EMI to Drop Mariah Carey, Sources Say

EMI Group is expected this week to drop pop star Mariah Carey, less than a year after signing her to a blockbuster four-album contract worth more than $80 million, sources said.

The termination of the pact, which sources say will cost EMI an estimated $30 million in exit fees, follows a difficult year for Carey, who suffered a nervous breakdown last summer before releasing her debut album for the British music giant. But Carey’s “Glitter” CD for EMI was panned by critics and sold only about 2 million copies worldwide. Her 1993 album, “Music Box,” sold about 20 million copies for Sony.

This marks the first time a major music corporation has decided to cut its losses on an unprofitable superstar pact after one album.

Representatives for EMI and Carey declined to comment Tuesday.

But sources say the parties have been in negotiations since October, when EMI brought in music industry veteran Alain Levy to take over the faltering music corporation with a mandate to cut costs. EMI lost $77.6 million in the first half of its current fiscal year.

Levy and his second in command, David Munns, determined that it would be best to get the $30-million loss off its books from the Carey settlement before EMI’s fiscal year ends in March, sources said.

Within a week of taking the reins at EMI, Levy fired Virgin head Nancy Berry, the executive who signed Carey to the lavish pact after outbidding several competitors. The Carey deal was approved by Nancy Berry’s former husband and boss, Ken Berry--who also was ousted when Levy took over.

EMI’s Virgin Records signed Carey, an international star who had sold more than 100 million albums at Sony, with the hope that she would continue her winning streak. EMI spent a fortune on marketing and promotional costs for “Glitter,” but Carey’s album lost more than $10 million in the process, sources said.

Dumping Carey is a clear indication that Levy will run EMI in a dramatically different fashion than his predecessors. The 54-year-old French executive also has held frank discussions recently with his top managers about reducing their lavish salaries and job perks at EMI. Levy is being paid $1 million to run EMI--about one fifth of what his competitors earn.

Levy, who previously turned PolyGram into the world’s leading record company, has developed a reputation for being a frugal, no-nonsense manager. Analysts say Levy’s bold decision to cut ties with Carey could have ramifications for fading superstars at other labels too. Battered by decreasing sales and exploding costs, record companies are scrambling to find new methods to make their quarterly numbers.

Although Carey will leave EMI and become a free agent again, it is unclear which record company would be willing to pay a hefty price to sign her.

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Times staff writer Jeff Leeds contributed to this report.