Sony Music Sues EMI Over Broken Executive Contract

NEW YORK (Reuters) – Sony Music Entertainment (6758.T) is suing smaller rival EMI Music and one of its executives after he allegedly broke his promise to join Sony on a new $3 million contract.

The suit alleges that Ron Werre used his deal with Sony as leverage in negotiating a promotion at EMI.

Sony charged that Werre, who had been EMI’s president of music services, agreed in February to join Sony on a three-year deal after his contract expired in 2010, according to documents filed at the Supreme Court of New York.

But last week EMI announced it had promoted Werre to the position of chief operating officer of its North American business. Sony immediately filed suit.

Sony, home to acts like Beyonce, Bruce Springsteen and Kelly Clarkson, said it had intended to appoint Werre as its new president of commercial music and had already fired the incumbent president in anticipation of the appointment.

“Werre never intended to fulfill his contractual obligations to Sony Music, but was merely using his contract with Sony Music as a stalking horse to solicit a more lucrative contract from EMI with enhanced job responsibilities,” the suit said.

Sony, the world’s second largest music company, claims EMI was aware of its plans to hire Werre. It charged that after Werre had agreed to join Sony, EMI contacted Sony Music Chief Executive Officer Rolf Schmidt-Holtz asking for Werre’s new contract to be scrapped.

It said around the same time Werre himself informed another executive at Sony that he had changed his mind and would stay with EMI under a new contract. Sony also names Werre in the lawsuit.

Sony and EMI both declined to comment.

London-based EMI is the fourth largest music company in the world and is home to acts like Coldplay, Kylie Minogue and the Beatles. It is owned by UK private equity firm Terra Firma [TERA.UL].

EMI and Sony’s other major rivals include Vivendi’s (VIV.PA) Universal Music Group, the largest music company and Warner Music Group (WMG.N).

By Yinka Adegoke
(Reporting by Yinka Adegoke; Editing by Richard Chang)