With Lyor Cohen's sudden exit from Warner Music Group as chairman and CEO of recorded music the industry rumor mill has been working overtime naming his replacement, but insiders say that CEO Stephen Cooper may stay in place running the company and just have the labels heads reporting into him, as they are doing since Cohen resigned.
Lyor Cohen Stepping Down as Warner Music Chairman/CEO In the beginning there was a rocky start between Cooper and Cohen, but it seemed like they were finally working things out and that they would be walking down the road together. So we were all shocked when it happened."
So what happened to turn things around? All along sources have been saying that the key sticking point had been Cohen's contract, which a year after Len Blavatnik and his Access Industries had acquired WMG, still hadn't been signed to take into account his promotion to chairman of recorded music on a worldwide basis. According to company insiders, the problem didn't so much concern a money dispute as to how bonus and incentives based on performance can be worked out in the absence of a publicly-traded stock, which is how Cohen's previous contract and pay was structured. But others say that Access had a problem with the industry's executive high payment schemes. Two people close to the situation said there had been disagreements over future company structure and strategy, which would give him a modified role he was not keen on.
Warner Music and Cohen declined to comment.
Some industry executives still believe Cohen could wind up at Sony Music as Doug Morris' successor or helming Capitol Records; others, including WMG executives, say its more likely that he will align with a private equity firm and start a management company or maybe even become one of the bidders for the record label catalogs being divested by the Universal Music Group.
As one executive who is familiar with Cohen put it, "Lyor is an entrepreneur and he could only deal with so much of corporate." That executive bets that Cohen will start a management firm/label operation, rather than wind-up at one of the other majors.
"Lyor's forte is to 'move artists' as he and [Atlantic Group chairman/COO] Julie [Greenwald] like to say," another executive says. "If there is no room at UMG or Sony, Lyor may have to turn to private equity and build a new company."
For their part, sources at Universal and Sony say there is no room for Cohen, although they officially decline to comment.
While the press have been working overtime in installing soon-to-exit EMI boss Roger Faxon as Warner Music CEO, sources within WMG say that is not happening. They say that while Faxon would be a good replacement for Cooper, he could never handle Cohen's job because he doesn't have the A&R chops. He also does not have the close relationship with Blavatnik that Cooper does. But while some executives question if Cooper has the vision to run a major record company, WMG insiders say it doesn't appear he is going anywhere.
One music industry executive, who says he knows Cooper and his limitations says, "you need a music guy in the top spot and Access is crazy not to have one there."
But a WMG insider said the move makes some sense. "If Cooper wants to stay, why should they replace Cohen? You cut out a big chunk of overhead, and if you feel the separate record companies are running well why do you need to bring in someone else?"
One possible money-saving solution would be to give Greenwald, Kallman and Warner/Chappell Music Publishing chairman/CEO Cameron Strang more responsibilities, suggests another WMG executive. With Big Jon Platt recently joining the publishing company as president of creative for North America that could free up Strang, if he was needed.