In change of strategy, conglom buys label for $25 mil
In an acquisition that seemingly represents a shift in the conglom’s business plan for its music operation, the Walt Disney Co. has ponied up $25 million to purchase Mammoth Records, a potent indie label and home to the successful Squirrel Nut Zippers, among others.The pact, which closed Friday, also includes a five-year employment contract with Disney for Mammoth founder Jay Faires. Moving to acquisitions The deal suggests a change in strategy from growing internally through act signings and artist development — a plan Disney chairman Michael Eisner had previously directed and former Hollywood Records prexy Bob Pfeifer instituted — to pricey acquisitions. The pact — and new direction — is viewed as indicative of the increased role Disney studios chairman Joe Roth is playing in the operation of the studio’s record labels. Mammoth is being positioned by the studio as a key component of a music group that will encompass the studio’s Hollywood Records label and its recently bowed Nashville arm. Faires, who will retain the title of prexy of Mammoth, had been searching for a new home since being jettisoned by Atlantic Records in March as part of a cost-cutting move by the major label. According to sources, the price Disney paid for the label, which discovered Seven Mary Three (now an Atlantic act) was considerably higher than amounts offered by BMG and A&M Records, both of which were on the short list as suitors until last week. The move by Disney still begs the question of why the conglom doesn’t focus on pop music, which is a better fit with its TV and film programming, rather than indie-inspired repertoire. Faires interested in film Sources close to the pact note that Faires’ interest in film production may have been one of the reasons he pacted with Disney, rather than A&M, which had the inside track as recently as late Tuesday. Both entities are distributed through Polygram Group Distribution. “Jay Faires has quietly built one of the most widely admired record companies in the industry,” said Roth. “His ability to find, groom and nurture musical talent is outstanding. Jay has proven himself as one of the next generation of leading music-industry executives.” Though an exec with considerable credibility among artists, the Faires nod will not likely deflect industry criticism aimed at Disney last month for recalling the album released by Insane Clown Posse because the disc contained offensive material. (Daily Variety, June 24). The band was eventually dropped by Hollywood and inked a new pact last week with Island Records. (Daily Variety, July 17). Based in Carrboro, N.C., with offices in New York, Los Angeles and London, Mammoth boasts a current roster of more than 25 artists, including Frente!, the Backsliders, Pure and Squirrel Nut Zippers, whose bow “Hot” has sold more than 530,000 copies since its release six months ago. Mammoth has a catalog of more than 100 albums that includes several compilations including MTV Buzz Bin and Southern Rock Country Style discs. Faires started Mammoth in 1988 and entered into a joint venture pact with Atlantic Records in 1995. He was made a label veep as part of the deal.