NEW YORK — Ex-BMG Entertainment chief exec Strauss Zelnick has apparently found an unlikely new home at Japanese entertainment concern Nippon Columbia.
Company announced it has hired Zelnick to be chairman of its recorded music operations as part of a plan, financed in part by U.S. investment firm Ripplewood Holdings, to restructure and revitalize its businesses.
Under the terms of the deal, Nippon Columbia will sell substantially all of its Denon home electronics unit to Ripplewood for about $50 million and give the firm a 42% stake in its music business, also called Nippon Columbia, in return for just over $41 million.
Zelnick’s plans for revitalizing Nippon Columbia’s waning music imprint after the split are less clear, but the first order of business is expected to be the divestiture of ancillary businesses and beefing up the company’s artist roster.
Nippon Columbia’s stable consists mainly of such Japanese pop artists as Hiro:n and PaniCrew, but the label also has a Japanese distribution contract with Warner imprint 4AD, whose catalog includes the Breeders, Throwing Muses and the Pixies.
Company itself said only that it will prepare a plan “as soon as possible, one that focuses on the core business and continues to strengthen the financial base of the company.”
Zelnick has experience in lifting the fates of stagnant music companies: On his six-year watch at BMG, the big-five record label’s market share rose from 12% to nearly 20%. Zelnick ankled his position at BMG last October amid reported tensions with the leadership of its German parent Bertelsmann.
But according to one source close to the situation, it’s less clear how the new position can benefit Zelnick, particularly while he’s in the midst of trying to start up Gotham-based entertainment firm ZelnickMedia.
“I’d be surprised if he was actually hired as a hands-on chairman,” the source said. “They’re probably paying him some nice consulting money that could help him pay down overhead for his new company, but if there’s a backdoor way to get into the U.S. market, this isn’t the best one.”
Nippon Columbia didn’t disclose whether Zelnick or his company had taken an equity stake in the Japanese label as part of the deal. The exec was in Japan on Thursday and unavailable for comment.
Zelnick has a broad base of experience in the entertainment industry. Prior to his tenure at BMG, he held top exec spots at 20th Century Fox, Columbia Pictures, Vestron and entertainment software maker Crystal Dynamics.
Exec formed ZelnickMedia shortly after his BMG departure with an eye toward building a new-media empire from the ground up through investments. So far, however, the company’s only publicly announced stake is in music-streaming Netco Echo Networks, of which Zelnick is a board member.