Just Like That, WMG Files for IPO

Tommy Lee's New Crue: Handleman

Bono Lectures Bigwigs During Rock Hall Ceremony

Bulletin Board

Reprinted with permission from Hits Magazine

March 11, 2005

Whoa, that was quick. Warner Music Group filed for an initial public offering with the SEC Friday morning.

It was apparent that Chairman/CEO Edgar Bronfman Jr. and his investment partners were eager to get the IPO rolling; on Monday, The N.Y. Post said WMG would likely file registration forms this week, and that the IPO itself (i.e., the actual sale of stock) could happen within 60 days. The Post was right.

WMG, which hopes to raise $750 million from the IPO, didn't reveal any details in the filing, so it remains to be seen how many shares will be sold or the estimated price per share. Neither was it made clear wherther the stock will trade on the NYSE or Nasdaq, or what the stock symbol would be.

Bronfman, Thomas Lee and co. have been spinning Wall Street in anticipation of the offering, pointing to a 2% gain in revenue for the 10 months through Sept. 30, as well as $250 million in overhead cuts made ahead of schedule. WMG posted a profit of $36 million, compared to a loss of $1.15 billion a year earlier, more than $1b of which was due to impairment charges. But revenue for the company's fiscal first quarter, which ended Dec. 31 and included the critical holiday run, was down 7.9% from the same period a year earlier to $1.09 billion, from $1.18 billion, according to documents submitted to the SEC, even as WMG's marketshare continues to shrink.

You might expect a major windfall for WMG's principals, but as we reported earlier this week, sources say that all WMG employees, including Bronfman and Lyor Cohen, will have to hold their shares for up to four years before cashing out. Said principals declined to comment to Reuters about the IPO, citing the required quiet period.

WMG said in the filing that it plans to use proceeds from the offering to repay debt and for general corporate purposes.

As expected, Goldman Sachs and Morgan Stanley will be the lead underwriters for the IPO, with Lehman Brothers, Merrill Lynch, Deutsche Bank, Bank of America and Citigroup also ponying up, according to the filing.

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 16, 2005

Tommy Lee likes to shake up the status quo. Just a week after forever altering Billboard's staid image by pouring shots of Jack down the gullet of Co-Executive Editor Tamara Coniff—an historic event indelibly captured in the pages of the N.Y. Daily News—the free-thinking Motley Crue drummer has announced that he'll forego the major label system altogether with his upcoming solo album. Instead, Lee will have the Handleman Company exclusively handle its distribution. The album, Tommyland: The Ride, is scheduled to come out in August.

Sanctuary Management CEO Carl Stubner, who manages Lee, had a hand in hammering out the novel distribution concept, which could conceivably start a trend if it proves viable in this high-profile case. Will we see a day when a sizable number of established artists eschew the major label system for alternative means of getting to the marketplace? Who knows? We're just a bunch of music-trade slugs.

"From the very beginning, I wanted to do something different with this record, something groundbreaking," Lee said in the press release, issued Wednesday morning by the distributor. "I wanted to get great new music to my fans without charging them 15 or 16 bucks for a CD. And Handleman is helping me do that, so I couldn't be happier."

The Troy, Michigan-based distributor will partner with a third-party sales-consultant firm Rocket Science LLC to handle solicitation, retail marketing and account interaction activities.

Said Chairman/CEO Stephen Strome, "This initiative is an example of how Handleman Company can add value to the music supply chain. Given our high-quality people, systems and experience, we are confident this relationship will be beneficial for everyone involved, including consumers, retailers, Tommy Lee and Handleman Company."

According to Handleman, the direct relationship will streamline the supply chain and allow the album to be priced relatively low while still enabling retailers to achieve a fair profit margin. The deal marks the first time that Lee will release an album without using the traditional major label infrastructure, and the first time that Handleman will act as the sole distributor for a major recording artist.

Tommyland: The Ride, Lee's third solo recording, will be released in conjunction with his new NBC reality show, Tommy Lee Goes to College. The album features guest appearances by Nickelback's Chad Kroeger, Carl Bell of Fuel, Deryck Whibley of Sum 41, Good Charlotte's Joel Madden and Backstreet Boy Nick Carter.

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 15, 2005

One way for the Rock and Roll Hall of Fame to make sure it has a compelling awards ceremony is to induct an artist who's still at the peak of his powers. Just as last year's show was kicked up a notch by Prince, Monday night's ceremony was energized by the presence of U2, which can still stake a claim as the best band in the world at the beginning of its second quarter century.

The show climaxed not with the traditional all-star jam (which tends to be more fun for the participants than for viewers) but with U2 blazing away on "Pride (In the Name of Love)," "I Still Haven't Found What I'm Looking For" (with Bruce Springsteen joining them) and "Vertigo," which turned the industry crowd into unselfconscious fans.

Springsteen began his speech honoring U2 with the familiar chant, "Uno, dos, tres, catorce," quoting Bono's countoff at the start of "Vertigo." "The translation is 'one, two, three, fourteen,'" Bruce pointed out. "That is the correct math for rock & roll. The whole had better equal a lot more than the sum of its parts—or else you're just rubbing two sticks together." Springsteen also called the band "keepers of some of the most beautiful sonic architecture in rock & roll."

In his speech, Bono admonished the bigwigs in the audience, telling them that they need to reinvent the way the operate if they want to survive and pointing out that U2, Springsteen and Neil Young would have been uncerermoniously dropped well before achieving greatness if they'd come along in recent years. "There would be no U2 the way things are now—that's a fact," he said. Later, during the band's performance, Bono went into the audience and grabbed glasses of champagne off the tables, but he somehow resisted the temptation to douse the record execs he'd lectured, flinging the champagne at his fellow bandmembers instead.

The colorful old record biz was represented by inductees Seymour Stein and archetypal booking agent Frank Barsalona, who was inducted, fittingly, by Sopranos gangsters Miami Steve Van Zandt and James Gandolfini. Van Zandt, wearing his Silvio Dante wig for the occasion, quipped that Barsalona changed the business by "replacing the old thieves with young thieves."

In another perfect old-school moment, Mariah Carey dropped by Tommy Mottola's table to to plant a kiss on her surprised former hubby. You gotta love it.

U2 wasn't the only band to set off fireworks during the ceremony. A still-vibrant Chrissie Hynde and her longtime band the Pretenders were joined by Young on a shredding performance of "My City Was Gone."

Said Young of the Pretenders, "They went through all the heartache that rock & roll is built on—they lost two bandmembers and they never gave up." Hynde honored two of the original members who succumbed to fatal drug overdoses after the band's first two albums. "We are a tribute band," she said. "We're paying tribute to James Honeyman-Scott and Pete Farndon, without whom we would not have been here."

Also inducted were Philly soul progenitors the O'Jays (who were inducted, for some reason, by Justin Timberlake), Alabama soul man Percy Sledge and blues legend Buddy Guy, every one of whom still had a spring in his step. Rod Stewart called Sledge's indelible vocal on the 1966 classic "When a Man Loves a Woman" "one of the best performances I've ever heard and I'm sure you've ever heard."

VH1 will broadcast a two-hour edit of the ceremony Saturday night, so set your TiVos. This is one music special we all need to watch.

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

Sugar Ray will release a greatest hits CD in June on Atlantic... Bruce Springsteen's 19th album, Devils & Dust, is out now on Columbia. CD was produced by Brendan O' Brien... Barbra Streisand and Barry Gibb are back in the studio recording. Session is to celebrate the 25th anniversary of their Number One hit, "Guilty."

Ludacris will co-star in the MTV/Paramount Pictures comedy, Skip Day, where he portrays a high school student who plans a day for everyone to skip class. He will also contribute material to the soundtrack.

According to Missy Elliott, "Today, I think the music industry is so gimmicky. Record labels are more caught up in trying to get clones of successful artists instead of looking for something unique." Hey, Missy, before you start talking about gimmicky, take a look at your own TV reality show!

The new 50 Cent CD, Massacre, is out and has exploded. Look for this one to do far better than his multi-platinum debut... Citing better licensing agreements and more foreign distribution, ASCAP says its member royalty distribution reached $610 million in 2004. This marked a 14.5% increase in royalty payments.

Cream is reuniting and is currently in rehearsals for a limited series of shows... Bret Michaels, former Poison frontman who turned in his rock shoes for a country hat is getting lots of exposure on radio and on Nashville Star, but is still finding that first monster hit a bit elusive.

Finally, all of the industry awards shows are over. How about a show giving out awards for the best awards show? How'd they miss that one??? See you all next month.

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