Situation@UMG: “Anyone Connected to Doug Morris Potentially Has a Problem…”

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This is way bigger than LA Reid, and if you work inside UMG, it will probably affect your job.

According to several sources to Digital Music News with close knowledge of the situation, Universal Music Group is now grinding through a very serious restructuring, one that could put previous reductions and changes to shame.  The restructuring will heavily affect North America, but global operations are also expected to undergo significant changes.

Universal has been in ‘perma-downsize mode’ for some time, though an approach of ‘gradual hacking’ by UMG president and COO Zack Horowitz appears to be getting reexamined.  The first hint of serious smoke came from IDJ chief Reid, whose death warrant was all-but-written late September.  But somehow, Reid is hanging on, and sources were unsure exactly how he’s pulling it off.  “Everyone was expecting him to get the boot that day,” one source told Digital Music News.

Reid has been criticized on several fronts, including a lack of budgetary control.  But other heavyweights – including Interscope Geffen A&M chairman Jimmy Iovine – are also getting scrutinized.  “Jimmy bought some breathing room with the American Idol thing,” one source noted, referencing the recent judgeship offered to the executive.  The glamorous move, according to the source, thrust Iovine into a high-profile position that made it difficult for UMG higher-ups to entertain serious changes – at least for now.

And why mess with Iovine, a mainstay of previous success at Interscope?  Another source noted that Iovine was ruffling incoming UMG CEO Lucian Grainge with a number of sloppy practices and bottom-line issues.  That includes the presence of several relatives on the payroll, though we could not confirm that aspect.

But everyone is getting looked at, not just Iovine and Reid.  In fact, according to one top-level executive, “anyone connected to Doug Morris potentially has a problem,” the type of gut-wrenching transition that often accompanies changes in major label leadership.  But Grainge himself is also getting blowback from within the organization, specifically for making statements about the need for significant realignments.

Unfortunately, that has made life nightmarish for human resource staffers.  “Everyone wants to know where they stand, and is putting enormous pressure on HR,” one source inside the mega-label relayed.  “I think HR is demanding that management offer at least some clarity.”

“This is just bad management,” another frustrated executive told Digital Music News.  “People can’t get phone calls returned, there’s no productivity.”

Meanwhile, the Grainge train is coming to Los Angeles, and another executive even spoke of a “de-East Coastification of the label” that seems to correspond with Grainge’s choice of city.  Earlier, a separate group of insiders noted that Grainge is picking Los Angeles because a disproportionate level of operations – including distribution – are there.  Previously, Manhattan had been the traditional roost for label bosses.  “There’s more on the West Coast now, it makes sense,” the source offered.

Down below, HR has been given orders to take inventory on every employee.  That is putting North American HR lead Gayle Moore in a tough position, and almost certainly indicates serious realignments ahead.  “She was told to get everyone’s info gathered, all vacation time, and severance details,” the source continued.