MCA Off to Cautious Start With Interscope

MCA Inc. on Wednesday formally completed its $200-million partnership pact with Interscope Records and quickly illustrated how it would try to avoid the national controversy over the Westwood-based label’s involvement in “gangsta” rap.

Interscope kicked off its first day at MCA by capturing the No. 1 spot on the nation’s pop chart with rapper Tupac Shakur’s new expletive-laced “All Eyez on Me” album. Released by Interscope-affiliated Death Row Records, Shakur’s double-CD collection sold a spectacular 566,000 copies last week--exceeding the combined total of the next five best-selling albums.

But “All Eyez on Me” was not distributed by MCA--a clear example of how it plans to distance itself from Interscope’s most provocative products.

The album instead is being distributed by PolyGram under a contract provision that allows Interscope the freedom to seek other distributors for albums deemed “objectionable” by MCA.

Under terms of the deal, MCA acquired a 50% stake in Interscope for $200 million, with an option to purchase the remaining stake in three to five years from Interscope founders Jimmy Iovine and Ted Field. However, MCA will earn no profit from any potentially offensive album manufactured, marketed and distributed through unrelated third parties in the future.

Interscope, which was dumped by Time Warner six months ago after a national controversy over gangsta rap, distributes music by the cutting-edge Death Row and Nothing/TVT labels, whose rosters include stars Shakur, Dr. Dre, Snoop Doggy Dogg and Nine Inch Nails.

The deal, which allows Iovine and Field to retain creative control over the label’s recordings, instantly bolsters MCA’s credibility in the crucial rock market and catapults it from sixth to fourth in U.S. music sales.

“This is an amazing moment in MCA’s history,” said MCA Music Group Chairman Doug Morris, who convinced Iovine and Field to join MCA instead of competitors Thorn EMI and PolyGram. “Interscope is a company with vision. It will be recognized someday as being in the same league as such legendary giants as Stax and Sun Records. These guys are Hall of Fame material.”

While Interscope has often been painted in the news media as a gangsta rap company because of its association with Death Row stars Dr. Dre and Snoop Doggy Dogg, the bulk of its artist roster consists of top-selling rock acts such as Bush, Primus, Deep Blue Something, the Toadies and No Doubt.

Widely regarded as the most successful new label in the business, Interscope has sold more than $400 million in albums in the United States in the last three years--cornering almost 3% of the total American market.

The Interscope deal was negotiated by Morris and his close advisors Mel Lewinter and Zach Horowitz. MCA President Ron Meyer and Edgar Bronfman Jr., chief executive of MCA parent Seagram Co., also played key roles in the lengthy late-night negotiations over the last five weeks.

Since its acquisition by Seagram in June, Universal City-based MCA has moved aggressively to capitalize on the recent chaos at Time Warner’s Warner Music Group, courting five ousted Warner executives and now Interscope.

“When I was growing up, I used to hear all these great stories about the legendary days of the old Warner Music family and how the executives over there truly understood the creative process,” Iovine said Wednesday. “Now all those executives are at MCA. This is definitely the place we want to be. MCA is where the great artists are going to flock to in the future.”