LOS ANGELES (Reuters) - Antonio "L.A." Reid resigned on Tuesday as head of Arista Records, estimated to have lost more than $100 million in the past two years despite a roster of hit artists like Outkast and Avril Lavigne (news).
Bertelsmann AG (news - web sites)'s BMG, the parent of Arista, said Reid resigned as president and chief executive officer effective immediately.
BMG executives felt that a change was needed after losses mounted even though Reid, who took over at the helm of the label in 2000, still had about a year and a half remaining on his contract, people familiar with the situation said.
All calls to Arista were directed to BMG. Reid was not immediately available for comment.
In the interim, executive management at Arista will report to Michael Smellie, chief operating officer of Germany's BMG, the company said.
Reid's departure comes as Arista is enjoying a commercial and critical hit with Outkast's "Speakerboxxx/The Love Below," which has sold 3.2 million units in the United States in the four months since its release, according to Nielsen Soundscan.
The Outkast album has also garnered several Grammy nominations and was the fifth best-selling album of 2003.
But Arista had several other less-than-stellar showings from TLC, Toni Braxton (news), Whitney Houston (news) and, more recently, Pink, whose latest album has sold only 556,000 units since its November release.
The executive shake-up also comes as Germany's Bertelsmann and Sony Corp (NYSE:SNE - news) (news - web sites). await regulatory approval of the planned merger of their recording units.
Both companies recently notified European Union (news - web sites) competition authorities of their plans for the 50-50 joint venture, first announced in November, which would create the world's second-largest record label.
The deal would combine the recorded music units of Bertelsmann's BMG and Sony Music, but exclude music publishing and CD production.
A spokesman for BMG said Reid's exit had no connection to the Sony deal, but some industry sources suggested there might be more restructuring as the companies await approval.
"This is not related to our planned merger with Sony," a spokesman said referring to the Reid announcement.
The deal, which needs antitrust clearance in the United States and Europe, would form a combined company with a 25.2 percent share of global music sales, based on 2002 data. That would challenge market leader Vivendi Universal's Universal Music, which has a 25.9 percent share.
Reid took over the top post at Arista in July 2000 after BMG management had asked music industry veteran Clive Davis, who founded the label in 1974, to step aside as CEO at age 67.
A public relations debacle ensued and BMG wounded up giving Davis another label under the BMG banner.
Prior to running Arista, Reid had co-founded LaFace with longtime friend and partner Kenneth (Babyface) Edmonds in 1989 and built the label into a music powerhouse.
