Elektra Chief Bob Krasnow Abruptly Quits : Entertainment: Chairman of recently realigned Warner Music unit cites sudden exclusion from the corporate inner circle.

The first casualty in the corporate shake-up at Warner Music Group occurred Tuesday as Elektra Entertainment Chairman Bob Krasnow abruptly resigned. At the same time, Warner Bros. Records Chairman Mo Ostin indicated that he will remain in place under the new regime.

The future of both executives was called into question Monday when Warner Music Group announced a realignment that requires Ostin and Krasnow to report to former Atlantic Group Chairman Doug Morris, who was elevated to the top of Time Warner Inc.’s new domestic music division.

The realignment was orchestrated by Warner Music Group Chairman Robert Morgado, who is trying to stimulate business at the labels.

Sources said Krasnow--who masterminded the success of such acts as Metallica, Natalie Cole and Tracy Chapman during his 11-year-tenure--blamed his departure on his exclusion from the new corporate inner circle. A Warner Music Group spokeswoman confirmed that Krasnow resigned, but she declined to comment further. Krasnow, who is said to have had two years left on his contract, did not return calls.

The 59-year-old executive, widely respected for his keen musical ear and bold decisions, has been dogged recently by Elektra’s lackluster chart and fiscal performance. Once the toast of the industry, the eclectic New York label has been sorely lagging behind its sister companies, Atlantic Group and Warner Bros. Records.

EastWest Chief Executive Sylvia Rhone, a 13-year Warner Atlantic veteran who has overseen the success of such acts as En Vogue and Pantera, could take over the reins at Elektra as early as next week, sources said.

Krasnow’s sudden resignation was the talk of the industry.

“Everybody has good years and bad years, but as far as I’m concerned Bob Krasnow is one of the smartest and most talented executives working in the music business these days,” music mogul David Geffen said. “His track record as a talent scout is impeccable. My guess is Bob will do fantastic wherever he ends up deciding to work.”

At Warner, sources said Ostin privately committed to remaining as chairman even though he is upset by the changes at the company. He will concentrate on overseeing a series of much-anticipated releases by such blockbuster artists as R.E.M., Madonna, Prince, Eric Clapton, Van Halen, Neil Young and the Red Hot Chili

Peppers. Ostin’s contract runs through the end of the year, but sources said he is expected to continue at the helm until at least 1996.

Interscope co-chief Jimmy Iovine denied rumors that he is being groomed to take over Ostin’s position at Warner Bros. Records.

“These rumors are absurd,” he said. “Interscope is taking up all of my available time. Besides, Mo is the preeminent record executive and someone I greatly admire.”