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REID READY TO CLIMB ABOARD
Arista Throne To Have New Occupant
As Davis Ponders Next Move

April 3, 2000

By Marc Pollack

Prominent music executive Antonio "L.A." Reid is expected to be named President of Arista Records imminently, ending months of speculation as to the future of the highly successful label and its founder, Clive Davis.

The appointment of Reid to the top spot at Arista, home to such artists as Santana, Whitney Houston, LFO, Sarah McLachlan, Aretha Franklin and Kenny G, as well as joint ventures with Puffy Combs' Bad Boy Entertainment and LaFace Records, could come as soon as this week, sources said.

Reid, who has already had closed-door meetings with the artists who make up Arista's roster and some of the company's existing staff, is said to already have his head of Business Affairs and Chief Financial Officer selected. Reid is ready to move in as soon as BMG Entertainment officially announces his appointment.

Davis, perhaps the best-known music executive in the business, will step down from the company he founded 25 years ago when his contract expires June 30.

While Davis has been in advanced negotiations to start up a new label at longtime friend Doug Morris' Universal Music Group, sources said, the 66-year-old veteran is still entertaining offers from other interested parties, including his former employers, BMG Entertainment. Davis will likely announce his move to another home shortly after Reid's promotion is revealed, sources confirmed.

Davis confidants and current top executives at Arista Charles Goldstuck, Richard Palmese and Tom Corson have all expressed their desire to leave the company with Davis. However, with contracts in play, the trio's possible departures will surely have to be worked out with parent BMG and its chief, Strauss Zelnick. No word as to whether any of Arista Records' current roster will leave the label when Davis departs to join him in his new endeavor. However, sources said, that "a few" would surely make the journey to wherever Davis turns up.

Reid, one-half of the successful LaFace Records imprint with top songwriter-producer Kenneth "Babyface" Edmonds, has had enormous success with such acts as TLC and Toni Braxton. Ironically, it was Davis who brought LaFace into the Arista fold through a long-term joint venture agreement that housed LaFace under Arista's roof. As part of Reid's appointment, it is expected that BMG will buy the 50% of La Face Records it already doesn't own for a reported $110 million, sources said.

Davis' departure from the company he founded and built into a true powerhouse shocked the music industry when it came to light that BMG officials wanted the confident but aging Davis to name his successor at the label. Davis refused, sparking a very public, ugly and heated war of words with Zelnick that eventually reached the highest corporate levels at BMG and raised the eyebrows of Zelnick's superiors, BMG head Michael Dornemann and Thomas Middlehoff, who rules BMG's corporate parent, Germany's Bertelsmann AG.

Although BMG's mandatory retirement age is 65, the clause could have been overlooked being that Arista is a U.S.-operated company. But the adversarial relationship between Davis and Zelnick, Davis' boss, that has existed since Zelnick took over all of BMG's music operations about five years ago, further soured during the succession discussions, which took place earlier this year.

Despite a lucrative offer from BMG to start up a new label under its umbrella, Davis will most likely depart when his contract expires at the end of June, sources said.

Davis is going out with a bang, thanks to the success of "Supernatural," which is nearing 10 million units, Santana's Grammy Awards sweep and his own induction into the Rock and Roll Hall of Fame. Since most of the credit for Santana's rebirth has been attributed to Davis, who's listed as the album's executive producer, the assumption can be made that the man who previously signed Janis Joplin, Bruce Springsteen, Billy Joel, Sly Stone, Pink Floyd, Houston and numerous other Platinum acts throughout his career, is still in peak form.

Reid, a Davis disciple, needs to start getting his house in order at Arista to ensure as smooth a transition as possible when he comes into power.

Sources at BMG and some at Arista believe Reid is the perfect choice to run Arista, given Davis' exit. "He has had success as a label head on a smaller level," said a source familiar with the situation. "He has been trained by Clive, whether Clive realizes it or not, and he has great contacts within Arista and throughout the industry. It's sad to see Clive go, but business must go on."

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