Record Company: Whitney Houston Is Straight as an Arrow

Whitney Houston | Warner Music Group | Odds and Ends

Whitney Houston is straight as an arrow, not doing drugs and working hard in the studio. That's the word from her record company Monday in response to my weekend report from the Bahamas that the recovering singer looked red-eyed and stoned at Stevie Wonder's spectacular birthday concert.

Let's take Whitney and her reps at their word. Why not? The goal here is to see Houston back in business, healthy and restored to her former vibrancy pre-Bobby Brown. If it's happening, and her appearance and attitude belie it, well, what the heck.

By the way, the "older man" who was described as Whitney's constant companion over the weekend was her brother Gary, a former drug addict who's been clean for some time, a source says, and he is also committed to his sobriety.

Whitney, they say, has been in the studio now for more than a month.

"She shows up at 3 p.m., stays as long as she's needed and is doing her practicing at home," a source said.

As I reported in February, among the producer/writers she's working with are Diane Warren, R. Kelly, Jermaine Dupri and Kenny "Babyface" Edmonds. Warren's song is titled "I Didn't Know How Much Strength I Had." Dupri cut his track last week.

I suppose Whitney is distrustful of the press, and she has every reason to be. In the tabloids she has been sold out by just about every member of her ex-husband's family, not to mention former employees, etc. She's been the subject of the worst photographs in the history of any person, famous or not. It can't be easy.

But Houston also has to take responsibility for the chaos she created in her career beginning in September 2003. That's when she appeared on stage at Madison Square Garden at Michael Jackson's 30th anniversary show looking anorexic and nearly dead.

From then on, her public appearances were calamities, culminating in her famous "I can afford better drugs than crack" interview with Diane Sawyer. And let's not forget the Atlanta landlord who found her in his rented condo two years ago, high as a kite and living with a washed-up pop singer.

Let's hope that all this amounts now to "Houston, we had a problem." Past tense.

Whitney, we're rooting for you.

Warner Music Group: A Rejected 2004 Merger

What if? What if Warner Music Group and EMI Music had merged in February 2004? There might be a record business now.

Alas, it turns out that Edgar Bronfman Jr. had the chance in February 2004 to merge the two companies, remain CEO and brilliantly regroup into a powerhouse. He could have combined the Beatles with Atlantic Records' catalog, streamlined into a mega giant and been awarded kudos from all corners.

No one knew this before now. But papers filed as exhibits in a lawsuit brought against Bronfman recently outline the whole mess as it went down.

The papers come from a suit brought by former Simon & Schuster publisher Richard Snyder, whom Bronfman met over Christmas 2001 while on a family vacation in Anguilla.

In 2002, Bronfman invited Snyder to help create deals for investment after the former had botched involvements with Vivendi Universal and elsewhere.

Snyder says that he was the architect of the Warner Music deal, and that once it was completed, Bronfman unceremoniously dumped him and refused to give him his cut. Snyder is suing for $100 million.

Bronfman says he merely rented office space to Snyder, who was down on his luck. But the papers filed by Snyder carefully indicate otherwise, including memos in which Snyder was cc'd, and names of executives with whom Snyder did business on behalf of Bronfman. The scion of the Seagram's empire may be having memory issues that are worth exploring.

The most glaring of the documents attached to the Snyder lawsuit: a letter from EMI chairman Eric Nicoli dated Feb. 9, 2004, to Bronfman and Scott Sperling of Thomas H. Lee Partners, the firm that financed Bronfman's WMG deal and now has a controlling stake in the company. It's titled "Proposal for Acquisition of Warner Recorded Music and Part of Warner-Chappell Music Publishing."

In the letter, Nicoli outlines an offer to merge with Bronfman's new WMG for $1.6 billion in cash, and reiterates a plan by which Bronfman would become CEO of the "enlarged EMI Group."

Nicoli recommends that Alain Levy, then head of EMI Music, become CEO of the Music Group and Martin Bandier become CEO of EMI Music Publishing. It's that simple. All Nicoli asks is that his EMI executives remain in place through the new company. He reminds Bronfman that the offer, which would have solved numerous problems for both companies, expires two days hence.

But Bronfman didn't want the deal. On Feb. 11, Nicoli e-mailed Bronfman: "We understand you do not wish to pursue our offer." He copied Sperling. Bronfman circulated the e-mail to Snyder and to his brother-in-law Alejandro Zubillaga. The pair, as well as others connected to Bronfman, had been working for months to make the merger happen.

The next day, Bronfman sent a memo to Roger Ames, the head of Warner Music, to start "consolidation," i.e. layoffs: "We should not only get additional granularity on exactly which employees will be leaving, we will also need to identify the top 30 or 50 people we will want to communicate with for retention."

Bronfman's verbiage left a lot to be desired. "Granularity" is defined as "the extent to which a system contains separate components (like granules). The more components in a system — or the greater the granularity — the more flexible it is."

In fact, Bronfman wanted fewer components and less flexibility.

What really surprises though, through just the e-mails and memos presented as exhibits, is how much Snyder had to with guiding Bronfman, and how little Bronfman regarded Snyder's involvement. Depositions in this case should be pretty interesting considering all the people with whom Snyder worked to put the initial WMG deal together and the EMI offer.

The EMI merger was not just a momentary impulse. Snyder worked for months to put it together while another deal he helped orchestrate — the buying of Warner Music by Bronfman et al from Time Warner — was getting ready to close.

Evidence of the EMI merger proposal is found in a business plan called "Wolf Merges with ELK" which Snyder oversaw (Wolf was Warner; ELK was EMI). Armed with this research, Snyder hosted Bronfman and Nicoli at his New York farm in January 2004 to hammer out the details.

But Bronfman — at the brink of fixing everything — balked. His main problem? He was worried that he could somehow be terminated from his position as CEO. He also feared that EMI's Alain Levy, as number 2 in the company, could unseat him.

"When Snyder then told Bronfman Jr. that Levy could not be terminated simply because Bronfman Jr. regarded him as a rival, Bronfman Jr. became agitated," court papers said.

In the end, Wolf did not merge with ELK. Bronfman moved into new Warner Music digs, and ceased relations with Snyder abruptly, as if the entire episode had never occurred. Bronfman fired lots of people and hired Lyor Cohen, Kevin Liles and Julie Greenwald from Island/Def Jam.

Last week, Warner Music reported a $27 million loss for its second quarter, compared to $7 million last year. Bronfman also fired 400 more staffers.

In the time since the 2004 deal didn't go down, ironies abound as well: Ames is not only gone, but he now runs — EMI. Levy and Bandier are gone from EMI. Bandier took over rival Sony/ATV Music Publishing.

Jason Flom, who was going to be the star of Bronfman's new Atlantic Records, is also at … EMI. And this week, EMI is considering offers from private firms after receiving unacceptable bids from Warner since this previously unknown one in 2004.

McCartney Gets Back; Gandolfini Relieved

Just a P.S. to this item: I told you a few weeks ago that Paul McCartney had left Capitol/EMI and took his back catalog with him.

Now come reports that EMI has reached a deal with McCartney for the entire solo-release library from "McCartney" (1970) through "Chaos and Creation in the Backyard" (2005). They will all soon be available for downloading, too, followed by the Beatles catalog.

It's good news for EMI, although McCartney's new album, "Memory Almost Full," will be released on June 5 through Starbucks' Hear Music/Concord Records and distributed worldwide by Universal Music. ...

James Gandolfini tells me he's relieved "The Sopranos" is almost over.

I ran into Gandolfini last night at the premiere of "Shrek the Third," where he brought his son and ex-wife Marcy.

Sunday night's episode, he said, "was very hard. The whole season has been very hard," he admitted.

The multi award-winning actor is looking forward to new horizons with a new slimmed down profile and lots of offers. If there's any justice, he will win the Emmy for this season.

Also at "Shrek": Mike Myers, getting ready to start his new "Love Guru" movie in June. And then, a fourth "Austin Powers"?

"It's possible. We have an idea. It's a five-parter," he said, adding, "Just kidding!"

Myers was joined by Amy Poehler and Maya Rudolph of "Saturday Night Live," Amy Sedaris and John Krasinski of "The Office."