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A & M Records Closes; Geffen Lays Off 110

Jobs: Seagram's actions end an era and underscore changes in the music business.

January 22, 1999|ROBERT HILBURN and GEOFF BOUCHER and CHUCK PHILIPS | TIMES STAFF WRITERS

After 37 years of spinning out hits by such acts as Cat Stevens, the Police and Sheryl Crow, A & M Records closed its doors Thursday--firing nearly 170 employees who were given the day to pack and leave.

Artists and executives hugged in the parking lot as weeping employees carried boxes of personal belongings to their cars. Above them, the A & M sign was draped with a black band and the flag flew at half staff, to commemorate, fired workers said, the death of the historic Hollywood record label.

Those fired at A & M were among nearly 500 employees cut in Los Angeles and New York by Seagram Co. as part of a massive restructuring that will eliminate thousands of music industry jobs worldwide. Two miles down the road, Geffen Record employees stripped the walls of gold records and carried boxes down Sunset Boulevard past the label's headquarters after being notified that they too no longer had jobs. About 110 Geffen employees were fired.

Signaling an end to an era in the Los Angeles music scene, the layoffs underscore the changing economics and direction of the music business as Seagram, which recently completed its $10.4-billion acquisition of PolyGram, combines two of the world's biggest record conglomerates.

At their peaks, A & M and Geffen represented the commercial and artistic potential of independent labels, which have been the proving ground for scores of musicians whose talents and vision did not fit into more mainstream labels.

But both labels began losing autonomy after they were bought up during the last decade by conglomerates PolyGram and MCA.

Changes Alarm Some Critics

Some industry critics are alarmed at the changes. With power concentrated in fewer and fewer hands, the danger, they fear, is that there will be no room left for the independent spirit that helped build such legendary independent labels as Atlantic, Motown, Island, A & M and Geffen. Among the artists launched by A & M and Geffen alone: Cat Stevens, the Police, Nirvana, the Carpenters, Joe Cocker, Beck and Guns 'N Roses.

"This isn't about Universal or Seagram," said A & M chief Al Cafaro, who also was fired. "The record business is changing fundamentally. Don't think that there are calm seas on the other side of this threshold. If the quake that devoured A & M and Geffen is a 6.0 on the Richter scale, there is a 7.0 coming in this industry. It's a Wall Street world now. Get ready."

Sources say Seagram is considering selling the A & M lot--which houses film star Charlie Chaplin's former sound stage--and the Geffen Records' headquarters--a converted group of houses once owned by songwriter Hoagy Carmichael.

Executives at Seagram's Universal Music Group say that A & M and Geffen will be folded into Interscope Records to form IGA--one of four large music groups made up of consolidated labels acquired in Seagram's purchase of PolyGram. About 200 employees were laid off Thursday at the New York-based Motown, Mercury and Island labels. About 250 artists will also be dropped over the next few months, sources said.

Universal executives say they intend to preserve the individual identities of the downsized labels as they fold them into larger groups, but the handful of A & M and Geffen employees who survived the blood bath were skeptical.

A & M, Geffen, Motown, Mercury and Island all have performed poorly in recent years, producing few hits and often operating in the red. Some label employees kept on by Seagram privately acknowledged that the downsizing was merited. Several workers who lost their jobs even praised Seagram's handling of the layoffs, saying the company had offered them generous severance packages.

"While change is always difficult, the restructuring of the labels is necessary for us to be more competitive, develop artists' careers and pave the way for meaningful growth," Universal Music Group said in a statement.

Seagram expects to produce $300 million in savings annually by consolidating the companies. Analysts suggest that the restructuring will provide Universal with unparalleled economies of scale guaranteed to boost operating margins and position the conglomerate for strong earnings growth over the next three years.

But that's little consolation to record label employees who were issued pink slips Thursday morning.

At A & M, employees wore baseball caps embroidered with the slogan "The Last of the Lot" as they gathered for a 9:30 a.m. meeting inside the Charlie Chaplin sound stage to hear the news. Sheryl Crow and Soundgarden's Chris Cornell stopped by the lot to trade war stories with tearful employees in the afternoon. Before the day was over, Universal officials ordered A & M to remove the black band that employees had draped around the company's famed trumpet overlooking the label's La Brea Avenue entrance.

While A & M and Geffen will live on in name, the gutting of their enterprises effectively ends their history as independent upstarts.

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