Ames revamps exex as AOL orders cuts

There's a great sense of loss, sez Warner insider

The Roger Ames era at the Warner Music Group is taking shape amid the specter of an AOL-ordered reduction in staff.

The two worlds began colliding last week as Warner Bros. Records chairman Russ Thyret and financial chief Jerome Gold officially ankled from their positions.

They will be replaced by Interscope Records chief Tom Whalley and Helen Murphy of Martha Stewart Living Omnimedia, respectively.

Interscope is making Whalley stay until his contract is up, meaning he won’t set foot in the Burbank offices until January. Warner Bros. Records president Phil Quartararo will run the show until then.

Thyret’s departure is the latest in a line of upheavals at the top of Warner Music since the late 1994 departure of Mo Ostin and Lenny Waronker, the two men who kept Warner Bros. at or near the top of the music business for more than a decade.

Retirement plans

The Warner Bros. that Whalley will enter, however, will consist of a considerably smaller staff, as the music group goes through an “early retirement”/layoff phase that will reduce the workforce between 5% and 10%. A minimum of 600 jobs will be sliced from the Warner Music Group, which consists of Warner Bros., Reprise, Atlantic, Elektra, Sire, Giant, Maverick and their subsidiaries.

Warner Music began circulating an early-retirement plan in late January to employees with at least a decade of service who are not under contract and at least 50 years old. Cuts are expected to be deeper at Warner Bros. Records, where about 40 people were offered the deal, and at Reprise, where the number of executives eligible for the plan is greater than at Atlantic or Elektra.

Bob Merlis, senior VP of communications and a 27-year vet of Warners, will in all likelihood be among the first to ankle; Carl Scott and Larry Butler, the top two execs in the artist relations department, are expected to follow suit.

Those who were offered the retirement plan have been given until March 12 to accept or reject it; some employees are bracing for a St. Patrick’s Day massacre, especially if the head count hasn’t reached the preordained level.

Others don’t think pinkslips will arrive until April — and there are many speculating that Howie Klein, the president of Reprise Records, won’t be around after the cuts either.

Scanning the competish

“It’s about the SoundScan numbers,” one Warner exec says, lamenting the lack of megahits within the WMG family. Warner Music had 11 albums in SoundScan’s top 100 for the week ended Feb. 24 and a market share of 15.6% last year, which put it in third place among the five major music distributors.

Warners has long had a reputation as an artist-friendly environment, and the label has benefited from lengthy associations with the likes of Madonna, R.E.M., Eric Clapton and Paul Simon.

Current stars include Faith Hill and newcomers Linkin Park, but in the era of mega-selling acts such as Backstreet Boys and ‘N Sync, the labels don’t feel satiated unless they have a disc such as Alanis Morissette’s “Jagged Little Pill” actively climbing toward eight digits in sales.

From the top

Former Polygram topper Ames clearly believes change begins at the top and has been bringing in his own management team one person at a time, title in place, with little regard to public appearance.

Whalley’s hiring, for example, was leaked to the media before Thyret, a 30-year veteran of Warner Music, was informed he would be replaced.

Murphy has close ties to Ames from her nine-year tenure at Polygram Holding, when Ames ran Polygram Music during the late ’90s. Murphy began her stint at Polygram in 1990 in the investor relations department and worked her way up to financial chief of the music giant.

“Clearly he has to assemble a team he feels comfortable with,” a Warners insider says. “But regardless of how anyone feels about another individual’s management style, there’s a great sense of loss when somebody is let go who has given 20 or more years to a company.”

Murphy will oversee finance, human resources, business development, information technology and real estate operations for Warner Music Group. She will also help Warner Music integrate itself into the mammoth AOL Time Warner multimedia machine.

Several Warners execs say privately that they no longer feel any outside pressure from the AOL side. Instead, they believe that Warner Music has being given space to right its own course.

One of its first moves has been an attempt to purchase the non-Warners half of Giant to make them a wholly owned label. It will continue to own half of Maverick Records, which has had its fair share of successes; Giant, on the other hand, has been far less visible on the top of the charts, though it does boast Grammy champs Steely Dan on its roster.

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