Iovine’s Role Is Expanded in Deal With Universal

Jimmy Iovine, chairman of Universal Music Group’s Interscope division, has signed a lucrative new five-year deal that could dramatically expand his role with the world’s biggest record conglomerate, sources said.

The deal provides Iovine with an equity stake in Universal, plus additional incentives for him to pursue outside entertainment ventures that would bolster the record giant’s bottom line, according to the sources.

It also solidifies Universal’s relationship with its hottest label executive only days after Lyor Cohen, head of the firm’s Island Def Jam label, said he was leaving to join Time Warner Inc.’s Warner Music Group.

Iovine, who has been instrumental in the careers of diverse artists such as Dr. Dre and U2, is considered one of the industry’s most consistent hit makers.

Terms of the deal were not disclosed, but sources said the contract would pay Iovine an estimated $50 million in addition to the equity and income from new outside ventures. The deal was negotiated over the last several months by Universal Music Group Chairman Doug Morris.

“For the record, anything Jimmy got, he earned,” Morris said. “The deal that he made allows him to act in the most entrepreneurial way within the confines of a public company. And it allows the company to get the benefit of his ideas.”

People familiar with the deal say French parent Vivendi Universal had found it difficult to make a rich new deal at a time when record sales were plunging worldwide. But industry insiders said formally inking the deal provided Universal with a crucial degree of stability.

“Jimmy Iovine is the foremost record executive in the world today, and it’s very important for Universal to have kept him,” said entertainment impresario David Geffen, who has sold Universal two record labels now overseen by Iovine.

One key aspect of the deal is the authority it provides Iovine in pursuing outside ventures in film and television. Iovine, a co-producer of Universal’s blockbuster Eminem film “8 Mile,” lately has been pursuing projects in television, including a Showtime rap series and, potentially, a new premium music channel featuring uncensored videos and other programming. Iovine’s signing was first reported Friday in the New York Daily News.

Universal is close to hiring former Arista Records chief Antonio “L.A.” Reid to take the reins at Island Def Jam, with the move expected to be announced as soon as next week, sources said.

Under Iovine, Interscope has ranked for two years running as the nation’s top seller of new releases, including last year’s biggest, 50 Cent’s “Get Rich or Die Tryin’,” which has sold more than 6.5 million copies.

Iovine broke into the music industry three decades ago, engineering or producing hits for John Lennon, Tom Petty, Bruce Springsteen and Patti Smith. He went on to turn Santa Monica-based Interscope -- launched as a joint venture with Time Warner in late 1990 -- from a gangsta rap upstart into the strongest label in America.

In the last year, Iovine has taken a lead role in persuading the industry to back Apple Computer Inc.’s new iTunes digital music service. He worked with Apple Chief Executive Steve Jobs to develop a massive promotion being rolled out during this weekend’s Super Bowl, in which Pepsi will give away up to 100 million free downloads from the iTunes service.

Iovine also recently struck an alliance with Hewlett-Packard, which has agreed to develop anti-piracy technology for its next generation of computer products.

“Jimmy is clearly on the leading edge of trying to explore new business models and new approaches for the music industry,” Jobs said. “He’s the future.”