WARNER MUSIC GROUP ACCOUNTS FOR ITSELF

"Purchase-price accounting" is a term being heard frequently at Warner Music Group companies lately. The term refers to costs that can be written off against an acquisition—in this case, America Online’s purchase of Time Warner. According to insiders, the time limit on such writeoffs for AOL is running out, which for the music group means label heads are currently occupied with some weighty decisions.

The brass has served notice that any executive, artist or joint-venture deals requiring re-evaluation should be dealt with before the end of the year, while the cost of buying out any such deals out can still be written off. This has led to a great deal of chatter, most of it baseless, as to whom and what Roger Ames and his lieutenants may be readying to jettison.

Some deals already wrapped up include Irving Azoff’s Giant, Quincy Jones’ Qwest and David Foster’s 143 Records. And with the London/Sire and Tommy Boy ventures said to be next in line, many are wondering what other deals are really under review.

Among those not being eyed for a buyout, insiders say, is Maverick. Despite rampant rumors to the contrary, no major restructuring of the label is said to be imminent. Similarly, recently resuscitated rumors of an Atlantic-Elektra merger appear, once again, to be nothing but smoke. (It’s worth noting that Elektra’s business is up significantly this year.)

WMG labels have been steadily improving their chart presence, with P.O.D. (Atlantic), Staind (Flip/Elektra), Linkin Park (Warner Bros.) and Enya (Reprise) still in the Top 25 and a recent Top 10 debut for Fabolous (Elektra) and solid sales for Missy Elliott (Elektra) further shoring things up. And with the Harry Potter ST selling and new albums from Jewel (Atlantic) and Kid Rock (Atlantic) coming, along with a Madonna greatest hits package (Warner Bros.), that trend is likely to continue.

As WMG continues to streamline its operations, industry eyes will be focused on what moves liberated players—including Seymour Stein, Peter Koepke, Tommy Silverman and Jason Flom, with whom Atlantic is negotiating to buy the rest of Lava—will make next. What new plays will emerge from the old?