Universal Music CEO Morris To Bring in Successor

Universal Music Group CEO Doug Morris is quietly making plans to bring in a successor to help run the world’s largest music company , BusinessWeek has been told. Sometime this summer, Universal intends to elevate its international chief Lucian Grainge to take over Morris’s CEO slot for the company whose artists include U2, Elton John and Mariah Carey. Morris, who will be 71 in November, is expected to remain as chairman and has told intimates that he does not intend to retire.

Details are still be worked out, according to those with knowledge of the arrangement, but it is being portrayed internally as a promotion for the 49-year old Grainge, who is highly regarded by executives at Universal’s Vivendi parent company. When they signed Morris to a four-year contract extension last year, Vivendi top executives encouraged their long-time Universal chief to bring in a successor, BusinessWeek has been told. Morris will continue to work on key projects for Universal, but will turn over day-to-day operations. Morris expects to maintain his seat on the Vivendi management board, which includes top executives from the French conglomerate’s business units.

Morris, a one-time songwriter with wrote the 1966 Chiffon’s hit “Sweet Talking Guy,” was a record producer before becoming president of Atlantic Records in 1980 and president of Warner Music (WMG) in 1994. In 1995, he moved over to Universal Music’s predecessor, MCA Records, as its chairman and CEO. The company was renamed Universal the next year, and acquired Polygram in 1998. That deal gave Universal labels like Motown and A&M Records. Universal currently sells more than one-third the music sold in the U.S..

At Universal, Morris became the industry leader in pushing for digital distribution of music. Universal was the first label to sign on with Steve Jobs’ iTunes, helping to pave the way for other labels to sign on before Apple (AAPL) launched the music service in 2003. Morris was also a key player in the music industry’s fight with Jobs that pressured the Apple CEO to offer variable pricing, by which iTtunes now charges more to download just released music and less for songs from a label’s catalog.

Morris is currently lining up advertisers for the expected launch next month of VEVO, an online service he masterminded for streaming music videos on YouTube (GOOG). Morris has already signed Sony and several independent labels, who will also provide their videos, and is in talks with Warner Music and EMI. The service is envisioned to be a music version of the video site Hulu, a free service by which TV networks generate revenues by selling advertisements. Universal, which has built a large business to sell artists’ merchandise, would also use the service for e-commerce.

Universal wouldn’t comment on the music company’s ongoing succession plans. But the London-based Grainge, who has three school-age children, recently purchased a house in Connecticut and is expected to wait until his kids school year ends in June before making the move to New York.

Grainge, who became Universal’ international chairman in 2005, began in the music business as an A&R executive in 1978 for CBS Records, and rose through the ranks as at Polygram before becoming chairman of Universal’s British operation in 2001.

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