Boston Ventures Buys MCA’s Label Share
LOS ANGELES — The MCA and Motown labels have settled their nearly 2-year-old legal battle. As a result, investment firm Boston Ventures, which already owns most of Motown, will purchase MCA’s approximate 18% interest in Motown and the pending lawsuit between MCA and Poly-Gram likely will be resolved.
The settlement was announced March 23 in a one-paragraph press release issued jointly by MCA and Motown stating that “all claims alleged in the various lawsuits will be dismissed.”
As part of the settlement, Motown, MCA, and Boston Ventures have agreed not to comment on the settlement. According to sources, the settlement is significant because it cuts Motown loose from ties to MCA. Boston Ventures’ plans to purchase MCA’s share of Motown will mean the label once again will be owned by non-warring parties. Boston Ventures already owns 70% of Motown. A partnership of Motown management and artists own the other 12%.
Losing Motown is a major blow to MCA’s Uni Distribution Corp., which counts global expansion as a key goal, and Motown’s deep and valuable catalog would likely further that cause.
According to published reports, Boston Ventures may have paid as much as $60 million for MCA’s 18% stake in Motown. But sources close to the deal claim that figure is “wildly inflated,” pointing out that Motown founder Berry Gordy sold the label, which was once one of the largest black-owned companies in the U.S., for $61 million in June 1988.
However, the subsequent sales of Geffen Records, for approximately $650 million, and of Virgin for $900 million, drove up the market value of labels. The reported $60 million for the 18% stake in Motown suggests that the label is now worth close to $300 million, which is in line with current market prices.
The Motown-MCA battle dates back to May 1991, when Motown sued MCA over the handling of Motown’s promotion and distribution. The suit alleged MCA “has consistently undermined the effort to rebuild Motown” (Billboard, May 25, 1991).
In response, MCA claimed Boston Ventures was attempting to use the suit as a tool to renegotiate the Motown- MCA distribution deal. Within weeks, MCA issued a cross-complaint against Boston Ventures and Motown (Billboard, June 8, 1991).
In late 1991, after Motown announced it would sever its ties with MCA Music Entertainment, the label announced it had signed new domestic and foreign distribution pacts with PolyGram Group Distribution (Billboard, Oct. 5 and Nov. 16, 1991).
MCA’s Uni Distribution responded by discounting Motown product, and a month later filed a suit against Poly-Gram for pacting with Motown while the label was still bound to Uni (Billboard, Nov. 23, 1991).
Insiders speculate Poly-Gram eventually will purchase an interest in the label from Boston Ventures. A Poly-Gram spokesperson termed such talk
“just speculation.”
MCA had distributed Motown product since July 1983, when the companies signed a 10-year agreement with two five-year options. END
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Credit source information (as published): Billboard, April 3, 1993
A MCRFB Note: For a previous Billboard Motown-related article published on this site previously — in addition to this story — GO HERE
