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Sony BMG’s board of directors is evenly split between the two companies, and, as Leeds points out, “The unusual structure forces them to at least try to live in harmony."

BMG SAYS LACK IS LACKING

Sources Inside Sony BMG Tell N.Y. Times’ Jeff Leeds About Dissatisfaction With CEO’s Performance and Knowledge of the Music Biz
BMG has told Sony that it does not want to renew the contract of Sony BMG CEO Andy Lack when it expires in six months, reports Jeff Leeds this morning in The N. Y. Times, citing executives within the company. Ironically, Lack’s most significant move since being named head of Sony Music three years ago by Sir Howard Stringer was to merge the two companies.

Lack supporters told Leeds that BMG’s demand for Lack’s dismissal was a result of political friction between the two companies and not any dissatisfaction with his performance. These same executives characterized the BMG stance as a power play to make up for the imminent departure of Sony BMG COO Michael Smellie, the ranking exec on the BMG side (see I.B. Bad). Others both inside and outside Sony BMG say Lack has not always shown an appropriate level of interest in or respect for the music business, as when he appeared at a Reuters conference earlier this year and said his company might be "the most profitable ugly duckling at the dance."

According to the story, Clive Davis wrote a letter to the Sony BMG board several months ago expressing frustration with Lack's handling of Davis's contract and a related profit-sharing agreement. Negotiations have been ongoing since the creation of the venture last year and are still not resolved.

When queried by Leeds, a Sony spokeswoman said only that Stringer "thinks Andy's done a very good job and he's very supportive of him." Lack was said to be on a plane and a BMG spokesperson declined to comment.

Sony BMG’s board of directors is evenly split between the two companies, and, as Leeds points out, “The unusual structure forces them to at least try to live in harmony. The two companies had cultivated distinct cultures for their music units, and uniting them has long been seen as a tough task.”

Leeds also points out that since the merger, Sony BMG's marketshare has dropped from 33% to 26%, while UMG has upped its share to 36%.

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