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REPORT: SMELLIE LAYS DOWN GAUNTLET

Outgoing SBMG COO Speaks Frankly to Analyst, NY Post Says
It appears the clash among Sony BMG executives has intensified in the week since the story broke that Bertelsmann told Sony it is against renewing SBMG chief Andy Lack’s contract when it expires in six months, the New York Post’s Tim Arango writes today.

According to the Post, outgoing SBMG COO (and long-time BMG exec) Michael Smellie told a group of financial analysts that he would consider staying on if changes were made to top management, apparently referring to Lack.

And in a private discussion with one London-based analyst, Smellie reportedly said that Sony label Columbia’s recent renewal of Bruce Springsteen’s contract for upwards of $100 million was a “trigger” in unleashing anti-Lack sentiment and one of the main reasons for Bertelsmann withdrawing its support for the former NBC exec and pal of Sony topper Howard Stringer.

Although the new Springsteen deal, which could be worth as much as $100 million if certain objectives are met, was ultimately approved by the SBMG board, the Post reports that the deal was initially made over the objections of Bertelsmann execs.

While some have said that simply filling the COO post to be vacated by Smellie with another German exec would be enough to quell the current anti-Lack movement, others are now insisting Bertelsmann will continue to push for Lack’s removal no matter who gets the COO gig.

According to reports, Sony has the ability to extend Lack’s tenure through the end of 2006, but after that, any additional extension would require Bertelsmann’s approval.
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