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Madonna’s label ripping off Warners?

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CMU. reports:

Also from the file marked ‘petty squabbles’ – erm, I mean, ‘litigation’ -more details on the dispute between Warner Music and its imprint Maverick after the former’s legal case against the latter was revealed yesterday.

As previously reported, Maverick – a joint venture label co-owned by Warners, Madonna, Guy Oseary and Ronnie Dashev – is attempting to break its link with the major label following the takeover by Edgar Bronfmann Jnr. Insiders expected Maverick bosses to simply utilise a clause in their contract with Warners that said they could end their agreement and buy out
the major’s share if there was a change of ownership. However, despite initial rumours of productive talks between the two parties, Maverick then filed legal proceedings which tried to void their relationship with Warners and seek compensation from them on the grounds that the major had been in breach of contract on numerous occasions in recent years.

Warner Music filed their own sealed lawsuit against Maverick less than 24 hours before the imprint. Details of that lawsuit were revealed yesterday. According to the Hollywood Reporter it states that Warners fulfilled all its obligations to Maverick and, what’s more, that the imprint owes the major $66 million relating to losses made by Maverick but covered by Warners, plus an additional $20 million to repay a loan and $6.5 million in unpaid fees. Therefore, the major argues, Maverick will need to pay $92.5 million in addition to 40% of the agreed value of the imprint (ie Warners’ share) in order to buy itself out of their partnership. The major is also threatening to take complete control of Maverick in order to recoup that $92.5 million.

Both sides are now awaiting the opportunity to fight their respective arguments in court. While the legal people go through the due process it’s unclear how the wranglings will impact on Maverick, and high profile releases such as Alanis Morrisette’s new album, out next month. Meanwhile Warners continue to claim the ongoing legal dispute does not affect their relationship with Madonna as an artist.

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  • Sandra Smallson

    update: Maverick responds!!

    hitsdailydouble.com:

    April 21, 2004

    Call it the 66 million-dollar question.

    The legal wrangling between Madonna’s Maverick Records and joint-venture partner Warner Music Group appears to be heating up, as WMG claims Maverick has lost $66 million since 1999—a claim Maverick’s attorney dismisses in no uncertain terms.

    The WMG claims were made in recently unsealed court filings stemming from its “preemptive” March 24 suit in a Delaware asking the court to affirm that WMG has no further obligation to Maverick and that Maverick’s claims, filed via a $200 million lawsuit in Los Angeles Superior Court on March 25, are baseless.

    The lawsuits came as the two sides were negotiating how to unwind their joint-venture partnership, which expires at the end of the year.

    Hollywood A-list attorney Bert Fields, who is representing Maverick in the matter, told HITS that he finds reports of WMG’s claim of Maverick losses suspicious.

    “It wasn’t enough that they pulled this stab-in-the back suing of Madonna’s company when we were in the middle of settlement negotiations, without warning. But now they’ve turned loose the massive Warner PR machine to smear Madonna and her partners with a bunch of baloney. For example, they claim they’ve incurred all these huge losses. That’s absolute hogwash. If you include all the money that’s skimmed off the top by the various Warner entities before it trickles down to Maverick, the Warner Music Group as a whole has a handsome profit—probably 100 million dollars. So for them to go around and say they’ve incurred these huge losses is grossly misleading.”

    The unsealed court documents further reveal that WMG expects to be paid $92.5 million by Maverick, which in addition to the alleged losses includes repayment of a $20 million loan and a $6.5 million “special fee.” Only then, WMG says, would Maverick be able to make an offer for WMG’s 40% of the joint venture according to their contract’s buy-sell clause.

    If Maverick is unable to raise the money to buy its freedom, WMG claims it would then be free to convert Maverick to a “purely passive economic interest” in which current partners Madonna, Guy Oseary and Ronnie Dashev would no longer have control of the label, according to reports.

    Maverick’s suit, meanwhile, alleges that WMG failed to keep up its end of the joint-venture bargain. Maverick says it had to spend $30 million on promotion, publicity, new media, sales and marketing expenses that WMG was required to pay under their contract.

    “They say that our claims are baseless,” Fields continued. “Well, I want to hear one Warner executive—just one—testify under oath that they have really supplied the services that they are required by contract to supply. They know they haven’t done that. They know that they are vulnerable there and that they are in breach of the contract. And yet, they put out this kind of claim. To me, this sends a real message to artists who are looking for a record company to sign with, because apparently, this is how they’re going to treat their people. If you talk to people, managers for example, whose clients were putting albums, about what Warner did or didn’t do, it’s just appalling, and we’re going to prove it in court.”

    Sources say Warner Music Group insiders have previously stated that Maverick has been profitable every year of its 12-year run except for 2000. Meanwhile, Alanis Morissette’s new album, So-Called Chaos is due for release May18. How will WMG’s new owners, Edgar Bronfman Jr., Thomas Lee Associates and partners proceed? Will Madonna be mad? Expect the heightened rhetoric to continue.

  • anne marie laughlin

    i think madonna smells really bad but i love her shes da best i love her and love her and lover her