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Warner Music Chief Expected to Quit Today : Entertainment: Robert Morgado, under fire for restructuring, will reportedly be replaced by HBO's Michael Fuchs.

May 03, 1995|CHUCK PHILIPS | TIMES STAFF WRITER

Robert Morgado, the embattled chairman of Warner Music Group, is expected to resign today in the latest in a series of tumultuous corporate shake-ups at the world's biggest record conglomerate.

Sources said Tuesday that Michael Fuchs, chairman of Time Warner's HBO pay TV division, will expand his duties at the New York media giant, taking over immediately as head of the international music sector.

Morgado's policies have been under fire since July, when he initiated a controversial restructuring plan that forced the departure of several executives, including revered Warner Bros. Records executives Mo Ostin and Lenny Waronker. Ironically, Ostin and Waronker have been offered a new Warner label deal, sources have told The Times, though insiders are skeptical they would return.

Morgado could not be reached for comment late Tuesday, but sources attributed his sudden exit to the 51-year-old Warner chief's continuing stormy relations with key executives and major recording artists.

Sources said Morgado decided to resign after a brief meeting Tuesday afternoon with Time Warner Chairman Gerald Levin, who had met earlier with other top executives in the music division. The executives have complained about Morgado's interference in the conglomerate's most profitable division.

Despite the management turmoil in the company, Warner Music Group--which includes Warner Bros. Records, Elektra Entertainment and Atlantic--grossed a record $991 million in the first quarter of 1995 and is home to such stars as Madonna, Metallica and Snoop Doggy Dogg.

The appointment of Fuchs may put to rest rumors that the 48-year-old HBO chief plans to jump ship to run MCA, the entertainment conglomerate recently acquired by Seagram.

Fuchs joined HBO as a programming executive in 1976 and became chairman in 1984, playing a key role during the pay TV network's remarkable business growth.

As head of the music group, Fuchs is expected to lean heavily on the expertise of Doug Morris, chairman and CEO of Warner Music U.S., which dominates the domestic market with a 22% share. Sources speculated that Morris will eventually take on greater responsibilities in guiding the firm's international division.

Morgado has been viewed as an outsider since he came to Warner a decade ago from the political world, where he worked as a former chief of staff to New York Gov. Hugh L. Carey. He was promoted in 1990 to revamp the international music division after helping the company slash costs in its computer game sector.

Morgado locked horns with Ostin in 1990 when he insisted on direct oversight of Warner Bros. Records. Before that, Ostin operated with autonomy, reporting first to Time Warner Chairman Steven Ross and then to Levin after Ross died.

Tensions reached the boiling point in July when Morgado promoted Morris, formerly head of sister label Atlantic, to run Time Warner's U.S. music division--a move insiders said was orchestrated to pressure Ostin and other top executives to quit.

Elektra Entertainment chief Robert Krasnow quit the day after the new chain of command was announced, and within a month, Metallica filed a lawsuit to sever its decade-long association with the firm.

Morgado alienated Morris beginning in August, when he jeopardized the firm's relationship with Interscope Records, the successful label founded by Ted Field and Jimmy Iovine and part-owned by Warner. Morgado, while dragging his feet about increasing the Warner stake in Interscope, threatened to send cease-and-desist notices to executives at several record companies demanding that they stop approaching Interscope with buyout offers. The threat infuriated Iovine.

In October, Morris and 11 other angry executives staged an unprecedented insurrection that nearly paralyzed the world's largest record company. Ultimately, Morgado caved in to their demand that Morris be granted autonomy to run the North American operations. Levin reduced Morgado's powers to overseeing the record club and foreign sector.

Morris quickly appointed Danny Goldberg to run the Warner Bros. label and installed Sylvia Rhone and Seymour Stein to stabilize Elektra. He quickly settled the Metallica lawsuit and persuaded Levin to purchase an additional 25% of Interscope.

Sources said animosity escalated between Morgado and Morris in recent months and that changes are likely in the record club and international divisions.

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