Stay Tuned By Stan Cornyn: Jack's Out

Thursday, April 11, 2013
Stay Tuned By Stan Cornyn: Jack's Out

Every Tuesday and Thursday, former Warner Bros. Records executive and industry insider Stan Cornyn ruminates on the past, present, and future of the music business.

To WBR and Reprise, 1965-1967 felt like a good, warm shower. Of cash.

“Across the street,” as Warner Bros. movie studio was called within the now-crowded, ex-machine-shop that housed its two labels, no fretting went on about “whither this record business.” It had already paid off big for the studio. Jack Warner had even reached out to the labels’ head, Mike Maitland, and named him a vice president of the whole company. Mike now lunched in Warner’s Exec Dining Room, a comfy room with wall murals of dancing nymphs. (The other WBR execs would still walk one block in the other direction to a Chinese deli Kosherama, where the egg roll and pastrami were considered equals.)

In 1965, Warner Bros. was solid. Maitland had named his own five vice presidents: Mo Ostin for Reprise; Joe Smith for Warner; Phil Rose for international; Ed West as financial; and Joel Friedman for marketing. Reprise’s distinguished producer, Sonny Burke, was moved across the street, where he now ruled as the picture company’s movie-music head. Burke’s album producing skills within the new Warner/Reprise had become less in demand.

True, Warner/Reprise still made good money with its tried-and-trues’ albums. 1965 hits still came from:
Dean: “In the Chapel in the Moonlight,” “Send Me the Pillow You Dream On,” “Houston”
Frank: “September of My Years,” A Man and His Music
Petula: “Downtown,” “I Know a Place”
Cosby: “Why Is There Air”
Newhart: “The Windmills Are Weakening”
and PP&M: “A Song Will Rise,” “See What Tomorrow Brings”

But the concentration of Warner and Reprise’s labels was on signing new acts. Like …

… well, this is not an amazing list, yet. “New” in 1965 did include:

Dino, Desi and Billy: Dino was Dean Martin’s son; Desi was an Arnez; Billy lived nearby. Their single: “I’m a Fool”
Freddy Cannon: “Action”
The Marketts: “Out of Limits”

And one more:

Caesar and Cleo

Mo Ostin had made a quick, “singles only” deal for two sides that a non-artist, Sal Bono, brought over. Sal was working at Atlantic Records’ local L.A. distributorship, but he really wanted to sing on records. To do this, Sal and his wife Cherilyn named themselves “Caesar and Cleo.” With $300 of his own money, they cut a few sides. Mo put out two sides for this couple: “Baby Don’t Go” and “I Got You Babe.” The Reprise single was a local L.A. hit, but not a stunner.

Sal went back to work, promoting for Atlantic, where he got signed to its “white pop” label, Atco. There, Caesar and Cleo started using their own names: Sonny and his wife Cher. And there, they put out (once more) “I Got You Babe.” For Atco, it became a #1 hit.

(Reprise later re-issued its “Sonny and Cher” left over’s. Too late. The duo was now Atco. Stay Tuned.)

But let’s not worry about Sonny and Cleo et al. Sales at WB and Reprise had reached $20 million a year. And no one at WBR ever worried about was that studio “across the street,” the one that Jack Warner ran.

Jack’s Feeling Older

Across the street these days, Jack Leonard Warner was feeling easy, but not red hot. He was 76 now, and had survived all of his brothers.

As a Hollywood titan, however, Jack Warner had long had two other brothers. Neither was named Warner. The two others had close ties to the studio’s finances. They’d lent money to the studio when WB needed cash. Done that for years now.

Both men lived in Manhattan. They did not like their names to appear in print, but let’s take that chance here: these two brothers were –

Serge Semenenko, of the First National Bank of Boston. Of Ukranian background, but now in mid-town Manhattan, Semenenko made sure that his investments would pay off. Variety once referred to him as “the Medici of the movies.” He had no office. He worked out of ravishing suite in New York’s Pierre Hotel. Or else he might be calling from Acapulco or the Riviera. But not from California.

Wherever Serge strode, he ducked photographers. But deep down he knew he was the real movie business. He had, in 1956, been part of a small clan who’d bought out the Warner shares of Harry Warner and Albert Warner. Those two buys had made him Warners second-largest stockholder.

Charlie Allen was the other of Jack’s two financial brothers. His company was called Allen & Co. He got referred to both as “the Midas of Wall Street” and as “the Godfather of Hollywood.” His “office” was Manhattan’s Carlyle Hotel, just a bit uptown from the Pierre. He was, it’s said, “shy and unassuming,” taking taxis around Manhattan when others in his family rode in limos. He did huge deals.

But, by 1965, Semenenko and Allen had grown uncomfortable with “brother” Jack Warner’s management of the studio. They worried that Jack was drifting, not driving, their enterprise. The two financiers knew (nor cared) little about Hollywood. They didn’t listen to records. They preferred Bette Davis over uh Petula That’s Her Name?

But now, they saw Jack Warner behaving his age. 76. Jack now stayed inside his Warner castle, his initial “W” on the water tower above the studio. He’d like to point up to that tower to end arguments: “See whose name is painted up on that tower?” It was his.

It’s now 1966.

Warner-Reprise continues to have hits. From their established artists came:
Frank: “That’s Life”; Sinatra at the Sands
Dean: “Somewhere There’s a Someone”
Petula: “My Love”
Cosby: Wonderfulness

Plus newly-signed artists:

The Association: “Cherish” and “Along Came Mary,” bought along with their former label, Valiant Records
Don Ho and the Aliis: “Tiny Bubbles”
Nancy Sinatra: “These Boots Are Made for Walkin’”

But these hits had no effect on Charlie Allen and Serge Semenenko. If they paid it any attention at all, it would just reassure them that a deal buying the studio from Jack Warner was even more promising.

On the phone, Allen and Semenenko to Warner, speaking softly but also surely. Told him that the time had come to repaint that tower’s name. They persistently persuaded Jack. Time to conserve your assets, Jack. You want to lose it all in taxes, Jack?

Jack Warner ultimately responded with what it’d take for him to walk away from his studio. Three things: (1) Assurance that the studio would always be named “Warner”; (2) Jobs would remain in place for key employees; and (3) $32 million for his stock.

Warner owned 1/3 of the shares in Warner Brothers. Semenenko and Allen would have to come up with $32 million for Jack’s shares, but also many more millions for the music branch, for outstanding shares and debentures, and for assumed liabilities. It turned out that buying Warner Bros. in toto would cost the buyer $184,742,000.

Semenenko knew just how to make it happen, big. Get somebody else to do the buying, while they turned the sale into gold.

To Jack Warner: $32,000,000
Outstanding Shares: 16,900.000
Convertible Debentures: 33,800,000
New Common Stock: 42,000,000
Assumed Liabilities: 59,000,000

Semenenko knew how and where to find a buyer. They agreed to look up the company that, back in the 1950s, had bought Warners’ library of movies to sell to television.

Jack Warner Drives Off, Off and Away

Jack got bought out.

With millions now in cash, the Boss drove his Bentley away from Burbank. He looked strong: his naturally black hair slicked back, tanned, mustache razor-thin, and post-tax $24 million in his pocket.

Arriving home, he told his son, “Yeah, today I’m Jack L. Warner, but wait until tomorrow. I’ll just be another rich Jew.”

Soon, tomorrow came. Fewer friends would show up at his home for tennis on weekends, and then none to call out, “Great shot, Chief.”

And across the street, this sale had happened without a word to anyone. Who knew? Those in “Records” had never even heard of Semenemko and Allan.

And those two guys in New York, they had never even heard of the Electric Prunes. Warner/Reprise was gold personified.

At a late-1965 company meeting, Mike Maitland (left) presents Mo Ostin with his own gold record for Frank Sinatra’s A Man and His Music. Applauding are company financial head Ed West (second from left) and (far right) handsome liner writer Stan Cornyn.

A New Water Tower To Stare At

The company that had, back in the 1950s, bought Warners’ film library was named 7Arts. Its head then and now was Eliot Hyman, a TV syndicator. 7Arts was a resell company, and often in need of money. Allen and Semenenko served 7Arts as they had Jack Warner: funds for sale. In 1960, they’d taken 7Arts “public” on the American Stock Exchange.

7Arts made the deal. Semenenko and Allen handled finding the $184 million needed.

It took until August, 1967, for Mike Maitland to get called “across the street” to sign an “Amendment to the Certificate of Incorporation.” It changed the name of his company. Warner Bros. Records was now, legally, “Warner Bros.-7 Arts Records.” A new, clumsy label was to be used.

In Jack’s daddy chair at the studio, now sat Eliot Hyman’s son, Kenneth Hyman. He insisted that their logo now appear on all Warner albums and stuff. The Warner water tower was repainted as the W7 water tower. Tough financial policies were announced.

Within the record company, neither Eliot nor son Kenneth were seen nor heard from. Only Allen & Company’s Alan Hirschfield came by. He was Hollywoody. He dated stunning actresses, an attribute Warner Reprise staffers found admirable. Hirschfield chatted up the staff, saying how “they” intended to turn the studio/music business into a “leisure-time conglomerate.”

The quickest way to build a conglomerate was, he persuaded, is to buy up undervalued companies, add them in to what you already own, and make the two worth three. He’d already talked to another record label and thought it was “conglomerate-able.” For $4 million, he believed Atlantic Records could be paired in with Warner/Reprise.

In New York, the flirting between 7Arts and Atlantic Records had gone on and on. Lots of “we’ll call you”s and “thinking it over”s and “checking it out”s. Eliot Hyman himself felt uncertain about Atlantic.

He flew out to California and sat with Mike Maitland and Ed West. He related how Atlantic had had (as had Warners) a strong sales year. Maitland and West had to agree: if 7Arts could pay the cost, Atlantic was a good buy.

Hyman talked to all parts of the deal. To Frank Sinatra, who owned 1/3 of Warner-Reprise. To Atlantic’s three owners: Ahmet and Nesuhi Ertegun and Jerry Wexler. They all needed to say “yes” if this was to be a deal.

Having no word, yes or no, was Mike Maitland. He was just an employee of Warner-7Arts. Not an owner.

Flying back home from California, Eliot Hyman had “yes” from the buyers he needed. He called Atlantic, ready to deal.

Were they ready?

-- Stay Tuned.

What Ever Happened To:

Charlie Allen: Died in July 1994, at age 91, in his apartment at the Sherry Netherlands Hotel. He had remained in investing since he started at 15, when he’d quit school to become a runner on the NY Stock Exchange.

Serge Semenenko: After the Warner sale, he retired from First Boson in 1967 and died on April 24, 1980, age 77.

Jack Warner: After leaving his studio, Warner produced films independently, including Camelot. He died of edema at 86 (Sept. 9, 1978), outliving by more than a decade his other three “Warner” brothers. He had lived on in his home in Beverly Hills (1801 Angelo Drive) to the end.

The Electric Prunes: After their one “psychedelic rock” hit (“I Had Too Much to Dream [Last Night]”), the band next made an album while singing in Latin (Mass in F Minor); its “Kyre Elaison” was featured on the soundtrack of the film Easy Rider. The Prunes was (or were) only a garage band from the San Fernando Valley, but its manager and producers set performing goals far beyond their capacities. The Prunes disbanded in 1969, although various members have re-convened into this century.