First Madonna statement about the Warner/Maverick battle

Madonna donned fatigues last year for a video to promote her latest album, “American Life.” Now she is drumming up more military metaphors for an increasingly bitter public battle with Warner Music Group and its new chief executive and part owner, Edgar Bronfman Jr.

“I find myself in the ludicrous position of being sued by my own record company, whom I have been loyal, industrious and reliable to for over 20 years,” Madonna said in a statement, her first comment since the two sides filed dueling lawsuits late last month. “For them to behave this way is nothing short of treason.”

The dispute does not involve Madonna in her role as one of Warner’s biggest stars. Instead it revolves around Maverick Records, the music label that she and two others own with Warner Music in a partnership that is to expire by the end of this year. Either Warner or Madonna’s group is supposed to buy out the other side.

The grievances have been simmering for several years. Maverick executives say they are being shortchanged by Warner Music, while Warner sees Maverick as a money-losing venture whose biggest successes, like Alanis Morissette, are in the past. But when Time Warner completed the sale of its record business for $2.6 billion to a consortium led by Mr. Bronfman, an executive considered to be among the more receptive to artists’ needs and desires, many in the music industry expected an amicable resolution.

Any honeymoon was short-lived. And it appears that hurt feelings on both sides have propelled this business negotiation into court.

Madonna’s partners in Maverick, Guy Oseary and Ronnie Dashev, say they were shocked by a lawsuit on the same day that they were bargaining for a resolution in good faith. Bert Fields, Maverick’s lawyer, called the suit a stab in the back for Madonna, who has sold millions of CD’s for the Warner Brothers Records label.

Warner Music executives fume privately that they were forced to act pre-emptively. According to executives involved in the negotiations, the new owners, already pushing through a restructuring calling for the elimination of 1,000 jobs, were on a tour to stir interest among banks and bond issuers to finance the purchase of Warner Music when Madonna and her partners threatened a lawsuit if a deal regarding Maverick was not struck imminently.

On March 24, partly to control where any case would be heard, Warner Music filed suit in Delaware, seeking a ruling that it had not breached its contract with Maverick. The next day Maverick sued Warner Music in California, charging fraud and improper accounting. On May 7 a Delaware judge will hear a motion to stay Warner Music’s action to allow the California complaint to proceed.

The object of the tussle is a boutique record label. Maverick, created in 1992, experienced its biggest success with Ms. Morissette, the singer and songwriter whose “Jagged Little Pill” (1995) has sold 14 million copies and is the one of the best-selling albums of all time, according to Nielsen SoundScan, which tracks music sales in the United States. Eight of the 10 albums from Maverick that have sold more than one million copies were released before the venture with Warner Music was renegotiated in 1999. Its roster also includes the singer and songwriter Michelle Branch and bands like Deftones and the Prodigy. In 2003 Maverick releases accounted for a little more than half of 1 percent of album sales in the United States.

Mr. Bronfman declined to comment on the suits, but Will Tanous, a company spokesman, issued a statement repeating Warner Music’s statement in the lawsuit that Maverick has been unprofitable for the last five years. In its complaint Warner Music says that Maverick has amassed more than $60 million in losses since 1999, and would have to repay $92.5 million before it could buy out Warner’s’ half of the joint venture.

Maverick’s filing paints a more complicated picture. Its partners charge that Roger Ames, the former chairman and chief executive of Warner Music, refused to provide the promotional, sales and marketing support to Maverick required by the venture agreement. “They have consistently over a pattern of years refused to deal with our problems and have misled us,” Ms. Dashev said. (Mr. Ames is currently a consultant for Warner Music.)

Among numerous charges, the Maverick complaint says that Warner Music manipulated figures to show that Maverick was losing money by not crediting it with the profits generated by the manufacturing, distribution and international sales of Maverick CD’s. If profits were properly accounted, Mr. Fields, a well-known Hollywood lawyer, said, they would show that Maverick has made $100 million for Warner.

But the joint-venture contract does not require adding profits from those areas to Maverick’s earnings, said an executive close to Warner Music, who has detailed knowledge of the contract. “What they’re trying to do is not supported by anything in the agreement,” the executive said. “It’s supported by their desire to get a check they’re not entitled to by virtue of the contract, to pretend in 2004, ‘Oh, let’s take an eraser to a few provisions and let’s put in what we wish were in the contract.’ ”

Whitney Broussard, a New York entertainment lawyer whose clients include the Warner Music artists Twista and Third Eye Blind, said it was not uncommon for revenue from manufacturing and distribution to be excluded from profit calculations in joint-venture agreements.

Unclear in the feud is what, if any, collateral damage will be done to Warner Music’s relationship with Madonna, who owes two more albums to Warner Brothers Records.

While Warner is not dismissing Madonna’s stature – she is preparing for a world tour that starts in late May, and a six-night stand at Madison Square Garden in June is sold out – she is not, at 45, the sales powerhouse she once was. “American Life” has sold a relatively meager 634,000 copies in the United States. Her previous two albums each sold three million to four million copies. But her vintage releases have done much better: “Like a Virgin” (1984) sold 10 million, and “True Blue” (1986) seven million.

“This is not about Madonna, an artist with whom we have a longstanding and very successful relationship,” Mr. Tanous said.

Madonna’s manager, Caresse Henry, said the legal dispute was hurting Madonna’s relationship as an artist with Warner. “It’s like serving somebody divorce papers and then asking them when they want to go to dinner,” Ms. Henry said.
Article by Chris Nelson
Source: New York Times