Despite Troubles, Arista Claims 1999 Was A Record Year

Amid ongoing controversy surrounding the future of company founder and president Clive Davis, Arista Records managed to log the highest revenues in company history during 1999, the label announced this week. Arista is off to a strong start in 2000 as well: word came today (1/12) that Santana's "Supernatural," riding the wave of multiple Grammy nominations, will return to the top of the Billboard 200 album chart next week.

''What a way to begin the year 2000,'' Davis said in a statement. ''To see Carlos' album reach these staggering sales numbers is great not only for Arista but for everyone who is in the music community as well.''

Santana's comeback album, which has sold nearly 5 million copies, and TLC's ''Fanmail,'' which was recently certified five times platinum, were the label's best-selling releases in 1999. Other big sellers included Whitney Houston's ''My Love Is Your Love,'' and Sarah McLachlan's ''Mirrorball.''

Arista, which is owned by the German conglomerate Bertelsmann AG, claims that it had sales of $425 million in 1999, $5 million more than 1998's record tally. The label also claimed record sales of $300 million during the last six months of 1999, and said that November's sales mark of $85 million was the best in the company's 25 year history.

However, Arista did not say if the increased revenues translated into increased profits, and Arista's profitability is said to be one of the reasons that executives at BMG Entertainment, Bertelsmann's North American unit, are unhappy with Davis.

A recent Los Angeles Times story, attributing the numbers to unnamed sources at BMG, reported that Arista was expected to generate a profit of only $25 million from 1999's revenues. Other Times sources said Arista would generate $40 million for Arista's bottom line, another $40 million in U.S. distribution fees, and $20 million more in foreign revenues. Because Bertelsmann is a closely-held company, it is not required to file detailed financial information about its operations, which makes the actual figures difficult to determine. Arista Records accounted for about a third of BMG's market share in 1999, according to the Times.

In a highly publicized dispute, Davis, 66, and Bertelsmann--which traditionally forces executives to retire at age 60--have been battling over leadership plans for the label. In November, BMG Entertainment Chairman Strauss Zelnick reportedly floated a plan that would have replaced Davis with L.A. Reid, the co-founder of LaFace Records, when Davis' contract expires at the end of June. But Davis quickly dashed hopes of a quick resolution to the succession issue, reportedly walking out of a meeting when told of the plan.

Further complicating the situation are reports that BMG, which wants to buy the half of LaFace Records that it doesn't already own, has reportedly been unable to come to terms with L.A. Reid on a price.

Many superstar acts expressed support for Davis after word of the corporate battle hit the press in November.

''It hurts me to think he's being treated with disrespect,'' Whitney Houston in a statement. ''He deserves total honor and respect from everyone including BMG. And as far as his age is concerned, he's younger than me, so maybe I should be retired.''

Also chiming in with support for Davis was Sean ''Puffy Combs, who started his Bad Boy Entertainment label with help from Davis. ''For more than 25 years, Clive Davis has been one of the most respected individuals in the music industry who has built a $3.5 billion empire,'' Combs said in a statement. ''I will always stand by him whatever the path he may choose.''