1997.05.31 - Los Angeles Times - Geffen Records Trims Work Force by 10%

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Geffen Records Trims Work Force by 10%

■ Music: The reduction move at the once-hot label signals a restructuring at MCA Records, sources say.

By CHUCK PHILIPS
TIMES STAFF WRITER

Following a corporate edict to cut costs, Geffen Records slashed more than 10% of its work force on Friday.

The firings at Geffen set the stage for a restructuring at MCA Records next month that is expected to result in the net loss of about a dozen employees, sources said.

Geffen, once the hottest label in the music business, has been going through a lengthy dry spell in which the West Hollywood company has seen its U.S. market share dwindle to a meager 2.5% for current album sales.

The label issued a statement Friday saying that it made the “very difficult decision to redirect its resources" by eliminating about 20 employees.

Among those who lost their jobs was Roberta Peterson, head of the artist and repertoire, the department responsible for signing and developing new talent.

Geffen, which dominated the business in the early 1990s with rock hits by Nirvana and Guns N’ Roses, logged only three albums this week on Billboard’s national pop top 200 chart. Despite modest showings from Beck, Veruca Salt and the Counting Crows in recent years, the company has had tremendous difficulty in breaking new acts.

Sources said Geffen Chairman Ed Rosenblatt was notified earlier this month by Universal’s corporate office that his under-performing label must either deliver stronger financial results or make a specific cut in its budget.

The company chose to save money by cutting jobs across several departments. Staff members were notified Friday.

No acts were dropped as part of the cost-reduction move, but Geffen has planned for months to lose several slow-selling artists. Sources said critic darling Maria McKee may leave the company.

In 1994, Geffen accounted for more than a quarter of the total global revenue of Universal’s music division.

But sales have been sluggish at Geffen since its parent, Universal Music Group (formerly MCA), was purchased two years ago by Seagram Co. Last year, Interscope replaced Geffen as the rock powerhouse and breadwinner in the Universal family.

Only those employees who were being laid off were notified Friday. Rosenblatt is expected to announce the staff cuts Monday at a company “town hall’’ meeting.

This articles contains some of the reasons and development that led to this a year later:

https://www.a-4-d.com/t4484-1998-12-21-the-new-york-times-a-major-merger-shakes-up-the-world-of-rock