Maverick Files Suit Against WMG

Indies Eyeing New Trade Group

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Reprinted with permission from Hits Magazine

March 26, 2004

As expected, Maverick Records filed a lawsuit in L.A. Superior Court yesterday against the Warner Music Group, the latest move in an ongoing dispute about the value of the 60% of the label owned by partners Madonna, Guy Oseary and Ronnie Dashev.

WMG has an option to buy that share when its agreement with Maverick runs out on Dec. 31.

Maverick claims that WMG "repeatedly and willfully" breached its 1992 joint-venture pact, which was amended in 1999, alleging the label had to spend $30 million on promotion, publicity, new media, sales and marketing expenses that WMG was required to pay under the pact.

The suit charges Warner with "sacrificing the interests of the partnership and its partners for defendants' own selfish financial interests, attempting to induce one of their partners to betray the interests of his other partners and secretly attempting to seize the partnership opportunities for their own benefit."

It also alleges that WMG provided improper and inaccurate accountings of revenues, and that revenues derived from the sale of Maverick's properties within the Time-Warner family were not computed properly.

Among the other charges:

*Maverick was forced to shut down its Latin-music division and lay off its in-house promotion staff.

*WMG refused to allow the label to sign an artist who later pacted and was successful with Atlantic.

*WMG coerced them into settling a lawsuit with label artist Michele Branch to keep her manager happy, because the manager represents other Warner Music artists.

*$250,000 purportedly used for promotion of a single from Maverick's Rugrats soundtrack was spent by Warner Bros. "in a dubious and suspicious manner."

*WMG chairman/CEO Roger Ames "engaged in a pattern of false promises andmisrepresentations of fact" to effect changes in the joint venture, and that WMG sought to convince Oseary to back off pressing the issues raised in the suit with the promise of a new and separate contract.

Maverick's suit seeks actual, compensatory and punitive damages to be determined; an accounting; and a declaration that the label has the right to terminate the venture.

Noted celebrity attorney Bert Fields, who is representing the company in its action, estimated the total at more than $200 million.

"They feel that they have not been accounted to properly,'' Fields said. "They want fair accounting and they want damages for their losses.''

And while WMG was quick to rush out a statement that this dispute had nothing to do with its relationship with Madonna (see Rumor Mill), Fields wasn't so sure.

"It's a very strange way to make your most important artist happy," he told the N.Y. Daily News.

The suit came a day after Warner filed a sealed lawsuit in Delaware, asking the court to affirm that Maverick's claims are baseless.

Maverick asserts in the lawsuit that the label has generated more than $900 million in sales and profits of more than $100 million for Warner Music Group since the label was formed in 1992.

HITS magazine is the most powerful information vehicle in the music industry, and is read religiously by all the top executives and everyone else.

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Reprinted with permission from Hits Magazine

March 30, 2004

There's soon going to be a new way for indies' exposure.

Plans are being made by executives from more than 150 independent labels to form a new trade group, called American Music Independents. Meetings are scheduled for April in both New York and Los Angeles, to nail down the details. The basis framework has already been worked out, according to press reports. British trade groups the Association of Independent Music (AIM) and Impala have been advising the new trade group.

Independent labels have a combined marketshare of around 20% in the U.S., commanding $2.5 billion in sales, according to the Financial Times. The paper notes that indies have a 30% marketshare of online music.

AIM chairman/Impapla VP Alison Wenham said: "We have met with record companies, and we are actively encouraging and facilitating the collective will that is required to create a trade body to represent the independents of America. And if I could be any more elusive, I'd run for office."

The American Music Independents would be a complementary to the RIAA, but could be more aggressive in negotiating broadcasting rights and fighting for indies against the Big Five. Impala, for instance, has vocally opposed the Sony-BMG merger.

An anonymous person close to the talks and quoted by FT said: "It's about ensuring the market access for small and medium-sized labels; they have a different business model to the multinationals."

HITS magazine is the most powerful information vehicle in the music industry, and is read religiously by all the top executives and everyone else.

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By Kenny Kerner

Fantasy Records, home of Creedence Clearwater Revival as well as many other jazz and soul greats, is being sold by label owner Saul Zaentz. Asking price is believed to be about $100 million but insiders say it'll go for $65-$85 million.

Clear Channel Communications recently pulled the radio plug on DJ Howard Stern for allegedly violating the station's new indecency policy. Apparently, some of the segments of Stern's talk show contained dialogue that many deemed to be racist or sexist or both.

Dave Matthews Band resigned with RCA Records but remains a free agent in territories outside of the United States... Sixpence None The Richer has called it quits after a decade together... The Beastie Boys (remember them?) are in the studio finishing up their latest effort for Capitol Records. The new CD, set for a June 15th release, will be their first in almost six years.

Are you counting the heads rolling at the newly restructured Warner Music Group? Over 10 years ago I predicted that one day the industry would be thousands of small labels with a handful of artists each. We're almost there, folks!

Ozzfest 2004 will include Ozzy Osbourne, Judas Priest (yes, with Rob Halford), Slipknot and Slayer as headliners on Stage 1. Don't expect any power ballads. Tour begins July 10th and ends September 4th and should be one of the more successful tour of the summer.

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