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The story
Founded by Warner Bros. Entertainment on Apr 6, 1958, in New York City.1
1950s and 1960s
The film studio Warner Bros. had no record label division at the time one of its contracted actors, Tab Hunter, scored a No. 1 hit song in 1957 for Dot Records, a division of rival Paramount Pictures. In order to prevent any repetition of its actors recording for rival companies, and to also capitalize on the music business, Warner Bros. Records was created in 1958; its original office was located above the film studio's machine shop on 3701 Warner Boulevard in Burbank, California. In 1963, Warner purchased Reprise Records, which had been founded by Frank Sinatra three years earlier so that he could have more creative control over his recordings. With the Reprise acquisition, Warner gained the services of Mo Ostin, who was mainly responsible for the success of Warner/Reprise.
After Warner Bros. was sold to Seven Arts Productions in 1967 (forming Warner Bros.-Seven Arts), it purchased Atlantic Records, founded in 1947 and WMG's oldest label (until WMG completed its acquisition of Parlophone in 2013), as well as its subsidiary Atco Records. This acquisition brought Neil Young into the company fold, initially as a member of Buffalo Springfield. Young became one of Warner's longest-established artists, recording both as a solo artist and with groups under the Warner-owned Atlantic, Atco, and Reprise labels. Young also recorded five albums for Geffen Records during that label's period of Warner distribution. The Geffen catalogue, now owned by Universal Music Group, represents Young's only major recordings not under WMG ownership.
Atlantic, its subsidiary Atco Records, and its affiliate Stax Records paved the way for Warner's rise to industry prominence. The purchase brought in Atlantic's lucrative back catalogue, which included classic recordings by Ray Charles, the Drifters, the Coasters, and many more. In the mid-1960s, Atlantic/Stax released a string of landmark soul music recordings by artists including Booker T & the MGs, Sam & Dave, Wilson Pickett, Otis Redding, Ben E. King, and Aretha Franklin. Ultimately, the sale led to Stax leaving Atlantic because Seven Arts Productions insisted on keeping the rights to Stax recordings. Atlantic moved decisively into rock and pop in the late 1960s and 1970s, signing major British and American acts including Led Zeppelin, Cream, Crosby Stills & Nash, Yes, Emerson, Lake & Palmer, Genesis, Average White Band, Dr. John, King Crimson, Bette Midler, Roxy Music, and Foreigner.
An earlier attempt by Warner Bros. Records to create an in-house distribution arm in 1958 did not materialize. So in 1969, Elektra Records boss Jac Holzman approached Atlantic's Jerry Wexler with the idea of setting up a joint distribution network for Warner, Elektra, and Atlantic. An experimental branch was established in Southern California as a possible prototype for an expanded operation.
Atlantic exerts autonomy
It was soon apparent in 1969 that Atlantic/Atco president Ahmet Ertegun viewed Warner/Reprise president Mike Maitland as a rival. Maitland believed that, as vice-president in charge of the Warner Bros.-Seven Arts music division, he should have final say over all recording operations, and he further angered Ertegun by proposing that most of Atlantic's back-office functions (such as marketing and distribution) be combined with the existing departments at Warner/Reprise. In retrospect Ertegun clearly feared that Maitland would ultimately have more power than him, and so he moved rapidly to secure his own position and remove Maitland. Maitland had put off renegotiating the contracts of Joe Smith and Mo Ostin, the presidents of the Warner Bros. and Reprise labels, and this provided Ertegun with an effective means of undermining Maitland. When Wexler—now a major shareholder—found out about the contract issue he and Ertegun began pressuring Eliot Hyman to get Smith and Ostin under contract, ostensibly because they were worried that the two executives might move to rival labels—and in fact Ostin had received overtures from both MGM Records and ABC Records.
In 1969, the wisdom of Hyman's investments was proved when Kinney National Company purchased Warner Bros.-Seven Arts for $400 million, more than eight times what Hyman had paid for Warner/Reprise and Atlantic combined. Several months later, Kinney National Company reverted Warner Bros.-Seven Arts to its original name of "Warner Bros". From the base of his family's funeral parlour business, Kinney president Steve Ross had rapidly built the Kinney company into a profitable conglomerate with interests that included comic publishing, the Ashley-Famous talent agency, parking lots and cleaning services. Following the takeover, Warners' music group briefly adopted the 'umbrella' name Kinney Music, because U.S. anti-trust laws at the time prevented the three labels from trading as one. Ross was primarily focused on rebuilding the company's ailing movie division and was happy to defer to the advice of the managers of the company's record labels, since he knew that they were generating most of the group's profits. Ertegun's campaign against Maitland began in earnest that summer. Atlantic had agreed to help Warner Bros. in its efforts to establish its labels overseas, beginning with its soon-to-be-established Warner Bros. subsidiary in Australia, but when Warner executive Phil Rose arrived in Australia, he discovered that just one week earlier Atlantic had signed a new four-year distribution deal with a rival local label, Festival Records (owned by Rupert Murdoch's News Limited).
Mike Maitland complained bitterly to Kinney executive Ted Ashley, but to no avail – by this time Ertegun was poised to make his move against Maitland. As he had with Hyman, Ertegun urged Steve Ross to extend Mo Ostin and Joe Smith's contracts, a recommendation Ross was happy to accept. Ostin however had received overtures from other companies (including the aforementioned offers from MGM and ABC) and when he met with Ertegun in January 1970 and was offered Maitland's job, he was unwilling to re-sign immediately. In response, Ertegun broadly hinted that Maitland's days were numbered and that he, Ertegun, was about to take over the recording division. Unlike the Warner/Reprise executives, Atlantic's execs the Ertegun brothers (Ahmet and Neshui) and Wexler owned stock in Kinney.
Ostin was understandably concerned that, if he accepted the position, the Warner Bros. staff would feel that he had stabbed Maitland in the back, but his attorney convinced him that Maitland's departure was inevitable, regardless of whether or not he accepted the post (succinctly advising him, "Don't be a schmuck"). On Sunday January 25, Ted Ashley went to Maitland's house to tell him he had been dismissed, and Maitland declined the offer of a job at the movie studio. One week later, Mo Ostin was named as the new President of Warner Bros. Records, with Joe Smith as his executive vice-president. Ertegun nominally remained the head of Atlantic, but since both Ostin and Smith owed their new positions to him, Ertegun was now the de facto head of the Warner music division. Ertegun was given the formal title of executive vice-president-Music Group. Maitland moved to MCA Records later that year and successfully consolidated MCA's labels, which he couldn't do at Warner.
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1970s
During the 1970s, the Kinney group built up a commanding position in the music industry. In 1970, Kinney bought Elektra Records and its sister label Nonesuch Records (founded by Jac Holzman in 1950) for $10 million, bringing in leading rock acts, including the Doors, Tim Buckley, and Love, and its historically significant folk archive, along with the successful budget Western classical-music label Nonesuch Records.
The purchase of Elektra-Nonesuch brought a rich back catalogue of folk music as well as the renowned Nonesuch catalogue of classical and world music. Elektra founder Jac Holzman ran the label under Warners for two years, but by that time, he was by his own admission "burnt out" after twenty years in the business. Kinney president Steve Ross subsequently appointed Holzman as part of a seven-person "brain trust" tasked with investigating opportunities presented by new technologies, a role Holzman was eager to accept. The same year, the group established its first overseas offices in Canada and Australia. By that time the "Seven Arts" moniker was dropped from the Warner Bros. name. Warner Bros. also founded the Casablanca Records subsidiary, headed by Neil Bogart; but several years later Casablanca became independent from Warner Bros.
Warner-Elektra-Atlantic and worldwide distribution
With the Elektra acquisition, the next step was forming an in-house distribution arm for the co-owned labels. By this time, Warner-Reprise's frustrations with its current distributors had reached breaking point; Joe Smith (then executive vice-president of Warner Bros.) recalled that the Grateful Dead were becoming a major act but the distributor was constantly out of stock of their albums. These circumstances facilitated the full establishment of the group's in-house distribution arm, initially called Kinney Record Group International. By late 1972, US anti-trust laws had changed and the company was renamed Warner-Elektra-Atlantic, WEA for short, which was renamed Warner Music in 1991 (the word "group" was added after the formation of AOL Time Warner in 2001).
WEA was an early champion of heavy metal rock music. Several such bands, including three major British pioneers Led Zeppelin, Black Sabbath, and Deep Purple, were all signed to WEA's labels, at least in the United States. Among the earliest American metal acts to be signed to WEA were Alice Cooper, Montrose, and Van Halen.
Up to this point the Kinney-owned record companies had relied on licensing deals with overseas record labels to manufacture, distribute and promote its products in other countries; concurrent with the establishment of its new distribution arm, the company now began establishing subsidiaries in the other major markets, beginning with the creation of Warner Bros. Records Australia in 1970, soon followed by branch offices in the UK, Europe and Japan. In July 1971, the new in-house distribution company was incorporated as Warner-Elektra-Atlantic Distributing Corp. (WEA) and branch offices were established in eight major US cities; Joel Friedman a one-time Billboard writer who had been the head of Warner's advertising/merchandising division in its early years, was appointed to head WEA's US domestic division, and Ahmet Ertegun's brother Nesuhi was appointed to oversee its international operations. Neshui Ertegun, originally a Turkish native like his brother, displayed a global perspective and independence from its U.S. counterpart by successfully promoting international acts in their target markets worldwide. Ertegun headed WEA International until his retirement in 1987. A de facto committee of three senior marketing executives—Dave Glew from Atlantic, Ed Rosenblatt from Warner Bros. and Mel Posner from Elektra—oversaw the integration of each label's marketing and distribution through the new division, but each label continued to operate totally independently in A&R matters and also applied their own expertise in marketing and advertising.
On July 1, 1971, following the pattern set by similar joint ventures in Canada and Australia, the Warner labels entered into a partnership with the British arm of CBS Records to press and distribute Warner-Reprise product in the United Kingdom, although this was undertaken as a cooperative venture rather than a formally incorporated business partnership. The Billboard article that reported the new arrangement also noted that, despite their intense competition in the US market, CBS continued to press Warner-Reprise recordings in the US. However the new UK arrangement was a major blow to Warner's previous British manufacturer Pye Records, for whom Warner-Reprise had been their largest account. With the scheduled addition of the UK rights to the Atlantic catalogue, which would revert to Kinney in early 1972, Billboard predicted that the Warner-CBS partnership would have a 25–30% share of the UK music market.
In April 1971, thanks mainly to the influence of Ahmet Ertegun, the Kinney group announced a major coup with its acquisition of the worldwide rights to the Rolling Stones' new label Rolling Stones Records, following the expiration of the band's contract with British Decca (then separate from the American label) and the acrimonious end to their business relationship with their former manager Allen Klein. Under the terms of the deal, Atlantic subsidiary Atco would distribute the Stones' recordings in the US, with other territories mainly handled by Warner Bros. international divisions.
One of Kinney's wisest investments was Fleetwood Mac. The band signed with Reprise in the early 1970s after relocating to the US, and the label supported the group through numerous lineup changes and several lean years during which the band's records sold relatively poorly, although they remained a popular concert attraction. Ironically, after the group's transfer to Warner Bros. in 1975 and the recruitment of new members Lindsey Buckingham and Stevie Nicks, the group scored a major international hit with the single "Rhiannon" and consolidated with the best selling albums Fleetwood Mac, Rumours and Tusk.
Warner Communications (1972–1990)
Due to a financial scandal involving price fixing in its parking operations, Kinney National spun off its non-entertainment assets in 1972 (as National Kinney Corporation) and changed its name to Warner Communications Inc.
In 1972, the Warner group acquired another rich prize, David Geffen's Asylum Records. The $7 million purchase brought in several acts that proved crucial to WEA's subsequent success, including Linda Ronstadt, the Eagles, Jackson Browne, Joni Mitchell, and later Warren Zevon. On the downside, however, it was rumored that Warner was soon concerned about its possible liability under the California State Labor Code because of Geffen's questionable status as both the manager of most of the Asylum acts and the head of the record label to which they were signed. The sale included the Asylum Records label and its recordings, as well as Geffen's lucrative music publishing assets and the interests in the royalties of some of the artists managed by Geffen and partner Elliot Roberts. Geffen accepted a five-year contract with WCI and turned over his 75% share in the Geffen-Roberts management company to Roberts and Warner paid Geffen and Roberts 121,952 common shares worth $4,750,000 at the time of the sale, plus $400,000 in cash and a further $1.6 million in promissory notes convertible to common stock.
Although it seemed a lucrative deal at the time, Geffen soon had reason to regret it. Uncharacteristically, he had greatly underestimated the value of his assets—within Asylum's first year as a Warner subsidiary, albums by Linda Ronstadt and the Eagles alone had earned more than the entire value of the Asylum sale. Geffen's discomfort was compounded by the fact that, within six months of the sale, the value of his volatile Warner shares had plummeted from $4.5 million to just $800,000. He appealed to Steve Ross to intervene, and as part of a make-good deal, Ross agreed to pay him the difference in the share value over five years. Acting on Jac Holzman's suggestion that Kinney should take Asylum from Atlantic and merge it with Elektra, Ross then appointed Geffen to run the new combined label.
In 1977, Warner Bros. Music, led by president Ed Silvers, formed Pacific Records for their composers and distributed (appropriately) by Atlantic Records. Alan O'Day was the first artist signed to the label, and the first release was "Undercover Angel". The song, which he described as a "nocturnal novelette", was released in February 1977. Within a few months it had become No. 1 in the country, and has sold approximately two million copies. It was also a hit in Australia, reaching No. 9 on the Australian Singles Chart. "Undercover Angel" also landed O'Day in an exclusive club as one of only a handful of writers/performers to pen a No. 1 hit for themselves and a No. 1 for another artist.
New signings in the late 1970s placed WEA in a strong position for the 1980s. A deal with Seymour Stein's Sire Records label (which Warner Bros. Records later took over) brought in several major punk rock and new wave acts including the Pretenders, the Ramones and Talking Heads and, most importantly, rising star Madonna; Elektra signed the Cars and Warner Bros. signed Prince, giving WEA several of the biggest-selling acts of the decade.
WEA's labels also distributed a number of otherwise independent labels. For example, Warner Bros. distributed Straight Records, DiscReet Records, Bizarre Records, Bearsville Records, and Geffen Records (the latter was sold to MCA in 1990). Atlantic Records distributed Swan Song Records. In 1975, WEA scored a major coup by signing a distribution agreement with Island Records, which only covered the United States and select other countries. For the next 14 years (initially with Warner Bros. until 1982, then with Atlantic afterward), WEA would distribute such artists as Bob Marley, U2, Robert Palmer, Anthrax, and Tom Waits. This relationship ended when Island was sold to PolyGram in 1989.
1980s
A name-only unit appearing exclusively next to copyright statements, WEA International Inc., was created in early 1982, to handle distribution of all Warner Bros., Elektra, and Atlantic (all these namings accounting for the initials in the title "WEA") releases for international countries.
A proposed 1983 international merger between PolyGram and WEA was forbidden by both the US Federal Trade Commission and West Germany's cartel office, so PolyGram's half-owner Philips then purchased a further 40% of the company from its partner Siemens, and bought the remaining shares in 1987. The same year, PolyGram divested its film and publishing operations, closed PolyGram Pictures and sold Chappell Music to Warner for US$275 million.
In 1976, Warner gained a brief early lead in digital media when it purchased the Atari computer company. WCI also blazed the trail in visual music with MTV, which it created and co-owned in partnership with American Express as Warner-Amex (which also ran the company's cable television systems, including the interactive TV experiment QUBE, which MTV spun-off from). By 1984, however, Warner rapidly divested many of these recent acquisitions, including Atari, The Franklin Mint, Panavision, MTV Networks and a cosmetics business; this was due in large part to the 1983 video game crash, which Atari had played a central role in, and the resulting loss of profits and investor confidence (Warner-Amex's cable system expansion also contributed to Warner's financial downturn).
WEA formed WEA Manufacturing in 1986. In 1988, WEA took over the German classical label Teldec and the British Magnet label.
In 1989, it was announced that Warner Communications was to merge with Time Inc. to form Time Warner, a transaction that was completed in 1990. Following the merger, WEA continued acquiring independent labels, buying CGD Records (Italy) and MMG Records (Japan) in 1989.
From Wikipedia’s article on Warner Music Group, shared under CC BY-SA 4.0.7