Cook to take over Polygram during merger
Ending a seven-year run at the helm of Polygram, Alain Levy stepped down Monday as the company’s prexy/CEO. The move is the first in a series of changes expected in the exec suites at the soon-to-be world’s largest music conglomerate in the wake of Seagram’s $10.26 billion merger of Polygram into its Universal Music Group.
Levy’s exit had been expected (Daily Variety, May 12) and clears the way for the ascension of Universal execs Doug Morris and Jorgen Larsen to worldwide chairman/CEO and chairman/CEO of UMG’s international operation, respectively. (Daily Variety, June 15).
Those nods may be announced today, but will not become effective until the sale is completed sometime in the fall and passes regulatory muster.
Until the sale closes, Polygram chief financial officer Jan Cook has been upped to CEO to help guide the company during the acquisition process. Analysts anticipate that more than 2,000 staffers eventually will be pinkslipped.
Unhappy at the top
The abrupt exit of Levy – it is unusual for a chief exec to exit in the middle of a merger – reflects his unhappiness at the way he was treated by execs at Polygram parent Philips Electronics who reportedly kept Levy out of the loop until a sale to Seagram was imminent.
Once the sale was close, sources said, Levy was also vocal internally against such a merger and tried to scotch the deal, at one point even refusing to let Universal execs review Polygram paperwork. A spokeswoman for Levy said the exec would not be available for comment.
Sources said Levy would exit with a low eight-figure severance package which included the remaining year on his contract. Industry insiders suggest Levy has already approached a competitor and could soon resurface. A spokeswoman said Levy was going to take some time off to consider his career options.
Credited with growth
The 51-year-old Levy is credited with growing Polygram, home to such artists as Hanson, U2 and opera tenor Andrea Bocelli, into a leading record company, though its international operation is widely viewed as being far stronger than its domestic one in the $40 billion music industry.
The conglom leads the big six in international sales by having anticipated the importance that building local repertoire would have on the bottom line, and by Levy’s mandate to aggressively cut costs.
Rather than relying heavily on Stateside acts to cross international borders, Levy, along with his European and Far East outpost chiefs, focused on indigenous artists.
The strategy, aided by Polygram Music Group worldwide president Roger Ames, paid off over the past 18 months as the conglom’s earnings were shored up by the hefty overseas sales tallies.
But the totals were adversely impacted by the downturn in the Asian economy and Levy’s expenditures in advancing Polygram’s film production and distribution interests, though the company posted a 17% rise in net sales in its 1997 fiscal year over the 1996 period.
“It has been a privilege to lead the world’s largest record company for the past seven years and more recently to have been involved with building the first major studio of the last half-century,” Levy said in a statement. “I want to thank the artists and the 12,000 people who work at Polygram.”
Ironically, just as Seagram CEO Edgar Bronfman Jr. is taking Universal from the basement to the attic by acquiring Polygram, Levy advanced Polygram’s position in the world music industry by buying market share through the acquisitions of A&M Records, which came before Levy was named to Polygram’s top spot but he was instrumental in the deal, Motown Records and Island Records.
But the execs running those outposts would eventually all leave the fold, often as a result of frequent clashes with Levy and Polygram management.
Many complained that Levy would interfere and/or second-guess their decisions and was not considered an artist-friendly exec, though several acts such as Mercury Records artist Jon Bon Jovi, cozied up to the chief exec.
Levy was also not known for giving most high-level execs large compensation packages, as is the case at some other labels, and often paid execs near the bottom of the industry pay scale.
Nonetheless, Philips chairman Cor Boonstra said in a statement, “We are grateful to Alain for his dedication and vision, and we are proud of the accomplishments that we obtained under his leadership.”