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From EMI’s perspective, how great is the value of Ames and Flom to Levy and Munns in a post-acquisition scenario?

I.B. BAD: THE JASON FLOM SAGA

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DUMB & DUMBER? Every one of the managers and attorneys queried since the August 16 ambush at LAX, when Lyor Cohen gave Jason Flom his walking papers, assert that this was the most incomprehensible move since clueless TW head Michael Fuchs moved on Doug Morris and Jimmy Iovine 10 years ago. While the decision to excise Atlantic’s lone beacon of pop/rock A&R expertise defies reason, as one major manager pointed out, it runs true to form for Cohen and Bronfman. Indeed, Flom was at the helm for the few hits Atlantic has come up with since Elektra was folded in, including Rob Thomas (950k), Simple Plan (1.2m), Staind (last week’s #1) and the Click Five (a Top 15 debut this week), helping to offset post-merger disappointments from urban acts Fabolous (527k), Missy Elliott (390k), Fat Joe (240k) and Tweet (155k). But the rock hits under Flom’s watch haven’t stopped the bleeding, as Atlantic’s post-merger marketshare has plummeted 3 ½ points to 4%. Most of these same managers and attorneys, who are well aware of the bad blood between Cohen and Tom Whalley, are wondering whether the Warner Bros. Records head will remain bulletproof in the midst of what appears to be an urbanization move at WMG. Whalley’s marketshare (6% and change) and bottom line continue to be strong, but success doesn’t seem to be the key to longevity at Warner Music... As soon as the deed was done, Flom became the industry's hottest free agent, Initially, the smart money was on a reunion with Doug Morris at UMG, with the mentor enabling the protégé to create a sort of Lava II. But Flom will have two other options: EMI Music toppers Alain Levy and David Munns are very interested, and Sony BMG topper Andy Lack has reportedly sent out feelers as well. EMI consultant Roger Ames is another big fan. Ames’ vision as then-head of WMG involved merging Elektra and Atlantic and putting Flom in charge of the combined operation. Ames believed he could manage Flom, maximizing his A&R skills while minimizing his administrative, marketing and promotion deficiencies. Was it Ames who put the bug in Levy’s ear?… All of this drama is taking place in the context of a potential acquisition of Warner Music by EMI. Conversations are said to be hot and heavy as representatives from EMI and primary WMG investor Thomas H. Lee Partners endeavor to arrive at a number that would make sense to both sides. Wall Street has caught the scent, pushing up WMG shares in the last three weeks to Monday’s closing price of $17, marking the first time the stock had reached the original IPO figure. Then, on Tuesday, shares shot up by 95 cents to close at $17.95, a 5.6% one-day jump. As these unacknowledged negotiations continue, Bronfman and Cohen have crossed agendas with Lee and company, because they assume that if the deal goes down, they’ll both be toast... Looking at the scenario from EMI’s perspective, how great is the value of Ames and Flom to Levy and Munns in a post-acquisition scenario?... Contemplating the factors that led up to the firing, Flom's fate was probably sealed by a series of events that started when Bronfman and Cohen began slashing overhead and firing staff, only to watch helplessly as Cohen brought in his IDJ sidekicks Julie Greenwald and Kevin Liles at inflated salaries. Flom, who considered Greenwald and Liles to be unnecessary baggage, made no secret of his displeasure. From that point on, things were not right between Cohen and Flom (if indeed they were ever kosher). Having deposited his $50 million check for selling Lava, Flom already had enough fuck-you money to no longer care, and his wealth, combined with his disgust at the deteriorating state of the label, apparently inhibited his competitive drive. Some insiders believe Flom became so discontented that he gave Edgar and Lyor no choice but to remove him... Atlantic’s new titular head is Craig Kallman, who was tapped only after Cohen shopped Flom's job to numerous execs and got no takers. But is Kallman being set up to take the next bullet?… What happened to Flom, and what may yet happen to Kallman and Whalley, could be seen as the Machiavellian moves of someone trying to stay three steps ahead of the game in order to ensure him a place in a post-merger world... Meanwhile, Flom doesn’t seem to be too worked up about either recent events or the weighing of future options. He spent a good part of last week in Pebble Beach playing in the Kelly-Baruck golf tournament and thinking about his next money putt... Names in the Rumor Mill: Eric Nicoli, Scott Sperling, Allen Grubman, Irving Azoff, Sylvia Rhone, Dr. Dre and Arnold Stiefel.

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