Bertelsmann Wants Lack Out

Germany’s Bertelsmann has told its corporate music business partner, Sony Corp., that it does not want to renew the contract of Sony BMG Entertainment Chief Executive Andrew Lack.

Lack is a former NBC television executive and had never worked in the music industry until he took the Sony Music Entertainment job less than three years ago, according to The New York Times. Speaking on the condition of anonymity, execs at the company told the paper that Lack’s management style has alienated executives above and below him.

Some industry types inside and outside of Sony BMG have reportedly said Lack hasn’t shown an appropriate level of interest or respect for the music biz. At a Reuters conference earlier this year, he said his company might be “the most profitable ugly duckling at the dance.”

Lack’s supporters claim Bertelsmann’s move is a result of political friction between the two companies and not any dissatisfaction with his performance, according to the Times.

The supporters added that the company’s stance is a play to retain power after the expected departure of COO Michael Smellie, a longtime BMG exec, at the end of this year. Some familiar with the situation reportedly said that an exit by Lack might prompt Smellie to reconsider that decision. Or perhaps Bertelsmann is pressuring Lack to replace Smellie with someone affiliated with BMG.

Sony Chief Executive Howard Stringer apparently has Lack’s back. Stringer issued a statement saying, “Andy is exceptionally well-suited to manage the company in this challenging and ever-changing environment.”

Bertelsmann’s turn on Lack follows a series of setbacks at Sony BMG, including a sharp erosion of market share in the United States, the paper said. In the quarter ended in June, the joint venture recorded revenue of $1 billion and a net loss of $18 million when restructuring charges are included. However, just last month, Bertelsmann reportedly voiced support for the joint venture’s performance, saying it has made good progress.

Under the terms of the joint venture agreement, Bertelsmann is reportedly not able to independently fire Lack. However, it is unlikely the two companies would retain a chief executive who did not have the backing of both sides, sources told the Times.

Lack has roughly six months left on his contract. Sony Corp. has the authority to extend it briefly, the paper said.