Boston Ventures in 1987 for $ 61 million, an amount dwarfed by subsequent sales of Geffen Records (roughly $ 650 million) and Virgin Records (roughly $ 900 million). MCA sources yesterday claimed the settlement purchase price based on an optimistic prediction of the company’s earnings but would not estimate the purchase price.

Yesterday’s agreement makes Boston Ventures partner Martha Crowninshield the music industry’s most powerful female executive. Crowninshield oversees Boston Ventures operations.

The settlement brings to a close a bitter war that first erupted nearly two years ago when Motown filed suit against MCA, alleging 10 separate breaches of its distribution and services contract (Daily Variety, May 15, 1991). The original volley soon descended into a battle that drew in Polygram when that company agreed to pick up Motown’s distribution.

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