I.B. BAD FILLS IT UP WITH OCTONE

Many in the industry were taken aback by the news that Octone Records had moved from the RCA Music Group to Interscope Geffen A&M, which established the Octone/A&M label, installing Octone founder James Diener as President of the new entity. Adding the storied A&M name to Octone was Jimmy Iovine’s way of advancing the perception of Octone as an integral part of the IGA family while giving Diener instant status within the organization —and with former A&M head Ron Fair now heading Geffen, the A&M logo was essentially up for grabs.

Octone was launched with money procured by Diener from longtime Blackstone exec Howard Lipson and Blackstone alumnus Larry Fink, and he then made a joint venture agreement with Clive Davis’ newly formed J Records that included a buy/sell mechanism. The deal’s expiration triggered the buy/sell, with Octone asking for a payout said to be just south of $40 million. When RMG rejected that proposal, Octone then opted to bet on the come, buying out RMG and making the deal with IGA.

UMG was willing to shell out the $40m not only because of Maroon 5 (whose 2002 debut LP, Songs About Jane, sold 4.3 million in the U.S.) and Flyleaf (500k+), but also because the powers that be see Diener as a valuable addition to the IGA executive team. Octone/A&M, whose executive team includes longtime Octone GM David Boxenbaum and EVP/promotion head Ben Berkman, also gives IGA an East Coast presence.

So it appears that Iovine and Doug Morris are rolling the dice with Diener and Maroon 5 in hopes of a big upside for both.

Diener is a second-generation mogul; father Steve Diener was the President of ABC Records in the mid-'70s, a run that ended in 1979 when the American Broadcasting Co. sold the label to MCA, which then dissolved it.