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Universal Music’s Morris Seeking Exit to Join Sony

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Jan. 7 (Bloomberg) -- Doug Morris, chairman of Universal Music Group, is seeking an early end to his contract from parent Vivendi SA in order to join Sony Music Entertainment, three people with knowledge of the situation said.

Morris, 72, who has led the world’s largest record company since 1995, is in talks with Sony Corp. for the top post at its music division, said the people, who insisted on anonymity because the discussions are private.

Lucian Grainge replaced Morris as Universal Music’s chief executive officer on Jan. 1, part of a transition that began almost a year ago. Morris, who is under contract to remain chairman, has requested a meeting with Vivendi within two weeks to discuss a potential early exit, one of the people said.

Sony Music CEO Rolf Schmidt-Holtz’s contract expires in March. While Morris and Sony have a framework for an agreement, a pact hasn’t been signed and talks could still fall apart, the people said.

Sandy Genelius, a Sony spokeswoman in New York, declined to comment, as did Simon Gillham, a Vivendi spokesman in Paris.

Vivendi fell 24 cents to 20.55 euros today in Paris. The shares declined 2.9 percent last year. Sony’s American depositary receipts rose 3 cents to $36.04 at 4:15 p.m. in New York Stock Exchange composite trading.

Howard Stringer, Sony chairman and CEO, paid $1.2 billion in October 2008 for Bertelsmann AG’s 50 percent stake in Sony BMG, gaining full control of the world’s second-biggest record company, with artists including Avril Lavigne, Bruce Springsteen and Pink on labels such as Columbia, Epic, RCA and Jive.

Top Market Share

Universal Music captured 31 percent of 2010 album sales, extending its lead over Sony, with 28 percent, Nielsen Soundscan said in a Jan. 5 statement. Sony’s Columbia/Epic group ended the year as the biggest label, with 11 percent of total U.S. album sales, the researcher said.

Morris once ran Atlantic Records and Warner Music when it was part of Time Warner Inc. He began as a songwriter and penned the song “Sweet Talking Guy” and produced “Smokin’ in the Boys’ Room” by Brownsville Station.

During his career at Universal, Morris built the company to become the biggest in the industry, acquiring Polygram and helping popularize hip-hop music through the Interscope Records label, home to artists such as Dr. Dre. His talks with Sony were reported Dec. 8 by the New York Post.

Morris led the creation of Vevo.com, a joint venture with Google Inc.’s YouTube, Sony Music and Abu Dhabi Media Co. that plays ad-supported music videos. The operation, which started in April 2009, is making “tens of millions” of dollars in revenue, Chief Executive Officer Rio Caraeff said at a conference in San Francisco in September.

Morris would depart ahead of a restructuring of Universal Music’s operations. Vivendi moved Grainge to Los Angeles from London last year to begin shaping cost-cutting plans, Chief Financial Officer Philippe Capron said on a Nov. 15 conference call. He said the “very, very significant” potential to reduce expenses must be balanced with continued investment in artists.

To contact the reporter on this story: Andy Fixmer in Los Angeles at afixmer@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net.

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