A Label's Last Days

A brief statement from Universal Music Group on Sept. 5 hammered the last nail into the coffin of Sanctuary Group's much-vaunted "360-degree" business model, leaving artists and staffers in limbo.

"In consultation with senior management of the Sanctuary Group," UMG said, "it has been decided that its Sanctuary Records U.K. division will no longer continue as a stand-alone, front-line record label."

Although Universal declines to comment on its Sanctuary plans, informed sources say solid-performing divisions like merchandising business Bravado, booking agency Helter Skelter and management arm Trinifold will become stand-alone UMG operations.

The major's ambition is "to grow [that side of the] business," an executive close to the deal says, adding that UMG will begin that process "very soon." However, the source emphasizes, "Universal doesn't need a front-line Sanctuary record company."

Sanctuary's front-line labels have long underachieved, with one recent notable exception being the European performance of Morrissey's 2004 album "You Are the Quarry."

Morrissey is no longer with Sanctuary, but other artists on the roster have been told to "sit tight," says 19 Management's Mark Langthorne, who handles former Soft Cell singer/songwriter Marc Almond.

Earlier this year, Almond signed a three-album deal with Sanctuary imprint Sequel, which released his "Stardom Road" set in June. UMG has "about three months left" to decide if it wants to continue with Almond, Langthorne says. "We can't decide anything until they decide to take up the option," he says. "I hope they don't. [It would be] fantastic to go out and get a new deal; we have two other companies waiting."

Sequel also issued former Cranberries vocalist Dolores O'Riordan's debut solo album, "Are You Listening?," in May. But, her manager Don Burton says, "we're in limbo at the moment. We don't have a label. We're raring to go with a new single, the video is done, and we're stuck. Until I hear back from Universal, I don't know what plans they have."

Universal has until November to pick up O'Riordan's option, Burton says. Ironically, he adds, "we went with an indie because the Cranberries spent their entire career with Universal and we wanted to go with something smaller."

Rod Smallwood and Andy Taylor co-founded Sanctuary in 1976 as an artist management business. Three years later, the pair signed Iron Maiden for management, and they still handle the EMI-signed act.

After acquiring U.K. catalog specialist Castle Communications in 2000, Sanctuary embarked on a bullish series of label, publishing, management and merchandising acquisitions. It boasted annual revenue in excess of £220 million ($396 million) at its peak in 2003-04. But subsequent financial problems (Billboard, June 17, 2006) brought about an operating loss of £56.7 million ($107.2 million) in 2005-06.

Sanctuary divested its recording studio and publishing interests, plus its stake in the Rough Trade label, before UMG bought it Aug. 2 for £44.5 million ($87.7 million), and took on £60 million ($120 million) of debt.

Sanctuary began winding down front-line U.S. operations earlier this year. UMG has now entered a period of consultation regarding redundancies with the group's 60-plus U.K. staffers. The catalog unit—handling repertoire from Black Sabbath, Motörhead and the Kinks—will operate alongside Universal Music U.K.'s existing catalog division. But a source close to the deal admits few Sanctuary Records jobs will remain.

Billboard understands senior casualties include Sanctuary Records Group Worldwide CEO Joe Cokell and Sanctuary Records Group COO Roger Semon; neither could be reached, and Universal declined to comment.

As the survivors wait to learn their fate, one insider says: "The walls have finally caved in." But, he adds, "it's one of life's great mysteries it's taken so bloody long."

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