In the first of what is expected to be several phases of exec layoffs and artists being jettisoned, Universal Music Group brass is expected to announce the firing of around 500 employees across all strata of the conglom today.
The move comes as UMG execs try to downsize the world’s biggest music operation with more manageable numbers of artists and execs, while also eliminating redundant job functions and reducing operating costs.
In a scenario that will be duplicated at label offices on both coasts, many of the conglom’s senior execs and staffers will not find out their fate until this morning. UMG is expected to confirm the layoffs but not reveal the number of execs losing jobs at each label.
More than 3,000 employees in the conglom’s worldwide operation are expected to be laid off when all the trimming — which is expected to come in two groups of significant cuts — is completed. The larger cuts will then be followed by several smaller staff reductions over the next seven months.
The next substantial wave of exec cuts is expected next week and will likely center on the conglom’s sales and distribution operation as brass endeavors to turn the $10.4 billion purchase of Polygram into four major Stateside music groups and an efficient marketer of music.
UMG execs gathered in L.A. last week to showcase their upcoming releases and prepare for the massive reorganization.
The restructuring is expected to come at a price: It will likely result in the initial thinning of UMG’s market share — which currently hovers at 25% — as fewer albums are released.
Bottom line drops
The financial hit from paying $150 million to $200 million in payouts to artists and execs who have time left on their respective contracts will also take its toll on the bottom line and likely mitigate the expected $300 million in initial overhead savings.
On the West Coast, UMG will fold Interscope, Geffen and A&M Records into one music group — dubbed IGA — with 290 of the 345 employees of the latter two labels being let go.
Around 140 of the 205 artists across the three labels are expected to eventually be jettisoned, though the acts are expected to be cut gradually over several months.
Label prexy Bill Bennett and A&R chief David Simone are expected to be among the Geffen casualties, along with A&M Records CEO Al Cafaro.
Many A&M and Geffen execs met recently with Interscope co-chief Ted Field and label prexy Tom Whalley to learn the shape of the new label group under their — and co-CEO Jimmy Iovine’s — leadership.
In the East, the Mel Lewinter-led Universal Records will add Motown to its ranks and initially eliminate around 65 jobs to create a staff of around 10.
The future of Motown chairman Clarence Avant has not yet been resolved, though prexy George Jackson will be cut from the ranks as the reins of the label have been handed to Kedar Massenburg.
Mercury Records — topped by Jim Caparro (who replaced Danny Goldberg) and John Reid — will lose more than half of its 150 staffers and two-thirds of its 145 artists as it is merged with Island and Def Jam to create the Mercury-Island Group, the second Gotham-based label group.
Island will lose around half its 100 employees and chairman Davit Sigerson, while Def Jam will not be impacted by any cuts as chiefs Russell Simmons and Lyor Cohen negotiate to sell the outstanding 40% of the company to UMG.
MCA Records will remain intact under prexy Jay Boberg and second-in-command Abbey Konowitch, while MCA Music Publishing will continue to be run by chief David Renzer and will absorb the Polygram operation.
Poly publishing chief David Hochman recently learned his fate by being shown a corporate flow chart that didn’t have his name on it, and domestic publishing chief Nick Gatfield, who also topped Polydor Records, has been pink-slipped.
Polygram Music prexy Roger Ames will not be part of UMG, though UMG still owns half of his London Records in the U.S.