The Associated Press is reporting that LINKIN PARK wants to end its contract with Warner Music Group Corp. because it is unhappy with the financial implications of the company's impending initial public offering, the band said Monday.
The band, which blended rap and rock on best-selling albums like "Hybrid Theory" and "Meteora", is not going forward with plans to record its next Warner album, due in 2006. The group has a contract for four more albums with the record label.
"LINKIN PARK has become increasingly concerned that WMG's diminished resources will leave it unable to compete in today's global music marketplace, resulting in a failure to live up to WMG's fiduciary responsibility to market and promote LINKIN PARK," the band said in a statement issued by the band's management agency, The Firm.
The group claimed that it became concerned about Warner's ability to promote the band due to cost-cutting efforts at the company and the financial terms of its IPO, which is set to come to market this month.
A restructuring plan that is scheduled to save the company $250 million a year has resulted in a widespread reduction of employees at the company and cuts in marketing and promotional spending, the group said.
The IPO, which could raise as much as $782 million, will only provide about $7 million in cash for the company's coffers, because the majority raised will be used to pay off debt.
The current owners of the company, including Chief Executive Edgar Bronfman Jr., will be paid more than $200 million in special cash dividends and management termination fees if the IPO is completed.
LINKIN PARK claimed in its press release that the band is responsible for 10 percent of Warner Music's record sales, and that its decision to hold off on recording a new album — the group is instead considering increasing its reliance on touring, merchandise and endorsements — will be "disastrous" for the music label.
Warner Music said the band's contribution to the company's bottom line was overstated, pointing to Nielsen SoundScan data that shows LINKIN PARK's albums have made up about 3 percent of the company's U.S. sales in the last five years.
"While LINKIN PARK's talent is without question, the band's management is using fictitious numbers and making baseless charges and inflammatory threats in what is clearly a negotiating tactic. Warner Bros. Records has made significant investments in LINKIN PARK, and they have always been compensated generously for their outstanding worldwide success," Warner said.