1990.03.14 - Los Angeles Times - Geffen Records Sold in $550-Million Deal

Geffen Records Sold in $550-Million Deal
March 14, 1990|From Associated Press

Entertainment colossus MCA Inc. today bought the last big independent music label, Geffen Records, the home of such strong rock acts as Guns N' Roses, Don Henley, Cher, Aerosmith and Whitesnake.

Geffen's sole owner, David Geffen, will receive MCA preferred stock worth about $550 million at today's share price. He can sell it only over a four-year period and thus will benefit if its price goes up and suffer if it falls.

He will stay on as chairman and chief executive of Geffen, which he founded a decade ago in a deal in which Warner Bros. Records distributed his recordings in return for half the profits. That deal expires at the end of the year, and Geffen had been negotiating with Warner, the British Thorn-EMI and other companies.

Geffen Records did about $225 million in business last year.

Asked why Geffen selected MCA, MCA President Sid Sheinberg said, "I would suspect that the difference here is that he's dealing with people he's known for many years, people with a broad basis in entertainment, not just music.

Sheinberg noted that Geffen is known as a brilliant businessman.

"I'm flattering myself, but I think he also felt this was a very good security to own," he said in a telephone interview.

In addition to Geffen's music business, his Geffen Films has produced movies such as "Beetlejuice," "Little Shop of Horrors" and "Risky Business." Geffen Theatre co-produced "M. Butterfly," which earned nine 1988 Tony Awards, "Cats," "Dreamgirls" and "Little Shop of Horrors."

MCA is not buying those businesses. But the Universal City-based giant will acquire rights to Geffen's related music publishing business, founded in 1987 as a vehicle for Geffen Records-related projects. It has since expanded, and its stable of songwriters includes Stephen Sondheim.

As part of the deal, Geffen signed a 20-year "standstill" agreement that bars him from acquiring more MCA stock or engaging in proxy wars.

West Hollywood-based Geffen Records' artists also include Tesla, Peter Gabriel, Edie Brickell and the New Bohemians, Rickie Lee Jones, Pat Metheny, Joni Mitchell, Robbie Robertson, Jimmy Page, Olivia Newton-John, Kitaro, Ric Ocasek, XTC, Christopher Williams and Kylie Minogue.