Atlantic Records - Acquisition By Warner Bros.

Acquisition By Warner Bros.

Despite the huge success Atlantic was enjoying with its own artists and through its deal with Stax, by 1967 Jerry Wexler was seriously concerned about the disintegration of the old order of independent record companies and, fearing for the label's future, he began agitating for it to be sold to a larger company. Label president Ahmet Ertegun still had no desire to sell, but the balance of power had changed since the abortive takeover attempt of 1962; Atlantic's original investor Dr Vahdi Sabit and minority stockholder Miriam Bienstock had both been bought out in September 1964 and the other remaining partner, Nesuhi Ertegun, was eventually convinced to side with Wexler. Since they jointly held more stock, Ahmet was obliged to agree to the sale.

In October 1967 Atlantic was sold to Warner Bros.-Seven Arts for US$17.5 million, although all the partners later agreed that it was a poor deal which greatly undervalued Atlantic's true worth. Initially, Atlantic and Atco operated entirely separately from WB-SA's other labels, Warner Bros. and Reprise Records, and WB-SA's management did not interfere with the music division, since the ailing movie division was losing money, while the Warner recording division was booming - by mid-1968 Warner's recording and publishing interests were generating 74% of the group's total profits.

The sale of Atlantic Records activated a clause in the distribution agreement with Stax Records calling for renegotiation of the distribution deal and at this point the Stax partners discovered that the deal gave Atlantic ownership of all the Stax recordings Atlantic distributed. The new Warner owners refused to relinquish ownership of the Stax masters, so the distribution deal ended on May 1968. Atlantic continues to hold the rights to Stax recordings they distributed in the 1960s.

In the wake of the takeover, Jerry Wexler's influence in the company rapidly diminished; by his own admission, he and Ertegun had run Atlantic as "utmost despots" but in the new corporate structure, he found himself unwilling to accept the delegation of responsibility that his executive role dictated. He was also alienated from the "rockoid" white acts that were quickly becoming the label's most profitable commodities, and dispirited by the rapidly waning fortunes of the black acts he had championed, such as Ben E. King and Solomon Burke. Wexler ultimately decided to leave New York and move to Florida. Following his departure, Ertegun—who had previously taken little interest in Atlantic's business affairs—took decisive control of the label and quickly became a major force in the expanding Warner music group.

During 1968 Atlantic established a new subsidiary label, Cotillion Records. It The label was originally formed as an outlet for blues and deep Southern soul; its first single, Otis Clay's version of "She's About A Mover", was an R&B hit. Cotillion's catalog quickly expanded to include progressive rock, folk-rock, gospel, jazz and comedy. In 1976, the label started focusing on disco and R&B. Among its acts were the post-Curtis Mayfield Impressions, Slave, Brook Benton, Jean Knight, Mass Production, Sister Sledge, The Velvet Underground, Stacy Lattisaw, Lou Donaldson, Mylon LeFevre, Stevie Woods, Johnny Gill, Emerson, Lake & Palmer, Garland Green, The Dynamics, The Fabulous Counts, and The Fatback Band. Cotillion was also responsible for launching the career of Luther Vandross, who recorded for the label as part of the trio Luther. Cotillion also released the triple-albums soundtrack of the Woodstock festival film in 1970. From 1970 it also distributed Embryo Records, founded by jazz flautist Herbie Mann after his earlier Atlantic contract had expired.

In 1969 Warner Bros.-Seven Arts was taken over by the Kinney National Company, and in the early 1970s the group was rebadged as Warner Communications. After buying Elektra Records and its sister label Nonesuch Records in 1970, Kinney combined the operations of all of its record labels under a new holding company, Warner-Elektra-Atlantic, or WEA for short, and also known as Warner Music Group. WEA was also used as a label for distributing the company's artists outside North America. In January 1970, Ahmet Ertegun was successful in his executive battle against Warner Bros. Records president Mike Maitland to keep Atlantic Records autonomous and as a result Maitland was fired by Kinney president Steve Ross. Ertegun recommended Mo Ostin to succeed Maitland as Warner Bros. Records president. With Ertegun's power at Warners now secure, Atlantic was able to successfully maintain autonomy through the parent company reorganizations and continue to do their own marketing, while WEA handled distribution.