Arista: Steep Losses...

[New York Times]

Chief Executive of Arista Resigns Amid Steep Losses

By LAURA M. HOLSON

Published: January 14, 2004

LOS ANGELES, Jan. 13 - Antonio Reid, the studio executive largely responsible for starting the careers of artists like Pink and Avril Lavigne, abruptly resigned on Tuesday from Arista Records, where he had been chief executive for nearly four years.

BMG, the global music division of the German conglomerate Bertelsmann, which owns Arista, said it had no plans to replace Mr. Reid and did not elaborate on his departure. But according to two music executives who have worked with Mr. Reid, steep financial losses at the label were a factor.

Mr. Reid, who is known as L.A., has a reputation as an executive with a deft eye for talent, having fostered the careers of stars like TLC and Toni Braxton. But he was also known as a big spender, giving musicians generous contracts and paying for lavish marketing campaigns and videos.

Mr. Reid did not return two calls to his office, and his assistant said he was out of the office.

The chief executive of BMG, Rolf Schmidt-Holtz, said little about the departure, issuing a terse statement that said of Mr. Reid: "His passion for working with and developing some of the world's best artists is unparalleled. I sincerely wish him the best of luck in all future endeavors."

Mr. Reid got his start as a producer in Los Angeles and in 1989 co-founded LaFace Records. He joined Arista in July 2000, succeeding Clive Davis, who now runs RCA Records and J Records, Arista's sister companies at BMG.

Mr. Reid's breakout year came in 2002, when he seemed untouchable with young stars like Pink and Ms. Lavigne, who eschewed the sugary pop of Britney Spears and ruled the music charts. Several Arista artists, including Usher and OutKast, won Grammy Awards for albums released that year.

But last year was trickier for Mr. Reid. According to two music executives who have worked with him, the losses at Arista last year were too large to dismiss. While OutKast remained a standout at Arista, earning six Grammy nominations, blockbuster hopefuls like Whitney Houston failed to ignite sales as projected. Her last album, "Just Whitney," entered the music charts at No. 9 in late 2002 and did not muster much interest in 2003. Nor did Pink's most recent release last fall, "Try This."

During the heady days of the music business, less-than-stellar performance might be overlooked. But with music sales faltering, music executives are beholden to more bottom-line-oriented corporate executives. Just last year, Thomas D. Mottola, the longtime chief executive of the Sony Music Group, left the company after that division suffered losses.

According to one person close to Arista, Mr. Schmidt-Holtz encouraged Mr. Reid to review costs, particularly in light of the proposed merger of BMG and Sony, which is being reviewed by European regulators. It is possible that Arista could be merged into another label to save costs, though one company executive said there were no imminent plans to do so.

It is unclear whether any of Arista's artists will also leave. But one music executive said several artists were shocked Mr. Reid was leaving and were upset that he would no longer be working with them.

NEWSFILE: 14 JANUARY 2004