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Warner Bros. Records

History

Introduction

Warner Bros. Records was incorporated in 1958 as the recorded music division of the Warner Bros. Pictures movie studio. For most of its existence Warner Bros Records was one of a group of labels owned and operated by larger parent corporations. The sequence of companies that controlled Warner Bros and its allied labels evolved through a convoluted series of corporate mergers and acquisitions from the late 1960s to the early 2000s. In 2003 these music assets were divested by their then owner Time Warner and purchased by a private equity group, becoming the Warner Music International. WMI is currently the third-largest of the four major international music conglomerates, and its extensive publishing assets currently make it the world's largest music publisher.

Warner Bros Pictures made an early (but ultimately abortive) move into the music business. At the end of the silent movie era Warner Bros. Pictures decided to expand into publishing and recording so that it could access low-cost music content for its films. In 1928 the studio acquired several smaller music publishing firms -- including M. Witmark & Sons, Remick Music Corp., Harms Inc. and a partial interest in New World Music Corp. -- and merged them to form the Music Publishers Holding Company, which controlled valuable copyrights on standards by George and Ira Gershwin and Jerome Kern and the new division soon bringing in solid profits of up to US$2 million annually.

In 1930 MPHC paid US$28 million to acquire Brunswick Records, whose roster included Duke Ellington, Red Nichols, Leroy Carr, Tampa Red and Memphis Minnie, and soon after the sale to Warners, the label signed rising radio and recording star Bing Crosby. Unfortunately for Warners, the impact of the Great Depression soon decimated the record industry and sales plummeted from 104 million in 1927 to just 6 million by 1932, when the label was offloaded to American Record Corporation for a fraction of its former value. This loss implanted a deep suspicion about the music industry in Warner corporate director Herman Starr, who also headed MPHC from 1939. Due to his considerable influence with Jack Warner, the studio stayed out of the record business for more than 25 years, and during this period it licensed its film music to other companies for release as soundtrack albums.

1958-1967: formation and early growth

Warner re-entered music in 1958 with the establishment of Warner Bros Records. By this time the established Hollywood studios were reeling from multiple challenges to their former dominance, the most notable being the introduction of television in the late 1940s. Legal changes also had a major effect -- lawsuits brought by major stars had effectively overthrown the old studio contract system by the late 1940s; Warner Bros Studios sold off much of its movie library in 1948 (although, ironically, Time Warner's 1989 takeover of Turner Broadcasting returned most of the Warner archive to the company) and in 1949 anti-trust action by the US government forced the five major studios to sell off their cinema chains.

In 1956 Harry Warner and Albert Warner sold their interest in the studio and the Warner board was joined by new members who were more favourably disposed to a renewed expansion into music -- Charles Allen of the investment bank Charles Allen & Company, Serge Semenenko of the First National Bank of Boston and investor David Baird. Semenenko in particular had a strong professional interest in the entertainment business and he began to push Jack Warner on the issue of setting up an 'in-house' record label.

Warner Bros. Records opened for business on 19 March 1958, and its original office was located above the film studio's machine shop at 3701 Warner Boulevard in Burbank, California. Another impetus for the label's creation was the fact that Warner Bros. contract actor Tab Hunter scored a number one hit in 1957 with the single "Young Love", recorded for Dot Records. To Warners' chagrin, reporters were primarily asking about the hit record, instead of Hunter's latest Warner movie. The company quickly signed Hunter to the newly formed record division, and while his subsequent recordings for the label failed to duplicate the success that he had with Dot, the fledgling Warner Bros. Records was nonetheless successful.

For its first decade Warner Bros. Records was a relatively minor player compared to the market leaders, the British-based EMI and the two largest American labels, RCA Records and Columbia Records. However, Warner Bros. gradually built up a formidable roster by signing significant recording artists and especially by its acquisition of a string of prestige independent labels through the 1960s and 1970s.

In 1960, the label scored its first major coup by signing The Everly Brothers (who had previously recorded for Cadence Records) with the first million-dollar contract in music history. The same year, they released two albums by comedian Bob Newhart which each won Grammy Awards, including the Album of the Year.

In 1963, Warner Bros. Records closed its famous animation division, but later that year it purchased Frank Sinatra's Reprise Records in a "rescue" takeover. Although Reprise was struggling at the time of the sale, the acquisition ultimately proved very lucrative -- it flourished in the late 1960s thanks to Sinatra's famous "comeback", the hits by Sinatra and his daughter Nancy, and the acquisition of the U.S. distribution rights to the recordings of Jimi Hendrix, and Reprise remains part the Warner Music fold to this day.

In 1964, the label successfully negotiated with French label Disques Vogue and British label Pye Records for the rights to distribute Petula Clark's recordings in the US, beginning with her international hit "Downtown." Eight years later, in 1972, Dionne Warwick was brought to the label after leaving Scepter Records in a deal that was the biggest contract at the time for a female recording artist, although Warwick's five years at Warners were relatively unsuccessful in comparison to her spectacular hit-making tenure at Scepter.

1967-1989: the WEA era

In 1967 Jack Warner sold his controlling share in the Warner empire to Seven Arts Productions for US$95 million and the group was renamed Warner Bros.-Seven Arts. Soon after this Warner's music division expanded dramatically with the purchase of one of the most famous and successful American independent labels, Atlantic Records.

In 1969 Warner-Seven Arts was taken over by Kinney National Services, a conglomerate with wide-ranging interests that included comic publishing, the Ashley-Famous talent agency, parking-lots, cleaning services and funeral parlours. Warner Bros. Records worldwide briefly adopted the 'umbrella' name Kinney Music, because U.S. anti-trust laws at the time prevented the three labels from trading as one, so Kinney renamed the film and music group Warner Communications. Its stewardship helped rebuild the company's image, which had been tarnished by corruption and payola scandals.

During the 1970s the Warner group built up a commanding position in the music industry. In 1970 it bought Elektra Records (founded by Jac Holzman in 1950) for US$10 million, bringing in leading rock acts including The Doors, Tim Buckley and Love, and the historically significant Nonesuch Records folk archive. The same year, the group established its first overseas offices in Canada and Australia. By late 1972 U.S. anti-trust laws had changed and the company was renamed WEA Records (from the first initial of each of the three main labels, Warner Bros., Elektra and Atlantic).

Atlantic, its subsidiary Atco Records and its affiliate Stax Records paved the way for Warner group's rise to industry prominence. The purchase brought in Atlantic's lucrative back-catalogue, which included classic recordings by Ray Charles, The Drifters, The Coasters, Etta James and many more, and in the mid Sixties, Atlantic/Stax released a string of landmark soul music recordings by artists including Booker T & the MGs, Sam & Dave, Wilson Pickett, Otis Redding and Aretha Franklin. But the sale led to Stax leaving the Atlantic fold because the new Warner owners insisted on keeping the rights to Stax recordings. However Atlantic also moved decisively into rock and pop in the late 1960s and 1970s, signing major British and American acts including Cream, Crosby Stills & Nash, Yes, Led Zeppelin, The Average White Band, The Faces, Dr John, King Crimson, Bette Midler and Foreigner.

During this period the Warner Bros. label continued to build a prestigious rock/pop roster, beginning in the late 1960s with The Grateful Dead; by the early 1970s its signings included James Taylor, Van Morrison, America, Van Dyke Parks, Little Feat, Alice Cooper, Bonnie Raitt, Seals & Crofts and LaBelle.

Reprise also carved out its own distinctive niche, augmenting its complement of popular vocalists (Frank and Nancy Sinatra, Dean Martin, Sammy Davis Jr, Trini Lopez) with an eclectic roster ranging from popular music to comedy. This grew to include Lee Hazlewood, the early Joni Mitchell recordings, Neil Young, The Electric Prunes, The Kinks' Pye recordings, Arlo Guthrie, Norman Greenbaum, Tom Lehrer, Tiny Tim, Ry Cooder, Captain Beefheart, the early 1970s recordings by Frank Zappa and The Mothers, Gram Parsons, Emmylou Harris, Nico, The Fugs, Jethro Tull, Pentangle, T.Rex, The Meters, John Cale, Gordon Lightfoot, Michael Franks, Richard Pryor, Al Jarreau and the early '70s recordings of The Beach Boys.

One of the Warner group's wisest investments was Fleetwood Mac. The band signed to Reprise in the early 1970s after relocating to the USA and the label supported them through numerous lineup changes and several lean years during which the band's records sold relatively poorly, although they remained a popular concert attraction. Ironically, after their transfer to Warner Bros in 1975 and the recruitment of new members Lindsay Buckingham and Stevie Nicks, the group scored a major international hit with the breakthrough single "Rhiannon" and consolidated with the blockbusting albums Fleetwood Mac, Rumours and Tusk, becoming one of the most successful bands of all time.

In 1972 the Warner group acquired another rich prize, David Geffen's Asylum Records, which brought in the cream of the emerging 'West Coast' acts including Joni Mitchell, The Eagles, Linda Ronstadt, Jackson Browne and Warren Zevon. In 1976 Warner gained a brief early lead in digital media when it purchased the Atari computer company, and in 1981 it bought the Franklin Mint novelty company, but in 1984-5 Warner rapidly divested many of these recent acquisitions, including Atari, Franklin Mint, Panavision and a cosmetics business.

New signings in the late 1970s placed the Warner group in a strong position for the 1980s. A deal with Seymour Stein's Sire Records label (which Warner later took over) brought in several major New Wave acts including The Pretenders, The Ramones and Talking Heads and, most importantly, rising star Madonna; Elektra signed The Cars and Warner Bros. signed Prince, giving WEA several of the biggest-selling acts of the decade.

A proposed 1983 international merger between Polygram and WEA was forbidden by both the US Federal Trade Commission and Germany's cartel office, so Polygram's half-owner Philips then purchased a further 40% of the company from its partner Siemens, and bought the remaining shares in 1987. The same year, Polygram divested its film and publishing operations, closed Polygram Pictures and sold Chappell Music to Warner for US$275 million. In 1988 WEA took over the prestigious German classical label Teldec and the UK Magnet Records label.

1989-2004: the Time Warner era

In 1989 WEA's fortunes changed dramatically when the group was purchased for US$14 billion by the Time-Life media empire, creating Time Warner. Following the takeover, WEA continued acquiring independent labels, buying CGD Records (Italy) and MMG Records (Japan) in 1989, and in 1990 the French labels Carrere Disques and Erato. In 1991, WEA was renamed Warner Music.

In 1994 Canadian beverage giant Seagram bought a 14.5% stake in Time Warner, and the Warner publishing division -- now called Warner/Chappell Music -- acquired CPP/Belwin, becoming the largest world's largest owner of song copyrights and the world's largest publisher of printed music. In 1996 Time Warner made another dramatic expansion of its media holdings, taking over the Turner Broadcasting System, which by then included the Turner cable TV network, CNN and the screen production houses Castle Rock and New Line Cinema.

In 1998 Seagram boss Edgar Bronfman Jr. held talks aimed at merging Seagram's Universal Music with the venerable British recording company EMI, but the discussions came to nothing; Bronfman then oversaw Universal's takeover by Vivendi. WEA meanwhile continued to expand its publishing empire, buying a 90% stake in the Italian recording and music publishing group Nuova Fonit Cetra.

In 2000, Time Warner merged with leading American internet service provider AOL to craete AOL Time Warner. The new conglomerate again tried (and failed) to acquire EMI, and subsequent discussions about the takeover of BMG stalled, with Bertelsmann eventually offloading BMG into a joint venture with Sony. In 2002 AOLT-W further consolidated its hold over the publishing industry, buying 50% of music publisher Deston Songs from edel music AG. By the early 2000s, however, the effects of the "dotcom crash" had eroded AOL's profits and stock value, and in 2003 the Time Warner board sidelined its under-performing partner by dropping "AOL" from its business name.

2004-present: Warner Music International

In 2003, amid management disputes, sagging share prices and rising alarm about the impact of digital file sharing, Time Warner decided to unload its music operations. In March 2004, Time Warner's music assets were acquired by private equity group headed by Thomas H. Lee Partners, Lexa Partners (led by Edgar Bronfman Jr., who put up US$150 million drawn from his family's stake in Vivendi), Bain Capital and Providence Equity Partners. The deal set the group's value at around US$2.6 billion, payable in cash and other considerations, and it included an option that would allow Time Warner to buy back in if conditions proved favorable. Bronfman, Lee, Bain and Providence had reportedly recouped their investment by May 2006 through dividends, refinancing and a share offer floated in May 2005.

The Warner music group currently trades as Warner Music International and is structured in three main units: recording, licensing and publishing. It has thirty-seven affiliates and numerous licensees in over fifty countries, and operates on every continent (except Antarctica). Its major record labels include Atlantic, Bad Boy, Elektra, Erato, Lava, Madonna's Maverick Records, Nonesuch, Reprise, reissue specialist Rhino Records, Sire, Teldec, Warner Bros. and Word Records. Its music publishing division, Warner/Chappell Music, is currently the largest music publisher in the world, with a catalogue of over one million song copyrights. As of October 2005 WMI had 84,000 employees, US$42 billion in annual revenue and a market valuation of US$82 billion.

Once free of Time Warner, WMI began cutting costs by offloading loss-making or low-earning divisions. Like its rival EMI, Warner reacted to the growth of the digital music market by making an historic change, moving out of record production by closing or selling off disk-pressing plants, particularly in territories such as the USA and the Netherlands where production costs are high.

In 2005 the Miami-based Warner Bros. Publications, which printed and distributed a broad selection of sheet music, books, educational material, orchestrations, arrangements and tutorials, was sold to Alfred Publishing, although the sale excluded the print music business of WMG's Word Music (church hymnals, choral music and associated instrumental music).

During 2006 EMI and WMG engaged in a hostile takeover battle, with each rejecting an unwelcome US$4.6bn bid from the other. EMI announced that it had turned down an offer to be acquired by Warner Music, its smaller rival, calling the proposal "wholly unacceptable" and increasing its offer for Warner Music, which was in turn rebuffed.

Today Warner Bros. Records remains one of Warner Music Group's dominant labels, with around 120 artists on its roster.

Despite the divestiture, WMG currently enjoys a royalty-free license from Time Warner for the use of Warner Bros. trademarks although this could be revoked if WMG becomes under control of a major motion picture studio.
American Idol judge Kara DioGuardi was appointed to vice president of A&R in 2008.