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[Billboard Article]

Davis, BMG Team On New Label - 'Instant Major Company' Hires Arista Vets, Debuts 4 Acts BY CHUCK TAYLOR

NEW YORK-The formation of Clive Davis' joint-venture label with BMG, J Records, amounts to a $170 million bet that in a time of rampant consolidation, a legendary executive with a great track record can pull off the difficult task of creating a successful label with a small number of debut acts.

J Records is a 50/50 private joint venture between the former Arista Records president and BMG Entertainment. Named for Davis' middle initial and that of many of his family members, the label is valued at around $170 million by an industry source, in terms of signings and the formation of a management team. Initial speculation had put the figure at a loftier $300 million. BMG president/CEO Strauss Zelnick notes, "We're not disclosing terms, but the figure represents the largest commitment ever made to a joint venture in the record business.

"We're in growth mode at BMG," Zelnick adds of the $4.7 billion entertainment arm of media giant Bertelsmann AG. "We're excited to invest in the record business, and who better to do so with than Clive Davis?" 

Boy band O-Town, the subject of ABC television's "Making The Band" along with debut artists Olivia, Alicia Keys, and Jimmy Cozier, are the first acts on J Records; initial releases are due in October.

For Davis-who founded Arista and helmed it for 25 years before being replaced in May by industry powerhouse Antonio "L.A." Reid-J Records represents a bold new chapter.

"My years at Arista were incredibly gratifying," Davis says. "I will always root for Arista and wish L.A. Reid the best. I very much want the company to succeed and grow. You don't participate in the foundation and naming of a company and not want it to succeed.

"My 50% equity in J Records makes the future a win/win situation for everybody," he adds. "We have incredible momentum from the start. BMG and Strauss made it abundantly clear from the beginning that we would create something unprecedented-an instant major company. Any new artist being competed for or important artists wanting to make a new association will want to compete in the finals with us."

Putting the money where his mouth is, Davis has established a team of executive players on virtually all sides of the game. Joining him at J is president/COO Charles Goldstuck, former executive VP/GM at Arista, as well as Arista veterans Richard Palmese as senior VP of promotion, Tom Corson as senior VP of worldwide marketing, Julie Swidler as senior VP of business and legal affairs, Keith Naftaly as senior VP of A&R, Peter Edge and Hosh Gureli as VPs of A&R, and Alan Newham as senior VP of finance and administration.

According to Davis, more staff announcements from outside the Arista camp will be made in the coming week. 

Zelnick stresses he will play no active role in running the label. He says, "BMG's role is as financier and worldwide distributor. We will have zero management involvement, except to the extent that we can be supportive."

He added that there is no language in the agreement regarding Davis' eventual successor, as there was at Arista. "Clive will make his own decisions about management and management succession," Zelnick says. 

The deal does not currently include BMG's involvement in publishing, Internet, or specialized promotional tasks, but according to Goldstuck, announcements will be forthcoming about possible ventures to establish support businesses.

"We will align ourselves with BMG's strategic marketing to take advantage of opportunities," Goldstuck says. "Even though we will operate as an independent company, we will have the full advantage of BMG's resources and will be working closely with them."

Goldstuck confirmed that a publishing venture will be developed "in the next few months. We expect that it will be associated with BMG." 

Other future ventures include divisions for soundtracks and for motion picture and television opportunities for artists. Talk of an umbrella company, Davis Entertainment, is unfounded, Davis says. "There's no such entity. That's something that the press came up with."

Davis will continue hands-on production involvement in future projects by Arista artists Whitney Houston and Carlos Santana, as well as participation in a joint venture with Reid in producing the next project for Monica. "This really shows the spirit of cooperation and working to the end objective of increasing market share," Davis says. In addition, he says, "it is certainly anticipated that we will be working with Next, LFO, Shannon Curfman, and Deborah Cox"-all of whom are currently signed with Arista.

Davis also refutes earlier press accounts that the new label had attempted to woo Mariah Carey and George Michael to its camp. "Those reports are erroneous. We have had no discussions with George and Mariah."



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