The Brutal 35-Year War Between Sony, Stephen Popovich & Meat Loaf (Excerpt From Fredric Dannen's New Edition of 'Hit Men')

From left: John Belushi, Meat Loaf, Steve Popovich and singer Karla DeVito

(Photo courtesy of Steve Popovich Jr.)

On what would have been the first day of the trial, the parties finally settled. Sony agreed to pay $6.7 million to Popovich and his partners, and restore the Cleveland International logo to future copies of "Bat Out of Hell." Though Popovich's share of the settlement would not cover what he had spent on the litigation, he was satisfied -- until he discovered that Sony, despite the agreement, did not have any intention of putting his logo back. In 2002, he sued Sony again, for breach of contract and fraud. This time there was a two-week jury trial, in the spring of 2005, in district court in Cleveland. Sony meanwhile had settled privately with Meat Loaf. But Popovich had a star witness of his own: Yetnikoff.

In 1990, Yetnikoff, once the most powerful record executive in the business, had been forced out of Sony in the wake of a spectacular meltdown. An article in Time magazine titled "A Music King's Shattering Fall" suggested that one factor in Yetnikoff's downfall was his less-than-flattering portrayal in the hardcover edition of "Hit Men," which was published that same year, though in truth Yetnikoff had all but guaranteed his firing by inexplicably making enemies of several of his most important allies, including Sony recording artist Bruce Springsteen and his manager, Jon Landau.

Back when "Hit Men" was first being reported, Yetnikoff angrily denied reports that he was a cocaine user. He also said that one day he would write his life story, and call it "I Wuz There: The Music That Changed the World." He finally did publish his autobiography in 2004, but it was titled "Howling at the Moon: The Odyssey of a Monstrous Music Mogul in an Age of Excess." Far more entertaining than either of Clive Davis' memoirs, the book is a chronicle of Yetnikoff's debauchery, drunkenness and cocaine use during the 15 years he ran the world's largest record company. Yetnikoff's book probably did little to burnish his reputation, but it did report, accurately, that since getting sober, he had faithfully volunteered at recovery centers around the New York area.

After Yetnikoff finished his direct testimony at the 2005 trial, Stephen Williger, the lead lawyer for Sony, commenced his cross-examination, armed with a copy of "Howling at the Moon." Williger probably relished the thought of questioning a confessed drunk and drug abuser. He seems to have underestimated both Yetnikoff and the affection jurors have for witnesses who freely admit their own human failings.

Williger: Now, you acknowledged [in your book] that you don't like Sony; isn't that right?

Yetnikoff: Yes.

Williger: And, in fact, you don't like Sony because of the way that you wound up leaving Sony?

Yetnikoff: That's only a little part of it. I don't like Sony because I don't think they're a respectable, good company.

Williger: And as a matter of fact, Mr. ...

Yetnikoff: You asked me a question. Can I answer it? I don't like Sony for a multitude of reasons … I don't like their behavior. I think they're bullies … They lean on people. You want me to continue? Because I will if you want.

Williger: No, actually ...

Yetnikoff: I don't like Sony because I think their senior executives lie ...

Williger: Well, as a matter of fact, Mr. Yetnikoff, you, as a senior executive, actually lied to your bosses when you were employed?

Yetnikoff: Absolutely. I was drunk at the time. That's 16, 17 years ago. I am sober and clean for all that time, and the reason I don't like Sony is because of questions like that, looking to impugn my current testimony for things that I did and said 16 years ago, when I was not clean and sober ...

Williger: You want blood from Sony?

Yetnikoff: No, because I think the blood would be poisonous.

The jury returned a verdict holding Sony in breach of contract. The Cleveland International logo had been left off of more than 10 million "Bat Out of Hell" CDs, and the jurors awarded Popovich 50 cents per album in damages -- to the tune of $5,057,916. Sony appealed the verdict, tying up Popovich in court for yet another round of litigation. In 2006, Popovich begged his former boss Davis, who was now chairman of Sony-owned BMG North America, to intercede. "I do feel your pain but I'm totally helpless to further your cause," Davis wrote Popovich in an email. Popovich might have gone under, had it not been for Steven Van Zandt, the "Sopranos" actor and member of Springsteen's E Street Band, whom Popovich had befriended years earlier. "When I was dead f-ing broke, Steve gave me 50 grand, and he never let me pay him back," recalled Popovich.

In November 2007, a three-judge panel of the U.S. Court of Appeals for the Sixth Circuit voted 2-to-1 to uphold the jury verdict. Sony finally paid Popovich $5.7 million -- the damages awarded, plus interest -- in 2008. But the "battle out of hell," as the Cleveland press had dubbed it, was not over. Popovich, who had been fighting Sony for more than 15 years, and had spent far more money than he had recovered -- and that was leaving aside his physical and mental anguish and lost productivity -- was still not receiving royalties.

In August 2009, he commissioned Citrin Cooperman to audit Sony's royalty statements from July 2000 through December 2008. The report, which cost Popovich an additional $100,000, was completed in March 2011. The audit left many questions unanswered, including exactly how many copies of "Bat Out of Hell" had been sold. Some estimates have gone as high as 43 million, surpassing even the Eagles' "Greatest Hits 1971-1975." According to the RIAA, the album is 14 times platinum. SoundScan-era sales figures, which began in 1991, indicate that "Bat Out of Hell" has sold 5.1 million units (compared to "Thriller," at 6.4 million, and the Eagles' "Greatest Hits," at 5.7 million) -- enough to place the Meat Loaf album among the top sellers of all time.

A recent photograph of Stephen PopovichCourtesyof Stephen Popovich, Jr.

When Clifford Drobnick, Popovich's longtime personal CPA, read the report, he was outraged. Sony had allowed Citrin Cooperman to see barely half of the documents it was legally required to disclose. Drobnick wrote Popovich, "Prior to the audit report, you believed that Sony was sending you false, fraudulent and misleading semi-annual royalty statements. After the audit report, you know that Sony is sending you false, fraudulent and misleading royalty statements, but you still do not know the extent of the understatement of royalties due you." Drobnick recommended nothing less than a forensic audit.

It was not to be. On June 8, 2011, Popovich, 68, who had recently moved to Murfreesboro to be closer to his son and grandchildren, died in his apartment. He had had a history of heart trouble, but the stress of the Sony litigation was a likely contributing factor to his death.

Popovich Jr. says he "wrestled with" pursuing the case, but at the end of 2012, he reached a confidential settlement with Sony, ending the litigation once and for all. "I did a lot of soul searching, and I prayed a lot," he says. "I spoke to my wife, and a few other people. And I came to the realization that I want to be here for my kids like my dad was here for me. I saw the toll it took on him the last 10 full years he was around. It just got to the point where it totally consumed his life." (Sony had no comment on the settlement with Popovich Jr., but a representative for the company said, "We disputed the allegations of the auditor [Citrin Cooperman] at the time, and continue to do so.")

Instead, with his own money, and donations from friends including Van Zandt and Alexenburg, Popovich Jr. established a scholarship fund, in his father's name, at Cuyahoga Community College in Cleveland. The scholarship is designed, says Popovich, "to help students pursue a career in the music industry." He adds, "We need new leaders in the music business. Leaders who believe in morals and ethics."

The following article is excerpted from the forthcoming, newly expanded edition of Hit Men: Power Brokers and Fast Money Inside the Music Business. Continuously in print since its first publication in 1990, Hit Men will be rereleased May 5 by Vintage Books/Random House in all e-book formats, with a new last chapter, bringing the book's narrative to the present. The legal dispute recounted in this excerpt spanned a good portion of the two decades since the original edition was published.