As expected, Madonna’s Maverick Records label today (March 25) sued Warner Music Group (WMG), Time Warner Inc. and Warner Bros. Records, alleging that they breached a joint-venture agreement. The action, filed in California Superior Court in L.A., seeks to terminate the 12-year-old pact between Maverick and the Warner companies.
As previously reported, a source confirms that WMG on Wednesday launched a preemptive action against Maverick in a Delaware court, asking a judge to declare that Maverick’s claims were baseless. That filing remains sealed by the court.
The complaints are believed to be tied to ongoing disputes between WMG and Maverick about the value of the 60% of Maverick held by partners Madonna and Guy Oseary. WMG has an option to buy that share when its agreement with Maverick runs out on Dec. 31.
In its suit, Maverick claims that WMG repeatedly and willfully breached its 1992 joint-venture pact, which was amended in 1999. It alleges that Maverick had to spend $30 million on promotion, publicity, new media, sales and marketing expenses that WMG was required to pay under the agreement. It also claims that WMG provided improper and inaccurate accountings of revenues, and that revenues derived from the sale and exploitation of Maverick’s properties within the Time-Warner family were not computed properly.
The suit also alleges that Maverick was forced to shut down its Latin-music division and lay off its in-house promotion staff. It claims that, in a move to avoid sharing revenues with Maverick, WMG refused to allow the label to sign an artist who later pacted with Atlantic, another WMG music label. It also says that $250,000 purportedly used for promotion of a single from Maverick’s “Rugrats” soundtrack was spent by Warner Bros. “in a dubious and suspicious manner.”
The action alleges that WMG chairman/CEO Roger Ames “engaged in a pattern of false promises and misrepresentations of fact” to effect changes in the joint venture, and that WMG sought to induce Oseary to back off pressing the issues raised in the suit with the promise of a new and separate contract.
Maverick’s suit seeks actual, compensatory and punitive damages to be determined; an accounting; and a declaration that Maverick has the right to terminate the venture.
A WMG spokesman says that while the company has “deep respect” for Madonna, Maverick’s claims are “baseless, unsubstantiated and without merit.”