ON Media

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Band History

It was soon apparent in 1969 that Atlantic/Atco president Ahmet Ertegün viewed Warner/Reprise president Mike Maitland as an antagonist. Maitland believed that, as vice-president in charge of the Warner-Seven Arts music division, he should have final say over all recording operations, and he further angered Ertegün by proposing that most of Atlantic's back-office functions (such as accounting and distribution) be combined with the existing departments at Warner/Reprise. In retrospect Ertegün clearly feared that Maitland would ultimately have more power than him and so he moved rapidly to secure his own position and remove Maitland.
Maitland had put off renegotiating the contracts of Joe Smith and Mo Ostin, the presidents of the Warner Bros and Reprise labels, and this provided Ertegün with an effective means of undermining Matitland. When Wexler—now a major shareholder—found out about the contract issue he and Ertegün began pressuring Elliot Hyman to get Smith and Ostin under contract, ostensibly because they were worried that the two executives might move to rival labels—and in fact Ostin had received overtures from both the MGM and ABC labels.
In 1969, the wisdom of Hyman's investments was proved when Kinney National Services purchased Warner-Seven Arts for $400 million—more than eight times what Hyman had paid for Warner/Reprise and Atlantic combined. From the base of his family's funeral parlour business, Kinney president Steve Ross had rapidly built the Kinney company into a profitable conglomerate with interests that included comic publishing, the Ashley-Famous talent agency, parking lots and cleaning services. Following the takeover, Warners' music group briefly adopted the 'umbrella' name Kinney Music, because U.S. anti-trust laws at the time prevented the three labels from trading as one; once resolved, Kinney rebadged the film and music group Warner Communications Inc.
Ross was primarily focused on rebuilding the company's ailing movie division and was happy to defer to the advice of the managers of the company's record labels, since he knew that the they were generating most of the group's profits. Ertegun's campaign against Maitland began in earnest that summer. Atlantic had agreed to help Warner Bros in its efforts to establish its labels overseas, beginning with its soon-to-be-established Warner Bros subsidiary in Australia, but when Warner executive Phil Rose arrived in Australia, he discovered that just one week earlier Atlantic had signed a new four-year distribution deal with a rival local label, Festival Records (owned by Rupert Murdoch's News Limited). Mike Maitland complained bitterly to Kinney executive Ted Ashley, but to no avail^[4] – by this time Ertegun was poised to make his move against Maitland.
As he had with Hyman, Ertegun urged Steve Ross to extend Mo Ostin and Joe Smith's contracts, a recommendation Ross was happy to accept. Ostin however had received overtures from other companies including MGM Records and ABC Records and when he met with Ertegun in January 1970 and was offered Maitland's job, he was unwilling to re-sign immediately. In response, Ertegun broadly hinted that that Maitland's days were numbered and that he, Ertegun, was about to take over the recording division.
Ostin was understandably concerned that, if he accepted the position, the Warner Bros staff would feel that he had stabbed Maitland in the back, but his attorney convinced him that Maitland's departure was inevitable, regardless of whether or not he accepted the post (succinctly advising him, "Don't be a schmuck"). On Sunday January 25, Ted Ashley went to Maitland's house to tell him he had been dismissed, and Maitland declined the offer of a job at the movie studio. One week later, Mo Ostin was named as the new President of Warner Bros Records, with Joe Smith as his Executive Vice-President.^[5] Ertegun nominally remained the head of Atlantic, but since both Ostin and Smith owed their new positions to him, Ertegun was now the de facto head of the Warner music division. Maitland moved to MCA Records later that year and successfully consolidated MCA's labels which he couldn't do at Warner