“You get to be a certain age and these things happen and you say, ‘Look, this is not a fight for me to start at my age.’ Right now, I have a very, very comfortable job. Most people my age have been retired for years. I have the luxury of picking what I do and doing whatever I like with very few obligations and a lot of perks. Why would I now upset the apple cart? Because it is not something I can control.”
—Ahmet Ertegun
In the spring of 1983, the Atari Corporation, which had accounted for a third of Warner’s annual income and been one of the fastest growing companies in United States history, suffered a precipitous $500 million loss that caused the price of Warner’s common stock to plummet from $60 to $20 a share. In the new regime Steve Ross instituted to save his company from ruin, Ahmet was forced to use all his considerable diplomatic skills in order to survive.
Intent on spinning off Atari as he had done with other ventures once they had proved to be no longer profitable, Ross authorized Warner executive Bob Morgado to do “all the cost cutting” for him so he could restore Warner Communications to its former lucrative position. After Morgado had “let over a thousand employees in the corporation go,” he turned his attention with Ross’s blessing to the music division. As Joe Smith explained, “The music division was bloated and not doing well and Steve couldn’t fire anybody so he brought in Morgado. He was not a real likable guy and didn’t fit with the music guys.”
As chief of staff for Governor Hugh Carey of New York, Morgado had worked with Wall Street banker Felix Rohatyn to help create the MAC bonds that bailed New York City out of its financial difficulties in the 1970s. He had also been instrumental in planning and constructing the World Financial Center and the Javits Convention Center in Manhattan. Just before Carey left office in 1982, Steve Ross made Morgado his special assistant and then put him in charge of the record companies at Warner Communications.
Accurately, Morgado saw Atlantic, Warner Brothers, and Elektra as three separate labels that were being run “imperially” by Ahmet, Mo Ostin, and Bob Krasnow. Unable to change the structure at Atlantic because “Ahmet stood there, blocking the doorway,” Morgado decided instead to start with what he called his “area of greatest opportunity.” In the words of Warner’s label executive and author Stan Cornyn, this was also “a euphemism for ‘least-defended fortress’—WEA International,” a division then being run by Nesuhi.
Linda Moran, who worked for thirty-five years at Atlantic and then at the Warner Music Group, said, “Nesuhi put Warner Music International together. He handpicked the head of every country. It was his idea to create it.” Nonetheless, Morgado felt the division was, in Cornyn’s words, “loose, undirected, and indifferent.” Yet another issue was that none of the label heads, Ahmet among them, was pleased with the man Nesuhi had chosen to succeed him as the head of the division.
In May 1985, Morgado brought in Castilian-born Ramón López, the former head of Polygram Records in the United Kingdom, on an equal footing with Nesuhi as the vice chairman of Warner International. Refusing to concede power to López, Nesuhi continued running the division as he always had. In response to Morgado’s urging, the label heads, Mo Ostin and Ahmet among them, decided less than a year later to cancel Nesuhi’s contract and replace him with López.
While Ahmet and Nesuhi had over the years begun leading increasingly separate lives, the bond between them was still so strong that Ahmet could not bring himself to tell his brother the bad news. In part this was because Ahmet would have been unable, in Cornyn’s words, to answer the question, “With all your power, you couldn’t stop this?” According to Cornyn, Ahmet then asked Ostin to inform his brother of the decision. Ostin explained, “I don’t think Ahmet could have stopped it. It was a situation which had steam-rollered to the point where there was no turning back. It wasn’t anything Ahmet instigated. I think he just recognized this was going on and also felt there was no way he could prevent it.” David Horowitz was the one who actually told Nesuhi of the decision.
Moving to an office next to the one occupied by Morgado on the twenty-ninth floor of 75 Rockefeller Plaza, Nesuhi began recording jazz for East/West, a label Atlantic had once distributed that Ahmet reactivated for his brother to run. He also led the fight by the International Federation of Phonograph Industries to stamp out record piracy in Hong Kong, Singapore, Egypt, Turkey, and South Korea.
On March 20, 1989, Nesuhi wrote a long letter to his old friend Jerry Wexler. Going into detail about his recent medical history, Nesuhi noted he had begun experiencing stomach pains more than a year earlier only to be misdiagnosed by a doctor in London. After seeing a physician in New York who suspected he was suffering from ulcers, Nesuhi had learned he was suffering from large cell lymphoma in his stomach.
After having an ulcer and part of his stomach removed and losing thirty pounds, Nesuhi was now about to begin undergoing chemotherapy and expected to “be fully fit and well again after six treatments.” Staying in Ahmet’s house so he could get “some peace and quiet” while his daughter Leyla and his son Rustem from his fourth marriage were home, Nesuhi urged Wexler to begin writing his book. “Frankly,” he confessed, “I am also thinking seriously of starting a book of my own; the trouble is, I can’t write English half as well as you can.”
Two months later, Nesuhi was admitted to Mount Sinai Hospital in Manhattan. On July 15, 1989, at the age of seventy-one, he died from complications following cancer surgery. In his obituary in The New York Times the next day, Susan Heller Anderson wrote, “Elegant and dapper, Mr. Ertegun spoke several languages—all of them quietly. He was a reticent person in a flamboyant industry, and had two passions outside music—soccer and art.”
Delivering a formal eulogy for his brother at a celebration of his life, Ahmet described him as his “mother’s favorite child” and “a natural musician who could play many instruments by ear and also sing beautifully.” Calling him “a loner” and “a perfectionist” who let “very few, if any people into his inner sanctum,” Ahmet concluded by saying, “Nesuhi was my inspiration. Everything I did in my life, I did with the hope that I would get his nod of approval. He is no longer here for me to get that nod but I will continue to try to live by his standards. I miss him very much.”
Six weeks later, on August 29, 1989, Waxie Maxie Silverman, in whose Quality Music Shop both brothers had searched for old 78s while growing up in Washington, died at the age of seventy-nine. At a time when it would have been impossible for him to ignore his own mortality, Ahmet was told by Morgado he would now have to share the job of chairman and CEO of Atlantic with Doug Morris.
Morris had begun his career in the music industry as a songwriter. In 1966, he cowrote “Sweet Talkin’ Guy,” a hit for the Chiffons, as well as what he would later call “the most embarrassing song I ever wrote.” Entitled “Moulty,” the song was a minor hit on which Victor “Moulty” Moulton, the drummer of the Boston garage band the Barbarians, who had lost his left hand at the age of fourteen while holding a homemade pipe bomb that exploded, narrated the story of his life while also singing lead.
In 1970, Morris founded Big Tree Records. He first met Ahmet a year later when he bought the rights to a record by an English pop group called the Magic Lanterns only to have Ahmet call to inform him he had put the record out some years before and it still belonged to him. After Morris produced “Smokin’ in the Boys Room,” a hit for Brownsville Station on Big Tree, he sold his label to Atlantic in 1974 and began working there.
Four years later, Morris became president of Atco. Although Pete Townshend was being offered more money by Jerry Moss at A&M, Mo Ostin at Warner Brothers, and Walter Yetnikoff at CBS, Morris persuaded Townshend to sign as a solo act with Atco. Two years later, Morris signed Stevie Nicks of Fleetwood Mac and brought in Jimmy Iovine to produce a series of big solo hits for her. In a substantive shift in style that accurately reflected the changing nature of the record business, Morris succeeded Jerry Greenberg as the president of Atlantic Records in 1980.
As Greenberg would later say, “I’m the guy who bought Big Tree Records. I brought Doug in and I made him president of Atco because Ahmet wasn’t around and I needed help. And when I left, I said, ‘Make Doug president and I’m here as a consultant and don’t worry about it, it’ll run fine’ and Ahmet got another nice Jewish boy to run his company for him. Doug is a good guy but more corporate and political than I ever was.”
Like all those who had preceded him, Morris was also willing to study at the feet of the master. In Morris’s words, “I learned a lot from Ahmet. I’d had my own successful record company so I knew how to promote records and I had an intuitive feeling for what would sell, or not. More than anything else, I learned about the art of the business from Ahmet. I learned how to talk to people.”
After an “amazing” first year on the job during which Atlantic released five of the Top Ten selling records of 1980, Morris learned how generous Ahmet could be to those who enabled him to continue running the label in his own unique manner. When Ahmet gave Morris, who was then earning $250,000 a year, a year-end bonus of $750,000, Morris said to his wife, “Wow, what did we do? Win the Lotto?” As Morris recalled, “Ahmet then gave me another check for $250,000 of his own bonus money and said, ‘This is a much better number.’ So I got a million. And I was bought lock, stock, and barrel that day for life.”
Morris also saw firsthand how Ahmet dealt with situations that would have driven another man in his position to distraction. After Atari had gone down and threatened to take Warner Communications with it, Steve Ross called Morris and Ahmet to a meeting because, in Morris’s words, “They had to get more serious with the record business so it would become a cash cow again and they wanted to know our strategy and tactics for the coming year.” As he left the office that day at five o’clock, Ahmet told Morris he would take care of everything at the meeting. In Morris’s words, “I said, ‘No preparations?’ And he said, ‘Don’t worry about it.’ ” Wearing a tan suit and a yellow tie, Ahmet then walked out the door.
The next morning, Morris showed up at the meeting fifteen minutes before it was scheduled to begin at nine A.M. Ahmet was nowhere to be seen. At nine-fifteen, he strolled into the room and, in Morris’s words, “So help me, he had the same suit on and the same tie, except it looked like he had spilled a drink on himself.”
As Morris sat there thinking, “Oh, here’s where we get fired,” Ross asked both men to outline their detailed plans to increase Atlantic’s profits for the coming year. Without missing a beat, Ahmet said, “Doug and I are going to have more hits.” In Morris’s words, “There was a slight smattering of applause and everyone said, ‘Thank you. That’s a good strategy.’ And we left. By the way, the next year we had a lot more hits.”
Under increasing pressure from Morgado, who saw Morris as the key to Atlantic’s future success, Ahmet informed Sheldon Vogel in 1989 that he would now have to report to Morris. Although Vogel had always been Ahmet’s most loyal supporter as well as his trusted financial adviser in all his business concerns, both personal and corporate, Ahmet told Vogel, “If you want to stay, you’re on your own. I can’t support you.”
“Like all of us,” Vogel would later tell Stan Cornyn, “Ahmet was looking for his future.” Better than anyone else at the label, Vogel understood that despite all the money Ahmet had earned, his position at Atlantic was what mattered most to him. Vogel also recognized Ahmet’s “genius for staying in the middle so he doesn’t get on anyone’s side. He doesn’t get in anybody’s way . . . he’s never on the wrong side of anybody.”
After Morris had chosen Mel Lewinter to serve as his chief financial officer, Morgado gave Vogel a new two-year contract and elevated him to the corporate level, where as a member of Morgado’s staff, he occupied a prized corner office. When the label failed to meet Morgado’s financial expectations in 1989, Morgado bluntly told Ahmet “Atlantic isn’t cutting it,” and insisted he share his chairman/CEO position with Morris. As Morgado would later tell Cornyn, “I felt that it couldn’t work at Atlantic unless it worked with Ahmet. It had to be somebody Ahmet would accept.”
By keeping Ahmet on as the titular head of the label, Morgado persuaded him to name Doug Morris as his successor. In Linda Moran’s words, “Ahmet worked for several years without a contract. He was never going to leave because it was his company and Sheldon Vogel used to say, ‘You have to have some pride. You have to force them to give you a contract.’ But he would not do it. He just stayed there and no one knew he was working without a contract.”
In 1991 when Morgado finally did offer Ahmet a contract for a five-year term as cochairman of Atlantic, the terms were more than generous. Guaranteed an annual salary of $600,000 for the first three years and $750,000 for each of the final two years, Ahmet was also given a signing bonus of $2.5 million in addition to a lucrative annual bonus to be approved by Morgado. Having already been granted an option to purchase fifty thousand shares of stock, Ahmet was given the right to purchase another 115,000 shares over the next five years with the company guaranteeing he would earn at least $11.5 million from the investment.
The company also agreed to take out a million-dollar life insurance policy on him while absorbing the $970,000 mortgage loan Ahmet had been given in 1979 on his town house, the full principal of which was still outstanding. The agreement further stipulated that the company would pay all of Ahmet’s business expenses. After the contract expired, Ahmet would be paid one half of his base compensation for another five years in return for the exclusive use of his advisory services on music recording, video, and music publishing.
Then sixty-eight years old, Ahmet had been given what to those on the corporate level must have seemed like a lifetime deal. While the timing may have been sheer coincidence, it seems reasonable to assume Ahmet had been given this deal as a quid pro quo for accepting Morgado’s demand that Doug Morris be allowed to formally assume command of Atlantic.
Now free to do as he liked at the label, Morris brought in Val Azzoli, who had managed Rush, to help him change the corporate structure at Atlantic. He named Sylvia Rhone, who had developed acts like En Vogue and Pantera, to head East/West Records. At a later date, he brought in Danny Goldberg, who had managed Nirvana, to run Atlantic’s West Coast office. With Morgado providing the money, Morris also acquired 25 percent of Jimmy Iovine and Ted Field’s Interscope label, which would now be distributed by WEA.
On March 4, 1989, Steve Ross made a bold move to solve his financial problems by engineering a merger between Warner Communications and Time Inc. that resulted in the creation of the largest media company in the world with assets of more than $20 billion. David Geffen was so upset Ross had not told him of his plans that he then sold Geffen Records to MCA for $545 million.
Despite his lucrative contract, Ahmet continued pushing Steve Ross for added compensation. After learning from Mo Ostin in 1992 that executives in the movie division had been given large grants of company stock, Ahmet told Doug Morris, “Okay. We gotta go up and get ours.” Although Morris still considered himself “the junior partner” and “not at all like these guys,” he accompanied Ahmet to a meeting at which Ahmet told Morgado they wanted the same stock options that other top executives had already been given.
Ross, who was then sixty-five years old and suffering from prostate cancer, was at his Long Island estate and so Morgado said he would have to call him to ask about it. After Morgado told Ross what Ahmet and Morris were asking for, both men could hear Ross screaming over the phone, “Tell them they’re fired and to get the fuck out of the office!” After leaving Morgado’s office, Morris asked Ahmet what they were going to do now. “What do we do?” Ahmet said. “Well, we’ll go around to Sony and we’re gonna start a label.”
The two men were in a car on their way to Sony headquarters in the CBS building at 51 West 52nd Street when the phone rang and Morgado informed them Ross had called back and okayed the deal. In Morris’s words, “In the beginning, if Ahmet had gone upstairs to Ross and said, ‘Look what I’ve built for you, I’m only getting a dollar a year, I want a dollar and a quarter a year,’ I believe Ross would have said, ‘You want to know something? I’m going to give you a dollar fifty a year.’ ”
After checking himself into a Los Angeles hospital as “George Bailey,” the hero of Frank Capra’s It’s a Wonderful Life with whom he had always identified, Steve Ross died of prostate cancer on December 20, 1992. Less than a month later, Gerald Levin, an attorney who had begun his career as a programming executive at HBO before becoming CEO of Time Inc., assumed control of Time Warner and gave Morgado “his full backing” to run the music division as he saw fit.
Levin “appeared to have taken a liking to Morgado” and his decision also made eminent financial sense. In 1985, the combined gross revenues of the Warner Music Group labels had been around $900 million. By 1993, the figure had risen to $3.3 billion. The group’s earnings of $296 million were greater than any other division at Time Warner except for cable television. Their combined market share was 22.2 percent, with Sony Music next at 15.3 percent.
Much of the revenue had actually been generated by the introduction of the compact disc to replace the 331/3 long-playing album that had for so long been the mainstay of the industry. In vast numbers, record buyers had then begun purchasing albums they already owned on vinyl in what was widely promoted as a vastly superior sonic format.
While it would later be reported Ahmet had opposed the conversion from vinyl to CD, he had, as Morris would later say, “questioned it like everyone else because we didn’t know anything about it.” In the words of David Horowitz, who along with Jac Holzman was the leading proponent of the new compact disc format within the division and “actually made the decision to go full steam ahead” with the conversion, “the label heads were always fighting new technology. They didn’t get MTV. Ahmet pooh-poohed it. Nobody on the staff except for Doug Morris saw MTV as an opportunity rather than a threat. They were still record people and this was another medium. The creative aspect of their business was to find talent and the technology was fixed.”
Despite the increased profits generated by the Warner Music Group, the death of Steve Ross ended a wildly extravagant era in which the heads of his record labels had run their companies like feudal lords. It also set the stage for what would become known in the media as “The Clash of the Titans” and “The Showdown at the Hit Factory,” the day when those whom Ross had left behind would finally confront one another over the issue of who would run the huge moneymaking concern the division had become. As always, Ahmet was right in the eye of the storm.
On October 27, 1994, Ahmet got into the backseat of his chauffeured Mercedes and told his driver to take him to an apartment on Central Park West where he joined seven other colleagues, all of whom were prepared to leave their jobs, thereby creating what one newspaper account of the struggle called “an unprecedented palace revolt that could paralyze the world’s largest record company.”
Still physically strong, Ahmet was now using a cane to help him get around after having shattered his pelvis by falling down in his town house eight months earlier. In Mica’s words, “We have two houses joined together and to get from his dressing room to the bed, he had to go down four steps. He had probably had a few drinks and he missed the steps and crashed and broke his pelvis.”
Having already had a hip replacement, which, in Mica’s words, “was then more of a production than it is now,” Ahmet had been scheduled to have his hip repaired and underwent “a surgery of nine or ten hours in which every bone was put together so they were all hanging on a chain and it looked like an Egyptian band around your neck. And then a year later something was rubbing against something else so they had to go back in and fix it. The hip replacements were nothing but the pelvis was serious.”
Making his way to the apartment where Stuart Hersch, who ran Atlantic’s video division, lived, Ahmet joined Danny Goldberg, who by now had become president of Atlantic, and five other Atlantic executives. Clutching cell phones, they spent the next three hours anxiously awaiting the outcome of a showdown between Doug Morris and Bob Morgado. The issue that had brought them together was Morgado’s decision to bring in Rob Dickins, the chairman of Warner Music in the United Kingdom, who had “a reputation for being one of the most arrogant and imperious people in the music business,” to replace the recently departed Mo Ostin as the head of Warner Brothers Records.
During a series of phone conversations with Morgado the night before, an utterly frustrated Morris, who viewed the move as a sign he had no real authority as head of the Warner U.S. Music Group, had offered to return to his old position as chairman of Atlantic. Morgado accepted his offer. Morris had then contacted all those at Atlantic who were loyal to him and asked them to meet in Hersch’s apartment the following morning while he sat down with Morgado in his office at Rockefeller Center.
After his meeting with Morgado was over, Morris arrived at the apartment around noon convinced that Dickins’s appointment had already been announced. Ahmet called Morgado to express his concern about the decision, and Morgado asked him and Morris to come meet with him. Not knowing what the outcome would be, the entire team returned to work. At two in the afternoon, Ahmet and Morris sat down with Morgado for a three-hour meeting at which Morgado acquiesced to all of Morris’s demands. Morris told Morgado he wanted to appoint Danny Goldberg to succeed Ostin and Morgado agreed to do so.
Morgado then issued a four-paragraph statement in which he said his dispute with Morris had been “blown way out of proportion” and that rumors of problems between them were “merely speculation” and “without merit.” He also referred to Morris, who had previously been named as the president of the Warner U.S. Music Group as its “chairman and CEO,” thereby giving him a de facto promotion.
As Fredric Dannen would later write in The New Yorker, “Morgado had caved in, and Morris and his loyalists are not sure to this day why, but some of them suspect that Gerald Levin had made good on his threat to intervene.” In truth, after one of Morris’s loyalists called Edgar Bronfman Jr. from Hersch’s apartment, the heir to the Seagram fortune, who owned 15 percent of Warner’s stock, had made it plain he was siding with Morris, thereby forcing Morgado to reverse his decision.
Four days later, Danny Goldberg, who had only recently moved with his family from Los Angeles to New York, was officially appointed to replace Mo Ostin as the chairman of Warner Brothers Records. He then returned to the West Coast. Val Azzoli became the president of Atlantic, thereby making Ahmet once again the sole chairman of the label he had founded. Ahmet responded to the changes by saying, “This isn’t the first time in the history of the music business that executives have argued in the back room. In moments of emotional outburst, people can say all kinds of silly things to each other that they wish they hadn’t said afterward. The important thing is that the music division is now united and moving forward.”
On May 3, 1995, seven months after he had placated Doug Morris and his fellow executives by giving into all their demands, Morgado was fired by Levin. Bypassing Morris, Levin then appointed Michael Fuchs to head the Warner Music Group. A forty-nine-year-old entertainment lawyer who had once represented Carly Simon, Fuchs had joined HBO in 1976 and become its chairman in 1984. Having established a reputation as a brilliant television executive, Fuchs would now be running both the cable network and the music division.
As he was about to assume his new position, Fuchs ran into Joe Smith, the executive vice-president of Warner Brothers Records, at a party and told him, “We’re coming in there and you bandits won’t be able to operate like you used to anymore.” In a remark to which Fuchs apparently paid little heed, Smith replied, “Us bandits made the company you’re coming into.”
On June 21, 1995, seven weeks after assuming control of the Warner Music Group, Michael Fuchs called Doug Morris to his office at HBO. Expecting to be told he was finally being promoted to run the music division, Morris learned how mistaken he had been when Fuchs handed him a press release that read, “DOUG MORRIS RELIEVED OF ALL RESPONSIBILITIES AT WARNER MUSIC GROUP.” Followed to his office by security guards who watched as he packed up his personal belongings, Morris was then summarily escorted from the building.
Fearing Morris and his loyalists were planning a coup backed by Edgar Bronfman to take the division away from him, Fuchs had persuaded Levin that Morris had to be let go. On November 16, just 195 days after he had assumed control of the Warner Music Group, Fuchs himself was fired by Levin. Like Bob Morgado before him, Fuchs received a $60 million golden parachute to ease his departure from the company.
In time, Doug Morris would go on to become the chairman of Universal Music. However, his sudden departure from the Warner Music Group ruptured his relationship with Ahmet. As Morris would later say, “I was very unhappy Ahmet did not stick up for me when that happened. He sort of went to Turkey and tried to avoid the flak. It was very disappointing to me. I wasn’t let go. I was brutally fired and I don’t think there was anything he could have done about it but he didn’t get on the phone and say this was a terrible injustice to the press and I guess I expected him to do that. I think he knew I was very angry at him.”
During all the years they had worked together at Atlantic, Ahmet had done nothing but praise Morris to anyone who would listen. “Of all the people I’ve worked with,” Ahmet told Fredric Dannen, “he’s the straightest person I’ve ever known. . . . It’s incredible but in all the years I’ve been with Doug we have never had an argument and we have never left the office without hugging one another.”
By then, Ahmet had already distanced himself from Morris during the power struggle for control of the music division. Ahmet’s new view of Morris was summed up by Jac Holzman. “When Morgado was tossing out Doug Morris, Ahmet was telling a small circle of people including me and a few others that he hardly knew Doug Morris and had never had him over to his house. This was about not going underwater with a guy who was being tossed overboard even though he would have been in the water for a very short period of time.”
Recalling the day when he and Ahmet had gone to Sony after they had both been briefly fired over the phone by Steve Ross, Morris assumed Ahmet would now join him. In Linda Moran’s words, “Doug wanted Ahmet to leave the company and go with him. To walk out the door and quit. He assumed Ahmet was loyal to him. First of all, Ahmet was loyal to no one. Only to himself.”
The parting between the two men was so bitter they did not talk to one another for five years. On October 15, 1998, Morris was invited to speak at a gala United Jewish Appeal benefit dinner chaired by David Geffen at Pier Sixty on the Hudson River honoring Ahmet on his fiftieth anniversary in the record business. After Geffen had told his “bumping into geniuses” story, Morris stood up and “I talked about how for fifteen years, every morning it was a high five and every night it was a hug good night and how it was fifteen years of real fun. I really told the truth about those years which were incredible and it was a very emotional thing.”
The next day, Ahmet sent Morris a letter saying he had made “the most lovely speech of the evening and the reason I was able to do it was because I knew him the best of everyone and he really appreciated it and everything was okay after that. Every time I would meet him, he would say to me, ‘I miss you.’ ” Just like Herb Abramson, Jerry Wexler, David Geffen, and Jerry Greenberg, Doug Morris was now someone with whom Ahmet had once worked at Atlantic. They were now all gone, but he was still there. In the end, this was always what Ahmet had cared about most.