Musical chairs:Sony courts Universal Music's Morris

Mon Dec 13, 2010 4:45pm EST

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By Yinka Adegoke

NEW YORK, Dec 13 (Reuters) - Sony Corp (6758.T) has held early talks with Doug Morris, the veteran chairman of Universal Music Group, the world's largest music company, about running Sony Music Entertainment, according to two people familiar with the matter.

The surprise move is just one of several options for the Japanese electronics giant as it seeks to replace current Sony Music chief Rolf Schmidt Holtz, whose employment contract expires on March 31, after five years in the position.

A move by Morris could set off a wave of executive transfers between labels in the weeks ahead.

Sony will be keen to replace Schmidt Holtz with a CEO who not only understands the music business, but also new technologies as the industry continues to grapple with its shift from CDs to digital downloads and streaming music services.

Morris, 72, is credited with leading the music industry in its original early negotiations with Apple Inc's (AAPL.O) Steve Jobs to create the iTunes Music Store in 2003.

The most important task for a new Sony Music CEO will be uniting the company, which still remains bitterly divided between the Sony and BMG camps six years after the two companies merged. Rather than forge a powerhouse consisting of the No. 2 and No. 3 labels, the combined businesses have lost market share to Universal Music and Warner Music Group Corp WMG.N in that period.

One of Sony Chief Executive Howard Stringer's two most obvious internal choices was Barry Weiss, the respected label chief of Sony's RCA/Jive label. But Weiss, 51, announced last week he is jumping ship to Vivendi's (VIV.PA) Universal Music in a top role yet to be confirmed. Industry watchers said Weiss had likely come to the conclusion that Sony was unlikely to grant him the top music job.

The other obvious internal choice for Sony is Stringer's brother Rob, who runs the Columbia and Epic labels. But several executives said privately there is little chance the Sony board would approve of Stringer handing his younger brother the position.

Other options being considered by Sony include offering Sony USA Chief Financial Officer Rob Wiesenthal an operational role at Sony Music possibly alongside Rob Stringer, said one person with knowledge of internal talks.

Stringer has also sent feelers out for whether veteran music publishing chief Marty Bandier would be interested in taking on the role, according to two people with knowledge of the talks. Bandier currently runs the Sony/ATV Music Publishing joint venture with the estate of late pop star Michael Jackson.

But Bandier, 70, had little interest in switching over to running the labels, said another person with knowledge of the talks.

Stringer first raised the offer of the Sony Music job with Morris within the last two months. It comes just five months after Universal Music passed the CEO title from Morris on to Lucian Grainge who now runs the company from Los Angeles. Grainge is widely expected to announce a significant restructuring of Universal Music in 2011 that will see hundreds of roles cut.

Morris helped grow Universal Music to a dominant market share of more than a third of music sales in most of the world's largest music markets, including the United States. (Reporting by Yinka Adegoke; Editing by Tim Dobbyn)

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