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COMPANY TOWN | THE BIZ / CHUCK PHILIPS

Interscope Emerges as Star Act for Seagram

Label President Looks Back on Year After Merger, Discusses Industry's Future

December 14, 1999|CHUCK PHILIPS

Last week marked the one-year anniversary of Seagram's $10.4-billion purchase of PolyGram, which created the world's biggest record company and triggered the most brutal restructuring in the industry's history.

In Los Angeles alone, more than 100 artists and 300 employees got the ax as Seagram collapsed the anemic Geffen and A&M labels into Interscope Records, the controversial Westwood-based company founded by record producer Jimmy Iovine and financier Ted Field.

The messy task of executing the firings fell primarily to Tom Whalley, Interscope's press-shy president who landed his own job after being fired 10 years ago during a shake-up at a competing music firm.

"The process of closing the companies was a brutal thing. Horrible. Something I never want to go through again," Whalley said in his first-ever newspaper interview. "I know what it feels like to be fired. It's devastating. That's why I tried to handle it in as sensitive a way as possible. Did we handle every single situation perfectly? In hindsight, probably not. But we tried extremely hard to be fair. . . . Our goal was to forge something new here. And in that, I believe we totally succeeded."

A year after the acquisition, Interscope has emerged as Seagram's top domestic breadwinner, accounting for nearly one-third of the corporation's whopping 27% share of the U.S. music market, according to SoundScan. Competitors say that the post-merger Interscope Group's roster contains so many superstars that the label has a virtual stranglehold on radio and MTV.

The new Interscope has done little, however, to shed its image as an irresponsible upstart that profits from the sale of violent and sexually explicit rap and rock. Expletive-laced blockbusters by Eminem, Dr. Dre, Eve and Limp Bizkit were among the hits that have helped the label contribute an estimated $40 million in profit over the last six months to Seagram's bottom line, sources say.

And though Whalley and his bosses continue to be criticized inside and outside of the corporation for spending too much to promote acts, sources say the label is on track to meet its revenue projections for fiscal 2000. In fact, the post-merger Interscope Group, now named IGA, has sold 30% more albums this year than the three labels (Interscope, Geffen and A&M) did separately a year ago. IGA ranks as SoundScan's second best-selling label in the nation, behind Sony's Columbia Records.

"These guys are tough competitors," said Columbia Records Chairman Don Ienner. "It seems like we're always in a fight with Tom trying to sign some act. He's a real quiet guy, but look at how he runs that company. Just think about how much innovative talent this guy has signed over the years."

Whalley has been a behind-the-scenes force at Interscope since its 1989 launch, signing some of the company's biggest hit makers, including Tupac Shakur, Nine Inch Nails, Wallflowers, Limp Bizkit, Four Non Blondes and Smash Mouth. The 47-year-old executive is regarded as one of the most consistent discoverers of talent in the music business and has been involved with recordings that have sold an estimated 30 million copies.

A former schoolteacher, Whalley quit that profession 20 years ago to pursue a career in the music business. He started as clerk in the mail room at Warner Bros. Records and worked his way up to talent scout in the label's artist and repertoire division, where he worked with such critically acclaimed acts as the Blasters.

During the mid-1980s, Whalley joined Capitol Records, where he ran the talent division and signed such acts as Bonnie Raitt, Poison and Crowded House. On Whalley's watch, members of his artist and repertoire team also signed the Beastie Boys and Hammer, who ultimately delivered some of the company's biggest hits.

He was fired in 1989 during a Capitol regime change and had trouble landing a job until Raitt personally thanked him for believing in her during a nationally televised speech at the Grammy Awards show. The next day, Whalley was inundated with job offers--including one from financier Field, who wanted to hire him to discover bands for a new start-up label later to be known as Interscope.

By the time Whalley took the job, Field had already hired black music expert John McClain. Soon after, the trio linked up with Jimmy Iovine, a record producer who had been involved with such acts as John Lennon and Bruce Springsteen. The foursome struggled during their first few years, scoring sporadic hits with such teeny-bopper acts as Marky Mark.

It wasn't until McClain cut a deal with Death Row Records, a rap label run by Dr. Dre and his partner Marion "Suge" Knight, that Interscope began making any real noise in the music business. Death Row's gangsta rap quickly generated sales of about 25 million records for Interscope, but also caused tension with affiliate Time Warner after sparking protests from media watchdogs and political figures.

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