BMG Names Reid to Succeed Davis at Arista

Ending months of tense behind-the-scenes wrangling, Bertelsmann Music Group announced Tuesday that Antonio “L.A.” Reid will take over as president of its Arista Records division on July 1--the day the contract of his predecessor, Clive Davis, expires.

Reid’s long-rumored ascension has been overshadowed by controversy ever since Davis stormed out of a meeting last fall at BMG headquarters after being notified about the succession plan by BMG global music chief Strauss Zelnick. Davis’ battle with the German conglomerate has enraged many executives and artists at the record label, including Carlos Santana, Aretha Franklin and Whitney Houston--all of whom have come out in force to voice their outrage over his ouster.

“This was never about an ouster,” Zelnick said in an interview Tuesday. “I have the greatest respect for Clive Davis. BMG has always said that we have to deal with succession planning and contracts as they come up. Our goal has always been the same: Build this company creatively. Build upon Clive’s great legacy.”

Davis, 66, a notoriously obstinate executive, rejected the succession plan because he perceived it as a move to shove him out the door of the label he founded 25 years ago. The executive, who is expected to launch a new label in the fall, tried to put the best face on the announcement in a statement released Tuesday by a New York publicist.

“Though I regret the imposition of the Bertelsmann retirement-age policy, it’s time now to turn a new and vital chapter in this fast-changing world of music,” Davis said in the statement.

Reid’s promotion follows BMG’s recent acquisition of LaFace Records, a successful Arista-affiliated label founded by Reid and Kenneth “Babyface” Edmonds. LaFace, which has released a string of R&B; and rap hits from such stars as Toni Braxton, TLC and OutKast, was brought into the Bertelsmann family by Davis.

In an interview from BMG’s New York headquarters, Reid said he wasn’t worried that the news of his promotion has been eclipsed by the fireworks surrounding Davis’ fight with BMG.

“It wasn’t really any of my business,” Reid said. “I never perceived it as a war to begin with. I think both Strauss and Clive behaved like gentlemen. But I respect Clive and understand his position. He doesn’t want to just walk away. If I was Clive, I wouldn’t want to walk away, either.”

Davis had long resisted agreeing to a succession plan and began fighting with BMG in November after Zelnick informed him that the corporation intended to bring Reid on board. Davis, who earns a whopping $20 million annually in salary and bonuses, has run the label autonomously with great success, contributing about a third of BMG’s worldwide market share. But his critics say Davis spends far too much money promoting his artists, which cuts heavily into BMG’s profits.

Reid, a Grammy-winning producer who started out making hits for such dance acts as Bobby Brown and Paula Abdul, says he believes he can keep Arista on top of the charts after Davis leaves. But he faces significant obstacles in taking over the reins at Davis’ demoralized label.

Davis’ departure is expected to be followed by an exodus of top executives at the company, including the heads of marketing and promotion as well as its general manager. If Davis accepts BMG’s offer to launch a new label, a number of top Arista artists, including Houston and Santana, could also jump ship.

Anticipating a shake-up, Zelnick plans to install BMG corporate executives Matt Flott as senior vice president of finance and Steven Gawley as head of business affairs, sources said. Zelnick and Reid have also approached Atlantic Records general manager Ron Shapiro to take a key role at the label.

Zelnick has been grooming Reid to become president of Arista for nearly three years. Zelnick’s boss, Bertelsmann chief Michael Dornemann, signed on to the plan soon after and approved the step of enrolling Reid in a six-week executive course at the Harvard School of Business, which he completed two years ago.

Reid’s critics have questioned whether a black executive trained in urban music has what it takes to run a label built on pop music acts. Asked whether he thought such attacks on his credibility as a music executive were racist, he disagreed.

“I wouldn’t characterize it as racism,” Reid said. “I’m coming into this job behind one of the most important men ever in the record business--and that’s a tall order. I think it’s fair for that people to speculate about it.

“But just because my background is in black music, that doesn’t mean I don’t love it all. Anybody who knows me knows that I have a passion for music--and hopefully that passion will speak loudly in the success we achieve at Arista in the future.”