Many believed that the writing was on the wall for Serletic very early on, although he weathered the speculation for nearly four years.


Flom's In, Serletic's Out at the Label that Branson, Ayeroff, Harris & Quartararo Built (and Berry Nearly Dismantled...)
The industry is buzzing over the exit Tuesday of Matt Serletic as Chairman/CEO of Virgin Records, setting the stage for former Atlantic head Jason Flom to take over the label this coming Monday (10/24). Insiders are saying that most of the employees at Virgin are understandably nervous. People who worked with Serletic really liked him and everyone felt the burdened label had been doing better recently, thanks to the success of albums like the Gorillaz’ most recent blockbuster. Those left behind are, of course, wondering whether Flom will be bringing his own people to Virgin...and who those people might be.

Serletic was a hot producer before taking the Virgin reins. He began as a member of the band Collective Soul, producing that band's first album before going on to produce the first Matchbox Twenty album, which sold more than 20 million albums worldwide, as well as the double Grammy-winning megahit "Smooth" (featuring Matchbox Twenty's Rob Thomas) for Carlos Santana's Supernatural. He’s also produced for the likes of Aerosmith, Celine Dion, Willie Nelson, Patty Smyth and Lee Ann Womack. Late last year, he helmed Courtney Love’s debut solo album, America’s Sweetheart, for Virgin.

Historically, producers haven’t always fared well as label executives, and Serletic dealt with a degree of uncertainty from the time he took over the label in January 2002. He was somewhat encumbered right from the getgo, spending the first six months of his tenure in the studio with Matchbox Twenty.

Nevertheless, Serletic inherited a company that had been on a downswing since the exits of Jeff Ayeroff, Jordan Harris and Phil Quartararo, who teamed to launch Virgin Records America in 1986, six years before Richard Branson sold Virgin’s worldwide record operations to EMI for close to $1 billion. The exit of that holy triumvirate in 1992 began the Ken and Nancy Berry regime and a long period of dysfunction and tremendous financial loss, including the exorbitant signings of Janet Jackson, the Rolling Stones and Mariah Carey.

Serletic’s initial deal—which was negotiated by attorney Joel Katz—was originally a package deal for Serletic and former Capitol Interim President Roy Lott, with Serletic handling the creative side of things at Virgin and Lott handling the business side. That changed when Lott left the company after a brief stint.

Insiders believe that between the James Fifield era (when he helmed EMI North America) and the Ken Berry era (when he led Virgin and then later EMI)—which occurred both concurrently and consecutively—the executives took a label that was a real factor and totally mismanaged it. With the departure of Serletic, the only major appointment remaining from the era of Ken Berry as EMI chief is Andrew Slater at Capitol.

Which brings us full circle to incoming Virgin President Flom, who replaced the Elliot Spitzer payola investigations as the major topic of music biz speculation last summer, following his unceremonious dumping as Co-Chairman/CEO of Atlantic Records by WMG chief Lyor Cohen on August 16 (which also happened to be the 28th anniversary of Elvis’s death, a fact that may or may not have been lost on Cohen who brought a lot of drama to the dismissal). After spending his entire 26-year career at the legendary label, where he was mentored by Doug Morris, Flom, who was vacationing at his home in Aspen, was summoned by Cohen for a meeting at LAX. When Jason arrived at the airport, Lyor handed him a press release containing the bombshell: Flom, the Atlantic executive with the most seniority, was out.

But 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 had two other immediate options: EMI Music toppers Alain Levy and David Munns became very interested, and Sony BMG topper Andy Lack reportedly also sent out feelers. EMI consultant Roger Ames was another big fan. The speculation built and continued throughout the end of summer and the early fall. For awhile, those close to both Jason and Serletic believed that they could have ended up working together, as the two were tight for years, and Serletic made the Matchbox Twenty and Rob Thomas records for Flom—a job he continued doing after taking the top job at Virgin. Meanwhile, those in the know believed that Allen Grubman, Flom's attorney, was busy working out the details of Flom’s contract with EMI’s attorneys the entire time.

Cohen insiders tried to spin that Flom was a really good song man but not a great exec, a claim some found absurd—not just based on his early Morris mentoring but also the fact that his father, Joel Flom, was a very, very important New York attorney in the merger and acquisitions field. And, to skewer an old cliché, the fruit never falls that far from the tree. On top of that, Jason’s many musical successes—Twisted Sister, White Lion, Matchbox Twenty, Rob Thomas, Sugar Ray, Uncle Kracker and the entire Lava label, among so many others—speak for themselves. Finally, it would appear that Jason is a true diplomat among label executives. He and Craig Kallman were the only two significant players to weather all the post-Doug Morris changes at Atlantic, including the Morgado-Morris, Fuchs, Semel-Daly and Ames eras. The last big change, of course, came last year when Time Warner sold WMG to its current owners...which brings us to the present.

When all is said and done, Flom is very well liked and firmly established in the rock community, although he’s never really tried his hand in the urban and hip-hop markets to any great extent—which should prove a new challenge for the executive at Virgin (where hip-hop artist/producer/label owner Jermaine Dupri was hired late last year and named President of the label’s Urban Music department by Serletic). Nevertheless, he’s also very well liked by managers and attorneys alike. And perhaps most importantly—in terms of what matters here at HITS—he’s a fine, fine golfer.