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PolyGram Announces Acquisition Of A&M Records

October 11, 1989 GMT

NEW YORK (AP) _ Another independent U.S. record company has come under foreign ownership, as the PolyGram subsidiary of Dutch-based NV Philips said Wednesday it had agreed to acquire privately-owned A&M Records for about $500 million.

The deal for the company founded 27 years ago by trumpet player Herb Alpert and partner Jerry Moss - and named for their initials - had been rumored widely for weeks and continues a trend toward consolidation in the record business.

Company officials said the combination would give A&M more worldwide marketing muscle while providing PolyGram with greater access to the U.S. market.


It also would put under one corporate roof such popular and diverse performers as A&M’s Sting and Janet Jackson, plus PolyGram’s Bon Jovi, John Cougar Mellencamp and Vladimir Horowitz.

PolyGram, which says it is the world’s third largest recorded music group, said it would acquire all of A&M’s record operations plus its music video interests, its Los Angeles offices, including the former Charlie Chaplin film studios, and the A&M recording studio.

The acquisition excludes A&M’s music publishing interests.

″It’s a good deal for PolyGram and A&M,″ said Harold Vogel, entertainment industry analyst for the securities firm Merrill Lynch & Co.

Vogel said PolyGram has a large capital base and a significant share in foreign markets. The companies already have worked together for five years as PolyGram distributed A&M Records in Europe.

PolyGram said Alpert, Moss and its president, Gil Friesen, would continue their day-to-day roles at the company and have ″a high degree of autonomy.″

″We are not seeing the demise of the independent record company, rather the emergence of a new brand of independent,″ said David Fine, PolyGram’s president. He said the deal would give A&M ″the resources and marketing infrastructure of a major worldwide group″ while retaining its musical creativity, its culture and ″its street credibility.″

The record business has seen a wave of consolidation in recent years.

Warner Bros. Records is being acquired along with its parent, Warner Communications Inc., by Time Inc. Japan’s Sony bought CBS Records in 1988; RCA was acquired by Bertelsmann AG of West German; Thorn-EMI PLC bought a 50 percent stake in Britain’s Chrysalis Records; and a group including MCA Records bought Motown Records.


Moss indicated at a news conference that PolyGram and A&M were not concerned about size stifling creativity. Moss said A&M’s artists were told about the deal and he said he heard no objections.

Alpert told reporters he was excited about the deal and said it would give A&M ″more visibility and more muscle″ in competing for new talent.

″I think it’s the right move at the right time,″ he said.

Fine declined to state a precise price for the buyout, but said speculation that it was about $500 million ″is in the ballpark.″ A&M had sales of about $300 million last year.

A&M’s talent roster includes Janet Jackson, Sting, Joe Jackson and Suzanne Vega.

Founded in 1962 in Alpert’s garage near Los Angeles, its first release was ″The Lonely Bull″ by Alpert’s Tijuana Brass. Past A&M artists have included The Carpenters, Carole King, Cat Stevens, Joe Cocker, Styx and The Police.

A&M products are distributed in the United States by RCA Records, and have captured less than 2 percent of the domestic chart share in Billboard magazine’s Top Pop album chart.

Polygram ranks third worldwide behind Warner Bros. Records with its Warner, Elektra and Atlantic labels among others, and Sony Corp.’s CBS Records.

In the United States, Polygram ranked sixth in chart share on the Billboard’s Top Pop Album list for the six months ended July 1.

PolyGram, 90 percent owned by Dutch electronics giant NV Philips, is making its second major deal in three months. It bought Island Records Ltd., a London-based company which specializes in rap and reggae music, in August for an estimated $300 million.

PolyGram’s artists include Bon Jovi, Tears for Fears, Def Leppard and John Cougar Mellencamp. It is particlularly strong in classical music with performers including Leonard Bernstein, Vladimir Horowitz and Luciano Pavarotti.

Asked if PolyGram had an interest in expanding into the movie business as several other global media companies have, Fine said PolyGram was interested amd called it a ″logical move″ but said he did not know how soon.