There's no business like show business.
Just ask MCA Records President Irving Azoff, who has been the central figure in a stunning industry merger in which MCA would pay Azoff MCA stock worth more than $15 million to acquire his interests in three entertainment firms: Front Line Management, Full Moon Records and Facilities Merchandising Inc.
The money involved is considerable. In total, as reported in The Times last week, MCA has paid about $24.7 million for the three companies, a figure that several industry sources speculated was a generous assessment of the companies' value. But what has made the transaction a major issue in record business circles is the potential conflicts of interest in the acquisitions.
Here are a couple of intriguing examples:
Every time a record is sold by the rock group Chicago, which is signed to Full Moon Records, part of the profits go to Warner Bros. Records, which distributes Full Moon, while another percentage goes to MCA, which now owns Full Moon and manages the band.
If singer Jimmy Buffett, who is signed to MCA Records, wants to make an expensive new video, the decision would be resolved by his management, Front Line, and his record label, MCA, which are both under the same ownership.
And when longtime Azoff management client Don Henley's contract is up at Geffen Records, wouldn't MCA (which owns his management contract) have an unfair advantage in negotiating his new record contract?
Several top industry managers, most of whom declined to be quoted by name, expressed grave concerns about the move. "This really opens the door for a lot of potential problems," said Cliff Burnstein, who manages Def Leppard, Dokken and other leading heavy-metal acts. "How can Front Line have autonomy from MCA if the company is owned by MCA--and even owns stock in MCA?
"It's inevitable that artists and record labels have competing interests on matters like tour support and royalty rates. A manager sometimes has to fight the record company for his artist's goals. But if you're at Front Line, how are you supposed to fight for your client? It's an awkward situation, because you're essentially negotiating with yourself. If you say, 'We disagree and we're going to walk,' where are you going to walk to?"
Burnstein added that many fledgling managers might be unwilling to sign acts with MCA for fear of eventually losing artists to MCA management. "What if you're based in Rochester and the band is out in L.A., recording an album? Isn't it going to make you nervous that the band could suddenly see MCA as a more attractive management opportunity?"
Other managers had mixed feelings as well. "You have to marvel at Azoff pulling off such a master stroke," one leading manager said. "But you do have to wonder about the artists on MCA that have outside management. Aren't they going to feel as if MCA acts with MCA management ties are getting preferential treatment?"
Another manager added: "Think of the paranoia on the part of people at other record companies. Now they have an employee at a rival company involved with their own artists' careers. For a record company to have considerable control over a management firm is a potentially dangerous situation."
Azoff heatedly disputed these charges, saying that most of the complaints "are unfair and due to jealousy on the part of anti-MCA people."
He added: "Everyone is being very small-minded about this. Just go and check out the antitrust laws. MCA has a perfect right to be in the personal management business. MCA Inc. owns a big piece of Cineplex Odeon (a major theater chain). Does that mean MCA films shouldn't play there? There are just a lot of crybabies out there. People go from one side of the table to the other all the time. Wake up--that's the way the entertainment business works today.
"Look at CBS. Is it a conflict for CBS Records to be under the same roof as CBS Radio, which plays its artists? If (CBS Records Group president) Walter Yetnikoff wants to manage Patti LaBelle (who's signed to MCA), I'd be happy to deal with him. It's very 'in' right now to look for negative things at this record company, which has been the victim of a media witch hunt led by the L.A. Times." (Azoff was alluding to Times articles on MCA's links with alleged underworld figure Salvatore Pisello.)
Azoff insisted that MCA staffers are "thoroughly professional" and would treat all artists equally, regardless of their management ties. "You'd have to have a very narrow view of the industry to think that people here wouldn't do their best for every artist here. Anyway, the record deals now are controlled by attorneys. Artists have a lot of qualified people giving them advice. So when Jimmy Buffett's contract at MCA comes to an end, his attorney will call the shots about whether he stays here, not me or anyone else."
However, manager Mike Gormley, whose group Oingo Boingo is signed to MCA, isn't as critical of the label's new management links. "MCA has busted its butt for Oingo Boingo and I don't see any reason for that to change," he said. "The band and I have a strong relationship and I can't imagine any temptation existing for them to be influenced by any events at MCA. This kind of situation has existed before, when Motown used to manage artists that were signed to its label, and there's no reason why it couldn't be done again."
Azoff wouldn't discuss any details of the $24.7-million price tag on the acquisition of his companies, except to say "I'm sure it's going to be a great buy for MCA stockholders."