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"I'm not interested in politics or hierarchy—I'm interested in ideas."

LYOR'S LETTER TO THE TROOPS

Warner Music Group's North America Ruler Explains It All for You

The following memo went out to WMG staff on 3/2; it marks the first official mass communiqué from new North America chief Lyor Cohen.

Dear Partners:

Since I left Island Def Jam three weeks ago, I've had the chance to meet many of you, and I very much appreciate your warm and enthusiastic reception. I want to take this opportunity to introduce myself, talk about some new reporting relationships for our group and, most importantly, let you know how excited I am about the fantastic opportunities that lie ahead for us.

The changes announced today and the previous months of uncertainty have no doubt made it challenging to remain positive, enthusiastic and focused on your job and artists. But clarity is here, and I'd like to briefly discuss what these changes mean for us.

As you know, Atlantic and Elektra—or the East Coast label, as I will call it for the next month—will be merged. For now, this means Legal and Business Affairs, Finance and Sales are to be consolidated, effective immediately, and will report directly to me until we announce a final management structure in the near future.

As part of this effort, I am proud to announce that Michael Kushner will oversee Legal and Business Affairs; Sam Schwam will be head of Finance; and Rick Froio will lead our Sales efforts. Please make them feel supported and appreciated for accepting such challenging roles.

I am also pleased to announce that Ahmet Ertegun will be remaining with the Company. As the founder of one of the world's most renowned music companies, we are truly lucky that he will be helping us continue Atlantic's fantastic legacy.

Effective immediately, all other Atlantic department heads will report directly to Craig Kallman, whose energy and dedication have been instrumental to Atlantic's ongoing success. All other Elektra department heads will report directly to Greg Thompson, who has consistently proven to be a progressive and superior music executive. Lava will continue uninterrupted under the leadership of Jason Flom, as he and his team continue to prove how a new, super nimble, music intensive label can thrive and grow in this climate. As for Bob Hurwitz at Nonesuch, we as music fans eagerly await his new releases, which always remind us how lucky we are to be in this business.

I want to emphasize that this is a merger—not a takeover period for Atlantic or Elektra. Although the first three department heads I announced are from Atlantic, this is purely coincidence and not a true reflection of the new, united Elektra/Atlantic culture that we will work together to create. Previously, when I had to combine three stand-alone labels into one company, everyone had an equal opportunity to continue, and the same will hold true here. I will be spending time with as many of you as I can over the coming weeks in order to ensure that we end up with the best new team possible.

Tom Whalley will continue to lead Warner Bros. Records, and it will be a privilege to work alongside him. A record company is about its people and artists, and Tom and his team at Warner Bros. Records are a collaborative group of creative business people who work together beautifully.

Under Scott Pascucci's leadership, Warner Strategic Marketing will continue providing our labels and artists with the serious air support needed during these challenging times. John Esposito, a great music fan and a powerful executive, has reorganized WEA so that everyone in his company is supporting their new mandate to get "the right music at the right place at the right time." It will be a more sales and inventory management-oriented division, designed to best take advantage of artist opportunities on a market-by-market basis.

As you can see, we are not a big company, or an appendix of a big multinational, or owned by an organization on a different continent and in a different time zone. What's more, for the first time in many years, Warner Music will be solely a music company that is free to operate outside of the limitations faced by publicly held organizations. This new independence will allow us not only to manage the Company in original and exciting ways, but also to face the serious challenges of our industry with greater flexibility.

We are going to take full advantage of these structural changes and our independence, because we have the right vision. In his recent note, Edgar Bronfman, Jr. discussed how we want to "return to WMG's entrepreneurial roots and build on the great passion for music." I believe so strongly in this vision that I left my job of 21 years to help make it become a reality. Let's act on this vision by creating a company where the artists feel like they are home, where we can collaborate together across the entire company, where we are clear and direct with each other, and where we can take risks.

When it comes to leading this talented group of people, I'm not interested in politics or hierarchy—I'm interested in ideas. We are all in this together, and I want to create as flat an organization as possible so that we can all contribute and be recognized for those contributions. My door is open to everyone who needs a sounding board for new ideas. I have relocated to Elektra, but I can be reached [there]. My assistants' names are Cathy and Leslie. Please don't be formal with me; instead, call me directly for answers, concerns, comments or suggestions. I am here to help this process and would appreciate all of your insights.

Again, I'm very excited about the opportunities ahead and to be working again with Edgar, who has been very important to my professional and personal growth and whose passion for music I deeply admire. We are both here to provide you with the answers, support and respect that each and every one of you deserves.

Sincerely,
Lyor Cohen




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