Showdown at the Hit Factory

ON THE MORNING of Octo­ber 27, 1994, ten senior exec­u­tives of the Warn­er Music Group, the largest record com­pa­ny in the world, met secret­ly in an apart­ment on Cen­tral Park West and, in effect, declared war on the chair­man and chief exec­u­tive offi­cer of the com­pa­ny, a man named Robert J. Mor­ga­do. Warn­er Music, a divi­sion of Time Warn­er, is the only one of the record industry’s six major com­pa­nies that is Amer­i­can owned, and for decades it had also been the most sta­ble. Now it was on the verge of melt­down.
     A mood of rebel­lion against Mor­ga­do had been build­ing for months at all three of the company’s big labels—Atlantic Records and Elek­tra Records, in New York, and Warn­er Bros. Records, in Los Ange­les, the last of which had been run for twen­ty-five years by a for­mer pro­tégé of Frank Sina­tra named Mo Ostin. In the record­ed-music indus­try, which ten­ders its great­est respect to “record men” or “music men”—those peo­ple with the abil­i­ty to rec­og­nize and devel­op talent—Ostin was revered. He was a par­a­digm of the type of free­wheel­ing man­ag­er who thrived under the late Steve Ross, the chair­man of Time Warn­er. Ross, what­ev­er his short­com­ings, had a gift for han­dling cre­ative peo­ple, and he allowed Ostin to run his divi­sion with­out inter­fer­ence; in return, Ostin had made Warn­er Bros. the most prof­itable record label in the Unit­ed States, with a ros­ter of artists that includ­ed Madon­na, Prince, Paul Simon, Talk­ing Heads, Eric Clap­ton, and R.E.M. Though Ross, in 1990, had appoint­ed Robert Mor­ga­do to his cur­rent posi­tion as head of all the Amer­i­can labels—along with Warner’s for­eign labels, record club, and music-pub­lish­ing company—Ostin, whose title was chair­man of Warn­er Bros. Records, had insist­ed on report­ing direct­ly to Ross; after Ross died, in late 1992, Ostin and Mor­ga­do had clashed. “Mor­ga­do does not have a feel for a cre­ative busi­ness,” Ostin explained recent­ly. “He is not from show busi­ness.”
     Indeed, Mor­ga­do had been the chief of staff for Gov­er­nor Hugh Carey before being hired by Ross, in 1982. A man of unmis­tak­able intelligence—even his detrac­tors will acknowl­edge that—Morgado is also rather imper­son­al, and some­what bland. He tends to show the most emo­tion when he is describ­ing his strate­gic plan for the Warn­er Music Group, using terms like “man­i­fest des­tiny” and “lever­age” and, espe­cial­ly, “ver­ti­cal inte­gra­tion.” Mor­ga­do sees a future in which the labels take full advan­tage of the group’s size by work­ing together—just the oppo­site of the Steve Ross phi­los­o­phy, which had been to let them com­pete. Unfor­tu­nate­ly, not all the vet­er­an record men at the labels, who had risen up under Ross, shared Morgado’s dream—not Bob Kras­now, who ran Elek­tra Records, and cer­tain­ly not Mo Ostin.
     Mor­ga­do there­fore need­ed a strong, cred­i­ble ally to help him over­come the labels’ resis­tance, and he believed he had found that ally in Doug Mor­ris, the co-chair­man of Atlantic Records, who had begun as a song­writer and record pro­duc­er. (Mor­ris had co-writ­ten “Sweet Talkin’ Guy,” a 1966 hit for the Chif­fons, and had pro­duced “Smokin’ in the Boys Room” for Brownsville Sta­tion sev­en years lat­er.) Though Mor­ris was per­haps not held in as high esteem by the indus­try as Mo Ostin, he was indis­putably a record man. Last July, Mor­ga­do pro­mot­ed Mor­ris to a new posi­tion, just below him, in which he would over­see with him all the Amer­i­can labels; with­in a month, Ostin resigned.
     Morgado’s vic­to­ry was short-lived, how­ev­er, because he soon found him­self fac­ing down a new adver­sary: Doug Mor­ris. After pro­mot­ing Mor­ris to a posi­tion of lead­er­ship, Mor­ga­do had steadi­ly chipped away at his abil­i­ty to lead. Final­ly, Mor­ris felt he had been left with­out any author­i­ty at all; and at that point he mar­shalled his forces in the record group at the Cen­tral Park West apart­ment, in a dra­mat­ic, and fate­ful, attempt to win his author­i­ty back.

ROBERT MORGADO has nev­er claimed to be a record man, or even to know much about music. There is no stereo in his office. He is fifty-one, about five feet nine, and dark com­plex­ioned, with a broad face and a grin that reminds one of the Cheshire cat. A native of Hon­olu­lu, he is the son of an immi­grant Por­tuguese father and a Poly­ne­sian moth­er. On a recent after­noon, Mor­ga­do talked to a reporter about his long-range plans for the Warn­er Music Group. He was wear­ing a blue but­ton-down shirt with a mono­gram, and, as he spoke, he took sips from a pint bot­tle of Evian and dis­tract­ed­ly tore off its label.
     Mor­ga­do rarely gives inter­views, and acknowl­edges that he suf­fers from an image prob­lem. It upsets him to read con­tin­u­al­ly that he has a back­ground in pol­i­tics; as he sees it, his career was in pub­lic ser­vice. After earn­ing a master’s degree from the grad­u­ate school of pub­lic affairs at SUNY at Albany, in 1965, he worked as a bud­get and finan­cial ana­lyst with the New York State Leg­is­la­ture; in 1975, he became an aide to Gov­er­nor Carey, and two years lat­er he was appoint­ed the Governor’s chief of staff. Steve Ross, the head of what was then called Warn­er Com­mu­ni­ca­tions, which had its head­quar­ters in New York, had been a fund-rais­er for the Gov­er­nor, and just before Carey left office, in 1982, Ross made Mor­ga­do his spe­cial assis­tant.
     Four months lat­er, Warn­er Com­mu­ni­ca­tions expe­ri­enced the biggest cri­sis in its his­to­ry: the bot­tom fell out of its Atari unit, which made video games, and Warner’s stock price dropped near­ly sev­en­teen points in one day. Des­per­ate to reduce cor­po­rate over­head, Ross select­ed Mor­ga­do to elim­i­nate as many jobs as pos­si­ble, there­by earn­ing Mor­ga­do the epi­thet of “hatch­et man.” “Steve knew that we had to down­size, and he was look­ing for some­one to make it hap­pen,” Mor­ga­do says. “He asked me.”
     In 1985, Ross appoint­ed Mor­ga­do a senior exec­u­tive, with respon­si­bil­i­ty for Warner’s record­ed music and music pub­lish­ing. The appoint­ment came as no great shock to the labels. Ross had giv­en sim­i­lar respon­si­bil­i­ties to David Horowitz, one of four mem­bers of his Office of the Pres­i­dent (since dis­band­ed), and Horowitz had not tried to med­dle in the day-to-day affairs of the labels. Mor­ga­do, like Horowitz, was viewed main­ly as a liai­son between the labels and the cor­po­ra­tion. But in 1990, short­ly after Warn­er Com­mu­ni­ca­tions merged with Time, Inc., to cre­ate Time Warn­er, all the domes­tic and for­eign labels were assem­bled under a new cor­po­rate shell, the Warn­er Music Group, to be head­ed by Mor­ga­do; two years lat­er, Ross died of can­cer. Ross’s suc­ces­sor, Ger­ald M. Levin, appeared to have tak­en a lik­ing to Mor­ga­do, and gave him his full back­ing.
     It was not hard to see why: under Mor­ga­do, the labels’ results had been excel­lent. Since 1985, the com­bined rev­enues of the labels had risen from around nine hun­dred mil­lion dol­lars to $3.3 bil­lion last year. The group’s 1993 earn­ings, of $296 mil­lion, sur­passed those of every oth­er Time Warn­er divi­sion except cable tele­vi­sion. The Warn­er labels have con­sis­tent­ly led the indus­try in Unit­ed States mar­ket share; for the first ten months of this year, Warn­er had 22.2 per cent of the mar­ket, com­pared with 15.3 per cent for Sony Music, its near­est com­peti­tor.
     Ostin and oth­er vet­er­an record men with­in Warn­er were fierce­ly proud of these results but were annoyed that Mor­ga­do should take any cred­it for them. After all, Mor­ga­do had entered the record busi­ness the same year that the com­pact disk began to take off, and it was that change which had giv­en the indus­try its first sig­nif­i­cant price increas­es in years; world­wide indus­try rev­enues had climbed in less than a decade from about twelve bil­lion dol­lars to about thir­ty bil­lion. With­out a doubt, though, Mor­ga­do deserved cred­it for build­ing the record company’s pres­ence in Europe and Latin Amer­i­ca, part­ly through acqui­si­tion. More than half of Warn­er Music’s rev­enues now come from over­seas, and Mor­ga­do believes that the ratio can go even high­er; he sees Asia as the next fron­tier. “I sit here and see a mar­ket of two hun­dred mil­lion Indone­sians, and some­how I know that’s gonna be an impor­tant busi­ness for us,” he says.
     Morgado’s strat­e­gy is to strength­en the com­pa­ny through ver­ti­cal integration—the con­cept of reduc­ing one’s depen­dence on oth­ers and increas­ing one’s con­trol, as hap­pens when, say, a paper man­u­fac­tur­er buys for­est land. Last spring, Mor­ga­do invit­ed four of the five oth­er major record com­pa­nies and Tick­et­mas­ter to join him in cre­at­ing an alter­na­tive music-video chan­nel to MTV; to his dis­may, the Jus­tice Depart­ment is inves­ti­gat­ing whether the plan vio­lates antitrust laws.

THE MAN Mor­ga­do saw as the biggest obsta­cle to his plan to uni­fy the labels is short and slight, bald, and giv­en to wear­ing a sports jack­et with an open shirt col­lar. Mo Ostin was born in New York in 1927 but grew up in Los Ange­les. In 1954, four years after grad­u­at­ing from U.C.L.A. with an hon­ors degree in eco­nom­ics, Ostin joined Verve, a jazz label, as con­troller, but, he says, did a lit­tle of everything—sales, mar­ket­ing, finance, and A. & R., or artists and reper­toire. In 1960, Frank Sina­tra, hav­ing grown dis­grun­tled with Capi­tol Records, where he’d made records for eight years, cre­at­ed his own label, Reprise, to put out his record­ings and, sub­se­quent­ly, those of Sam­my Davis, Jr., Dean Mar­tin, and oth­er main­stream pop singers. “Frank hired me the first time I met him, and made me the head of his com­pa­ny,” Ostin says. Three years lat­er, Reprise merged with Warn­er Bros. Records, an adjunct to the Bur­bank movie stu­dio. Though Sina­tra had lit­tle use for rock music, Ostin took an ear­ly inter­est in it, and fol­low­ing the merg­er he signed the Kinks and Jimi Hen­drix. After more than two decades, he was still sign­ing rock acts: in 1990, he pur­sued and got the Red Hot Chili Pep­pers.
     Mor­ga­do faults Ostin for the bad blood between them. He recalls, “Mo would say to me, ‘This is not personal—but you shouldn’t real­ly exist. We don’t need you.’ “
     “I’ve nev­er said any­thing like that,” Ostin says. “But I did have a prob­lem with Mor­ga­do with respect to reportage. My con­tract clear­ly defined that I report­ed either to Steve Ross or to his suc­ces­sor. I nego­ti­at­ed very, very hard for that point.… I had been dealt with by Steve Ross as an exec­u­tive who had a lot of auton­o­my, who ran this com­pa­ny as if it were my own busi­ness. And the results were just fan­tas­tic. Bob Mor­ga­do came from a total­ly dif­fer­ent man­age­ment place. He was a guy who came out of politics—power, con­trol, and things of that sort were very impor­tant to him. And he attempt­ed to con­trol me, and I felt that that was not the prop­er way in which we could relate to one anoth­er.”
     Mor­ga­do acknowl­edged that under Ostin’s con­tract Ostin “tech­ni­cal­ly” report­ed to the head of Time Warn­er. “But what does that mean?” he said. “It had no con­crete man­i­fes­ta­tion in a day-to-day sense, because his busi­ness report­ed to me. Peo­ple like to hang on to words.”
     Clear­ly, though, Ostin was a threat to Morgado’s author­i­ty. “I was per­fect­ly hap­py to deal with him in his coor­di­na­tive and liai­son capac­i­ty in the record group,” Ostin says. “I just didn’t want him to inter­fere in my business.”

THE TIME WARNER BUILDING, at 75 Rock­e­feller Plaza, where Mor­ga­do has his office, is also home to Warner’s two large East Coast labels, Atlantic and Elek­tra, and Mor­ga­do had plen­ty of oppor­tu­ni­ty to observe the man­agers of those labels at work. One per­son who stood out was Atlantic’s pres­i­dent, Doug Morris—the man who had writ­ten “Sweet Talkin’ Guy.” Mor­ris, who still keeps a piano in his office, is fifty-four, com­pact­ly built, with a trim beard and a pro­nounced New York accent. (He grew up in Wood­mere, Long Island.) He is gre­gar­i­ous and nur­tur­ing; his per­son­al­i­ty is alto­geth­er dif­fer­ent from Bob Morgado’s. “Doug is the kind of guy who calls all his top exec­u­tives every Fri­day, wish­es them a good week­end, and tells them what genius­es they are,” Dan­ny Gold­berg, one of those exec­u­tives, says.
     With­in Atlantic, Mor­ris had his own nur­tur­ing boss in Ahmet Erte­gun, the label’s co-founder and chair­man, who was as much an indus­try leg­end as Mo Ostin. The son of a Turk­ish ambas­sador, Erte­gun had helped launch Atlantic in 1947 to record rhythm-and-blues artists like Ray Charles and, lat­er on, Aretha Franklin; by the sev­en­ties, he had turned Atlantic into a rock label, with the Rolling Stones and Led Zep­pelin. He had got to know Doug Mor­ris in 1974, when Atlantic made a dis­tri­b­u­tion deal for Big Tree, a small label that Mor­ris had found­ed; Atlantic bought Big Tree four years lat­er, and in 1980 Erte­gun named Mor­ris the pres­i­dent of Atlantic. Erte­gun has noth­ing but praise for Mor­ris. “Of all the peo­ple I’ve worked with, he’s the straight­est per­son I’ve ever known,” he says. “He does not have what the French call arrière-pen­sées—hid­den thoughts. It’s incred­i­ble, but in all the years I’ve been with Doug we have nev­er had an argu­ment and we have nev­er left the office with­out hug­ging one anoth­er.”
     By 1990, the year Mor­ga­do was pro­mot­ed to his cur­rent post, Atlantic had been in decline for some time. Erte­gun was now approach­ing sev­en­ty; the days when he court­ed the Rolling Stones aboard the Warn­er cor­po­rate jet were behind him. Atlantic’s annu­al rev­enues had flat­tened to about three hun­dred and fifty mil­lion dol­lars, and most of that amount came from “catalogue”—the sale of old record­ings by bands like Gen­e­sis and Cros­by, Stills, Nash & Young. Erte­gun acknowl­edged the need for a suc­ces­sion plan, and, unlike oth­er vet­er­an record men in the Warn­er Music Group, he put up lit­tle resis­tance to Mor­ga­do; in fact, he agreed with Mor­ga­do that there were com­pet­i­tive advan­tages to be gained from uni­fy­ing the labels. In Novem­ber of 1990, with Ertegun’s bless­ing, Bob Mor­ga­do ele­vat­ed Doug Mor­ris to co-chair­man of Atlantic.
     Mor­ris and Mor­ga­do seemed to like each oth­er well enough, but the bond real­ly link­ing them was one of mutu­al use­ful­ness. Morris’s pro­mo­tion reflect­ed well on Mor­ga­do. This year, the rechris­tened Atlantic Group is expect­ed to report sales of a bil­lion dol­lars. Though some of the growth has come from non-musi­cal businesses—notably exer­cise videos—most of it has come from new hit records. In 1990, Mor­ris gam­bled mil­lions of dol­lars of Atlantic’s mon­ey as a twen­ty-five-per-cent investor in Inter­scope Records, a new label cre­at­ed by the record pro­duc­er Jim­my Iovine and the retail heir Ted Field. Though Iovine had pro­duced and engi­neered albums by John Lennon, Bruce Spring­steen, and U2, he had no track record as a busi­ness­man, and until Mor­ris came along he could not find a backer. “No one would give me a deal,” Iovine says. “But Doug did.” Inter­scope has since become the hottest inde­pen­dent label in the Unit­ed States, with mul­ti­plat­inum albums by the rap­pers Snoop Dog­gy Dogg and Dr. Dre and the alter­na­tive-rock band Nine Inch Nails. Inter­scope is expect­ed to gross over a hun­dred mil­lion dol­lars domes­ti­cal­ly this year.
     Mor­ris also recruit­ed new exec­u­tive tal­ent to Atlantic. In 1992, he per­suad­ed Dan­ny Gold­berg, an artist’s man­ag­er whose clients includ­ed Bon­nie Raitt and Nir­vana, to run Atlantic’s West Coast office; this past Jan­u­ary, Gold­berg was pro­mot­ed to pres­i­dent of the label and sub­se­quent­ly moved to New York. Gold­berg, who is forty-four, is nasal-voiced, slight­ly nerdy, and well known for involve­ment in lib­er­al caus­es: he has been active in the A.C.L.U., and he co-pro­duced and co-direct­ed the “No Nukes” con­cert film. Kurt Cobain, the lead singer of Nir­vana, who com­mit­ted sui­cide ear­li­er this year, had referred to Gold­berg as his “spir­i­tu­al father.” Gold­berg, in his two years at Atlantic, has brought in at least three hot new acts: the singer-song­writ­ers Juliana Hat­field and Liz Phair, and the huge­ly suc­cess­ful alter­na­tive-rock band Stone Tem­ple Pilots. For the first six months of 1994, Atlantic out­per­formed Warn­er Bros.—an achieve­ment that just a few years ago would have been con­sid­ered impos­si­ble.
     Then, on July 11, 1994, Mor­ga­do pro­mot­ed Doug Mor­ris again, to pres­i­dent and chief oper­at­ing offi­cer of Warn­er Music‑U.S., a new­ly cre­at­ed hold­ing com­pa­ny for all the Amer­i­can labels. Erte­gun gave the move his bene­dic­tion, but over at Elek­tra its chair­man, Bob Krasnow—another vet­er­an who had clashed with Morgado—appeared to take the appoint­ment as an affront. He resigned the next day.
     Mor­ga­do and Mor­ris imme­di­ate­ly had a prob­lem on their hands with Metal­li­ca, a speed-met­al band on Elek­tra that was one of the most suc­cess­ful acts with­in the Warn­er Music Group. Since 1984, when Kras­now signed Metal­li­ca to its orig­i­nal con­tract with Elek­tra, the band had pro­duced four stu­dio albums that had togeth­er sold about eigh­teen mil­lion copies in the Unit­ed States. The band mem­bers and their man­agers, Cliff Burn­stein and Peter Men­sch, had had an excel­lent rela­tion­ship with Kras­now and were upset over his leav­ing. They were even more upset because a deal that they claimed had been nego­ti­at­ed with Kras­now in May—a joint ven­ture that would give the band fifty-per-cent own­er­ship of its mas­ter recordings—had not gone to con­tract.
     About a week after Morris’s pro­mo­tion, a meet­ing was held in a con­fer­ence room of the Time Warn­er Build­ing to dis­cuss a new deal for Metal­li­ca. Burn­stein and Men­sch came dressed in their usu­al jeans and sneak­ers, and were met by Mor­ga­do, Mor­ris, and two lawyers. The man­agers had an uneasy his­to­ry with Doug Mor­ris: they had pre­vi­ous­ly man­aged the band AC/DC on Atlantic, and Mor­ris had barred them from the build­ing for a time for bad­mouthing the label. But at the meet­ing, which last­ed about half an hour, Mor­ga­do did all the talk­ing. He explained that a joint ven­ture was out of the ques­tion, and that Warn­er Music pre­ferred to assume the risk, imply­ing that the com­pa­ny would offer a large advance. An offer was made a few days lat­er: about twen­ty mil­lion dol­lars for four new albums and a box set of the band’s great­est hits. “We almost had to laugh,” Burn­stein says. “After all that pon­tif­i­ca­tion about ‘We want to take the risk’! The way we cal­cu­late it, if we nev­er made a new record, they’d recoup that mon­ey just on cat­a­logue sales.”
     Before long, Metal­li­ca filed suit in Cal­i­for­nia, where the band is based, to be released from its exist­ing con­tract. Warn­er in turn filed suit in New York against the band for a hun­dred mil­lion dol­lars in dam­ages for antic­i­pat­ed breach of contract—an unusu­al hard­ball tac­tic for a record com­pa­ny to take against its musi­cians. Lars Ulrich, the band’s drum­mer, pub­licly vil­i­fied Mor­ga­do, call­ing him “greedy and arro­gant.” The lit­i­ga­tion is still pending.

THE APPOINTMENT of Doug Mor­ris did not sit well at Warn­er Bros. Records, in Bur­bank. Though Mo Ostin says he likes Mor­ris, the notion of hav­ing to answer to an indus­try fig­ure less­er than him­self must have galled him, and Ostin acknowl­edges that he has “con­front­ed” Mor­ris for being undu­ly boast­ful about the turn­around at Atlantic. “Except for the first six months of this year, Warn­er has con­sis­tent­ly out­per­formed Atlantic in mar­ket share and prof­it con­tri­bu­tion,” Ostin says. “And, since we’re in a busi­ness of the arts, one also has to look at the qual­i­ty of the music you put out. If you look at the Gram­my Awards as one exam­ple and com­pare Warn­er and Atlantic, that will tell you a lot. Just no con­test.”
     Warn­er Bros. Records endured a long cold spell until recent­ly, when big hits by two new groups, Green Day and Can­dle­box, and new releas­es by Madon­na, Eric Clap­ton, and R.E.M. put the label back at the top of the charts. Ostin deeply resents the sug­ges­tion that Warn­er Bros. Records has become too reliant on its old acts, and is hap­py to recite a long list of emerg­ing tal­ent, in addi­tion to Green Day and Can­dle­box, on the active ros­ter.
     Mor­ga­do says that he became con­cerned about the cold spell at Warn­er around the time he pro­mot­ed Mor­ris to head Warn­er Music‑U.S. “I want­ed Doug to work with them,” he said. “I didn’t know what the prob­lem was. Did they have the wrong A. & R. peo­ple? I thought Doug would have a bet­ter spin.”
     The final blowup between Ostin and Mor­ga­do came over the issue of suc­ces­sion. Ostin turned six­ty-sev­en this year, but he is in excel­lent health and is in no mood to retire from the busi­ness. “Mo was there from the begin­ning, and he wasn’t quite pre­pared to accept that there does come a time when you’ve got to build the next gen­er­a­tion,” Mor­ga­do said. “He was quite hap­py to go on anoth­er three years, and then wor­ry about the tran­si­tion after that. I didn’t think that was right.”
     Ostin calls that state­ment absurd. With­in Warn­er Bros., he says, every­one had known for years that he was groom­ing an even­tu­al suc­ces­sor in Lenny Waronker. Waronker, who is fifty-two, is a shy, soft-spo­ken Los Ange­les native who began pro­duc­ing records for Warn­er Bros. in 1966; among his cred­its are albums by Randy New­man and Ry Cood­er. He advanced into A. & R., and in 1982 Ostin made him the pres­i­dent of Warn­er Bros. Records. Mor­ga­do said he had doubts, how­ev­er, that Waronker pos­sessed the man­age­ment skills to run a record label. “That’s because Mor­ga­do is hung up on form and struc­ture instead of sub­stance,” Ostin says. “The most impor­tant thing any record exec­u­tive can do is sign and devel­op artists. And in that depart­ment Lenny is as good as they come.”
     Last spring, Ostin was offered a new three-year con­tract, which would have kept him on as chair­man of Warn­er Bros. through the end of 1998. The con­tract spec­i­fied that he would have to report to Mor­ga­do. “I stuck it in a draw­er,” Ostin says. “There were pres­sures put on me, and I just could not get myself to sign that doc­u­ment. I did not feel I could be hap­py if I con­tin­ued under the new set of cir­cum­stances. In fact, I felt I would be mis­er­able. And when I came to the real­iza­tion that I could let go—which was very, very painful for me, after all the years I had put in—and I addressed the idea of leav­ing, I almost felt a sense of relief.”
     On August 15th, in a let­ter to the staff of Warn­er Bros., Ostin wrote, “I am nei­ther resign­ing nor retir­ing. I am, how­ev­er, mov­ing on.” As of Jan­u­ary 1, 1995, he would become a con­sul­tant to Time Warner’s chair­man, Ger­ald Levin, for an unspec­i­fied peri­od. The news that Mo Ostin, the Great Record Man, had been forced to leave Warn­er Bros. before his time—that was how the indus­try took it—was greet­ed with a degree of out­rage that must have come as a sur­prise to Mor­ga­do. For all Morgado’s doubts about Lenny Waronker, it was Waronker who saved him from even greater oppro­bri­um, by agree­ing to take over as chair­man when Ostin left the label.
     Around this time, Mor­ris began to encounter seri­ous dif­fi­cul­ties with Mor­ga­do. The two men were dead­locked over Inter­scope, the hot inde­pen­dent label cre­at­ed by Jim­my Iovine and Ted Field which Mor­ris had gam­bled on. Atlantic was still a minor­i­ty share­hold­er in Inter­scope, and Mor­ris was anx­ious to exer­cise a buy­out option to acquire the label from Iovine and Field. Under the terms of the agree­ment, after a cer­tain date Inter­scope could solic­it out­side bids, and unless Atlantic was will­ing to match the high­est bid it would be forced to sell its shares. Mor­ris was fear­ful that Sony or Poly­Gram would snatch the label away, but Mor­ga­do was hes­i­tant about approv­ing the ask­ing price for the out­stand­ing shares; accord­ing to indus­try rumor, Iovine and Field val­ued their com­pa­ny at three hun­dred mil­lion dol­lars. (Iovine will not con­firm the fig­ure, but says, “I’m not gonna sit here and be coy and say I don’t want to make a for­tune.”) Mor­ga­do did agree to let Inter­scope solic­it bids ear­ly, as a way to estab­lish a mar­ket price, but then, inexplicably—and with­out con­sult­ing Morris—he threat­ened to lit­i­gate if any oth­er com­pa­ny actu­al­ly tried to pur­chase Inter­scope. Mor­ris was hor­ri­fied; Morgado’s heavy-hand­ed­ness was sure to antag­o­nize Iovine and Field, and might even destroy Atlantic’s chances of acquir­ing the label. (By last week, no deal with Inter­scope had been struck.)
     Soon Mor­ris was in for anoth­er shock. For four years, Enter­tain­ment Week­ly, a mag­a­zine pub­lished by Time Warn­er, had com­piled an annu­al list of what it calls the “Pow­er 101”—the most influ­en­tial peo­ple in movies, tele­vi­sion, music, books, and video. Each per­son on the list mer­its a pho­to­graph or an illus­tra­tion and a resume. As the fifth annu­al sur­vey was going to press, in mid-Octo­ber, a fact-check­er for the mag­a­zine called Morgado’s office. Mary Kaye Schilling, the senior edi­tor in charge of the Pow­er 101 issue, says that the staff was par­tic­u­lar­ly con­cerned about Mor­ga­do, because the pre­vi­ous year the mag­a­zine had made an error in his entry. But the check­er inad­ver­tent­ly revealed that Mor­ga­do was to share his spot on the list with Doug Mor­ris; Schilling says that Morgado’s press rep­re­sen­ta­tive told her that Mor­ga­do would find it “insult­ing” to be ranked equal­ly with Mor­ris. She adds, “It was eleven at night, and Jim Seymore”—the man­ag­ing editor—”just said ‘Fuck it’ and took Mor­ris out. It was a mis­take to give in to the pub­li­cist.” Mor­ris was bad­ly shak­en by this lat­est humil­i­a­tion.
     The last thing that Warn­er Music need­ed now was more trou­ble, but on Mon­day, Octo­ber 24th, Lenny Waronker sud­den­ly reversed his ear­li­er deci­sion to suc­ceed Mo Ostin as chair­man of Warn­er Bros. Records. In his own let­ter to the staff, Waronker said that he would con­tin­ue to serve as pres­i­dent under his cur­rent con­tract, which expires at the end of next year, and that he would “help in the tran­si­tion.” The mean­ing was clear: Waronker was going to quit the com­pa­ny.
     Imme­di­ate­ly, a num­ber of top Warn­er acts that had been signed by Ostin and Waronker, among them Tom Pet­ty, Neil Young, R.E.M., and Eric Clap­ton, pub­licly protest­ed the immi­nent depar­ture of Waronker, and blamed cor­po­rate man­age­ment in New York. The mem­bers of R.E.M., whose new album, “Mon­ster,” had had its debut at No. 1, and who had only one album left on their con­tract, hint­ed that they were shop­ping for a new label. An air of pan­ic set in. “Every­one was say­ing that the com­pa­ny was spin­ning out of con­trol,” Mor­ga­do recalled.

ON WEDNESDAY, Octo­ber 26th, Mor­ris had the first of sev­er­al tense con­ver­sa­tions with Mor­ga­do. A new suc­ces­sor to Ostin would have to be brought in rapid­ly to restore order, but there was no clear can­di­date. A week ear­li­er, Mor­ris had sum­moned from Lon­don the chair­man of Warn­er Music U.K., a man named Rob Dick­ins. Dick­ins has a rep­u­ta­tion for being one of the most arro­gant and impe­ri­ous peo­ple in the music busi­ness. Though he is now only forty-four years old, he had been in charge of oper­a­tions in the Unit­ed King­dom for eleven years, and he made no secret of his ambi­tion to run Warn­er Bros. Records. After inter­view­ing Dick­ins, how­ev­er, Mor­ris had some seri­ous doubts about whether he was the right man for the job. Now Mor­ga­do was pres­sur­ing Mor­ris to change his mind.
     The prin­ci­pal top­ic of the two men’s ongo­ing dis­agree­ment, how­ev­er, was whether Doug Mor­ris had any real authority—in the light of the inci­dents involv­ing Inter­scope and Enter­tain­ment Week­ly, it appeared that his job was mean­ing­less. As the day wore on, the last traces of civil­i­ty between Mor­ga­do and Mor­ris began to break down. Around mid­day, Time Warner’s chair­man, Ger­ald Levin, dropped by Morgado’s office for a few min­utes. Levin had had his own prob­lems recent­ly: Time Warn­er stock was trad­ing near its one-year low, in part because of reg­u­la­to­ry issues that might adverse­ly affect the company’s cable-tele­vi­sion unit, but also because of con­tin­u­ing con­cerns about the qual­i­ty of man­age­ment at the com­pa­ny fol­low­ing the death of Steve Ross. Levin brusque­ly told Mor­ga­do and Mor­ris that they must set­tle their dif­fer­ences, or he would have to step in and set­tle them him­self. Hours lat­er, how­ev­er, Mor­ga­do and Mor­ris were still at an impasse.
     Even though Mor­ris had offi­cial­ly been pro­mot­ed to pres­i­dent and chief oper­at­ing offi­cer of Warn­er Music‑U.S. in July, he had yet to sign his employ­ment con­tract. In utter frus­tra­tion, Mor­ris had been offer­ing to return the con­tract unsigned and go back to Atlantic Records. By ten that evening, Mor­ris had left the Time Warn­er Build­ing and returned home; Mor­ga­do called him to say that the offer to go back to Atlantic was accept­ed. Around mid­night, Mor­ga­do phoned Mor­ris again, to tell him that he had called Rob Dick­ins in Lon­don and giv­en him the chair­man­ship of Warn­er Bros. Records.
     Short­ly after the first call from Mor­ga­do, Mor­ris began to phone peo­ple he con­sid­ered to be his loy­al­ists, to tell them he had just been demot­ed. He called Ahmet Erte­gun, Dan­ny Gold­berg, and Mel Lewin­ter, the exec­u­tive vice-pres­i­dent of Warn­er Music‑U.S. Before the night was over, the news had been bro­ken to six oth­er loy­al­ists: Sylvia Rhone, for­mer­ly of Atlantic, whom Mor­ris had appoint­ed chair­man of Elek­tra to replace Bob Kras­now; Val Azzoli, the gen­er­al man­ag­er of Atlantic Records; Stu­art Her­sch, the chief exec­u­tive of A*Vision, the home-video and tele­vi­sion unit of the Atlantic Group; Jason Flom, the senior vice-pres­i­dent of A. & R. at Atlantic; Tony O’Brien, the Atlantic Group’s chief finan­cial offi­cer; and Ina Meibach, the exec­u­tive vice-pres­i­dent of the Atlantic Group. All nine loy­al­ists agreed to meet with Mor­ris the next morn­ing at Hersch’s apart­ment.
     At about 1 a.m. Lon­don time on Thurs­day, Octo­ber 27th, Rob Dick­ins got a call from Morgado’s office instruct­ing him to take the next Con­corde to New York. Dick­ins caught the 10:30 a.m. flight out of Heathrow, which arrives in New York at ten-twen­ty the same morn­ing. By a remark­able coin­ci­dence, Dick­ins found him­self seat­ed next to Steve Stew­art, who is the man­ag­er of the Stone Tem­ple Pilots, an Atlantic group. “He was in good spir­its and very excit­ed,” Stew­art says of Dick­ins. “We talked about real estate in Bur­bank.” On arriv­ing in New York, Dick­ins checked into a room at the Car­lyle. He sat and wait­ed for the phone call from Morgado’s office that would sum­mon him to Rock­e­feller Plaza for his anoint­ment and the press con­fer­ence that was sure to fol­low.
     Dick­ins did not know it, but Mor­ris was then back in Morgado’s office, still argu­ing. Mean­while, Morris’s loy­al­ists had gath­ered at the Her­sch apart­ment, and their emo­tions ran high. Was Mor­ga­do real­ly demot­ing Doug or just call­ing his bluff? Final­ly, the group dis­cussed con­sult­ing lawyers to explore all pos­si­ble options, includ­ing ear­ly release from their employ­ment con­tracts. Mor­ris arrived at the apart­ment as the meet­ing was about to break up; accord­ing to one of the atten­dees, he said, “Let’s have some salmon and get back to work.”
     Mor­ris returned to his office, and a short time lat­er he got a mes­sage from Mor­ga­do: the appoint­ment of Dick­ins was on hold, and Mor­ga­do was pre­pared to try to resolve the prob­lem of his own and Morris’s over­lap­ping respon­si­bil­i­ties. Mor­ga­do had caved in, and Mor­ris and his loy­al­ists are not sure to this day exact­ly why, but some of them sus­pect that Ger­ald Levin had made good on his threat to inter­vene; he had spo­ken on the phone to sev­er­al of the loy­al­ists and was aware of their dis­con­tent. (Levin declined sev­er­al inter­view requests for this account. Mor­ga­do will not dis­cuss any details of his dis­pute with Mor­ris, main­tain­ing that it has been “blown way out of pro­por­tion.”) By after­noon, Mor­ga­do had issued a state­ment of four brief para­graphs, to reas­sure the com­pa­ny and the news media that rumors of dishar­mo­ny between him and Mor­ris were “mere­ly spec­u­la­tion” and “with­out mer­it.” In the fourth para­graph, he made a pass­ing ref­er­ence to “Warn­er Music‑U.S. chair­man and CEO Doug Mor­ris, who is respon­si­ble for Warn­er Music Group’s U.S. record­ed-music oper­a­tions.” Morris’s title had been pres­i­dent; with­out actu­al­ly announc­ing it, Mor­ga­do had just giv­en him a pro­mo­tion.
     Rob Dick­ins was still sit­ting by the phone in his room at the Car­lyle; he did not learn until around nine that evening that Mor­ris had con­clu­sive­ly vetoed his appoint­ment. One of the peo­ple who spoke to Dick­ins that day says, “He ran the gamut of emotions—from fear to dis­ap­point­ment to fury to revenge.” Dick­ins flew back to Lon­don the next morn­ing. Mor­ga­do said, “I’m extreme­ly sym­pa­thet­ic, and I feel very bad about Rob. But Doug, if he is to do the job, has to have some­body he feels com­fort­able about work­ing with.”
     By Tues­day, Novem­ber 1st, it was offi­cial: the new chair­man and C.E.O. of Warn­er Bros. Records was Kurt Cobain’s “spir­i­tu­al father” and Doug Morris’s disciple—Danny Gold­berg. After uproot­ing his wife, Rose­mary Car­roll, who is a top enter­tain­ment lawyer, and their young daugh­ter ear­li­er this year to move from Los Ange­les to New York and become pres­i­dent of Atlantic, Gold­berg was going to have to uproot them again and move them back to L.A. Mean­while, Val Azzoli, the gen­er­al man­ag­er of Atlantic, who is a Mor­ris favorite, was pro­mot­ed to Atlantic pres­i­dent; Ahmet Erte­gun stayed on, as solo chair­man.
     Though Mor­ga­do still has author­i­ty over Warn­er Music’s inter­na­tion­al divi­sion, pub­lish­ing com­pa­ny, and record club, it is Mor­ris, his nom­i­nal sub­or­di­nate, who has the upper hand with the Amer­i­can labels. Now Warn­er Bros., Elek­tra, and Atlantic will be run by peo­ple who owe their alle­giance to Mor­ris. And because of his pub­lic schism with Mor­ga­do he does not even have to share in the blame for forc­ing out Ostin and Waronker and Kras­now. Instead, he gets to play the hero—the record man who defeat­ed the ulti­mate cor­po­rate suit.

A FOOTNOTE: The dra­mat­ic events at the Warn­er Music Group did not go unre­marked by a group of record-indus­try peo­ple who com­mu­ni­cate hourly in a “dirt file” on Amer­i­ca Online, the com­put­er ser­vice. Most of the cor­re­spon­dents are anonymous—they use han­dles like Moose­brain and Bond­Girl and Knowbiz—but not all. Dan­ny Gold­berg is among the chat­ters who signs his name; recent­ly he logged on to try to quell an improb­a­ble sto­ry that had been mak­ing the rounds. (“The rumor of Mor­ga­do and Mor­ris com­ing to blows is total­ly untrue.”) Most­ly, though, the cor­re­spon­dents ana­lyzed the events and debat­ed the fate of the par­tic­i­pants. “Mor­ga­do down, but not out,” wrote Know­biz. “Sky, how­ev­er, is still very gray.” A chat­ter known as Meannlean offered this obser­va­tion: “It’s no secret that Mo’s sta­tus was a threat to Morgado’s author­i­ty with­in the ‘Time Warn­er’ Music Group.… Isn’t it iron­ic that through Morgado’s efforts to gain con­trol from Mo, he lost it to Doug?” ♦