[article] articles about the Max Matsuura/avex scandal

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Ayumi Hamasaki's producer to stay with Avex

Masato Matsuura, the famous producer who brought pop star Ayumi Hamasaki into the spotlight, will return to the Avex record company group along with former managing director Ryuhei Chiba, the firm said Tuesday.

Avex announced the informal decision just two days after both Matsuura and Chiba resigned as senior managing director and managing director, respectively.

Matsuura had quit over internal trouble involving management plans at the company, and it had been rumored that artists he had dealt with would also move to another company as a result. But Avex officials said that this would no longer happen.

"With this, the possibility of artists transferring has been eliminated," an Avex representative said.

In addition to his position as managing director, Chiba had also served as president of a firm that managed artists. Avex officials said it was stated during a board of directors meeting on July 31 that conflicts of interest in Chiba's transactions would become a problem in the future. As a result it was recommended that he resign from his position as managing director.

Matsuura moved a motion for chairman Tatsumi Yoda to resign, saying his management plans were mistaken, but it was voted down, and he and Chiba resigned as directors.

Later, during a meeting between Chiba and Avex officials, it was reportedly decided that there were prospects for a solution to the problem of conflicts of interest affecting Chiba's transactions, and an informal decision was made for Matsuura and him to return to the company.

From The Mainichi Daily News, 3 August 2004

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Artists assert power at Avex / Record label aims to restore order after management rift

Major record label Avex Inc. based in Minato Ward, Tokyo, is recovering from a state of disarray after internal rifts led to the resignation of its senior managing director.

The infighting became public knowledge after Masato Matsuura, 39, one of the company's founders and a key figure in its growth, resigned Sunday. Two days later, however, Avex announced that Matsuura would return to the company.

Later Tuesday, Avex Chairman and Chief Executive Officer Tatsumi Yoda, 64, announced that he had assumed the post of nonvoting honorary chairman, and that Toshio Kobayashi, 39, a managing director, had been appointed the new president of the company.

The resignation of Matsuura, known as the force behind a string of Japanese pop megahits, seemed to provoke a backlash against the label from its employees and contracted musicians.

Established in 1988, the label saw rapid growth after signing major pop singers, including Namie Amuro and Ayumi Hamasaki. Its stock has been listed on the First Section of the Tokyo Stock Exchange since 1999. Shortly after the company's foundation, Yoda, who worked for an electric equipment maker at that time, was tapped to take the top job at Avex.

With Yoda looking after corporate management and Matsuura taking responsibility for music production, it did not take long for the company to become the nation's leading label.

But the prolonged downturn in sales of compact discs has hit Avex just as hard as it has other labels. Over the past three years, its business performance has been at a standstill. Under the circumstances, the management increasingly had called on the production side to reduce costs, sources said, adding that differences of opinion between the two sides were increasingly evident.

A board of directors meeting Friday reportedly triggered the resignation of Matsuura. During the meeting, Ryuhei Chiba, 40, president of talent agency Axev Inc., an affiliate of Avex, was urged to resign over irregularities concerning which acts he signed.

This was resisted by Matsuura--reportedly a close ally of Chiba--who then unsuccessfully put forward a motion to dismiss Yoda. Matsuura and Chiba ended up submitting their resignations after the meeting, but the move only led to further confusion.

On Monday, Avex's employees were informed of Matsuura's resignation at the company's regular morning meeting. In response, some employees reportedly asked the management to persuade Matsuura to stay with the company. Others hinted they would consider establishing a new firm together with Matsuura, according to the sources.

Concerns among Avex employees were fueled as the company's stock plunged by its daily limit to close at 1,608 yen on the TSE on Monday.

The same day, many artists signed to the label expressed their support for Matsuura.

Hamasaki said, "I'll decide on my future course depending on his (Matsuura's) fate."

Hiro, a member of pop group Exile, also spoke out in support of Matsuura. "The senior managing director (Matsuura) is my business mentor. I want to stay true to my beliefs and work with him to create music that will make history," he said.

Similarly, Avex's other musicians, such as hitomi and Kumi Koda, put messages supporting Matsuura on their Web sites.

Fearing that it might lose some of its artists, Avex management then tried to mend fences with Matsuura. The same concerns also appear to be behind the management reshuffle.

Kobayashi and Yoda held a press conference at the TSE at 10 p.m. Tuesday.

"I asked Matsuura to return and made preparations accordingly. From now on, I'd like Matsuura, Kobayashi and Chiba, who will be reinstated as Axev president, to establish their own management system," Yoda said.

When asked whether responses of its artists to Matsuura's resignation affected the management reshuffle, Yoda said, "It would be a lie if I said the drop in stock prices and the musicians' responses didn't have any impact on that."

Kobayashi said: "Matsuura was a friend of mine at high school and our relationship hasn't changed since then."

From The Daily Yomiuri, 5 August 2004

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Japanese industry awaits Avex fallout: label group, artists carry on after Yoda departure.

by Peter Serafin


TOKYO -- The Japanese record industry is awaiting developments at the country's leading independent label group, Avex, after its top executive stepped down.

Disagreements at the board level and the intervention of major artists at the Tokyo-based company were followed by the Aug. 3 resignation of chairman/CEO Tom Yoda.

Managing director Toshio Kobayashi was named to the new role of Avex president the same day, taking over most of Yoda's responsibilities. Yoda has taken the post of non-voting honorary chairman.

Yoda also exited as chairman/CEO of the Recording Industry Assn. of Japan, a post he had held since March 2003. RIAJ senior managing director/COO Osamu Tanabe is serving as chairman/CEO until a permanent replacement is chosen.

Yoda's departure shocked many industry insiders.

"His presence [at the RIAJ] will be sorely missed," one industry source says. "As chairman/CEO, he has proposed and fought for a number of key initiatives that will benefit the music industry, artists and consumers for years to come."

BOARDROOM DISAGREEMENTS

Yoda's departure from an active role at Avex followed a July 30 boardroom spat that saw two other leading execs temporarily quit the company. The two were senior managing director Masato "Max" Matsuura (one of the company's founders) and Ryuhei Chiba, president of talent-agency subsidiary Axev.

At a reportedly acrimonious board meeting, Yoda introduced a resolution calling on Chiba to resign because of an alleged conflict of interest. A source says the disagreement arose because Chiba had signed to Axev an artist managed by a member of his family.

The board backed Yoda's resolution in a 6-1 vote. However, Matsuura--described by insiders as a close ally of Chiba's--then introduced a second resolution demanding that Yoda step down due to "a difference of opinion in management principles."

Matsuura's motion was defeated 5-2. He and Chiba resigned the next day.

The company issued a press release Aug. 1 announcing the resignations. But when the news came out, several priority Avex acts, including J-pop acts Ayumi Hamasaki, Exile and Kumi Koda, publicly declared their support for Matsuura.

Hamasaki accounts for about 10% of Avex's revenue, according to the company. The diva issued a statement Aug. 2 saying, "I will decide on my future course depending on [Matsuura's] fate."

Exile frontman Hiro described Matsuura to the Japanese press as his mentor and declared that he wanted to continue working with him. Other artists posted messages of support on their Web sites.

Matsuura is considered a visionary, hands-on record producer. He discovered and developed a number of Avex's top acts, including Hamasaki, Exile and J-pop vocalist Namie Amuro.

The boardroom dispute and the artists' reaction prompted fears that the label could lose some of its most important acts. Those fears had an immediate impact on Avexs stock price: By close of trading Aug. 2, its shares had dropped 16% on the Tokyo Stock Exchange.

Following closed-door meetings with Matsuura and Chiba, Avex issued a statement Aug. 3 saying that the two had agreed to withdraw their resignations. Both were also reappointed to the board of directors, pending final approval at a shareholders' meeting Sept. 28.

Avex also announced Kobayashi's elevation to president and confirmed that Yoda had stepped down as chairman/CEO.

Hamasaki subsequently told the press that since Matsuura had been reinstated, she would stay with Avex.

At an Aug. 3 press conference, Yoda said, "From now on, I'd like Matsuura, Kobayashi and Chiba to establish their own management system."

He added, "I would be lying if I said the reaction of some of our artists and the drop in share value didn't have anything to do with this decision."

DYNAMIC STYLE

Avex launched in 1988 as an importer of overseas product, especially Euro-dance tracks. It was also the Japanese licensee of Jive Records until Zomba opened its Tokyo office in 2000. With a strong local roster, Avex grew quickly, becoming one of Japan's biggest music business success stories.

Entrepreneur Yoda was tapped to head Avex four months after the company was founded. He earned a reputation throughout the industry for his smart, aggressive style. Observers cite the combination of Yoda's business acumen and Matsuura's creative insight as the basis for the company's rapid ascent.

One industry source notes that Yoda "introduced a dynamic management style that afforded the company's creative staff the perfect environment in which to develop and bring to market key acts, and [he] enabled Avex to be listed on the Tokyo Stock Exchange. [That is] no small feat for an independent music software producer."

Another observer notes that Yoda's fluency in English and experience gained while living in the United States greatly raised the international profile of domestic Japanese product.

Avex reported sales of 73.9 billion yen ($673.3 million) on a consolidated basis for the fiscal year ended March 31, down 8.8% from the previous year. The company has been listed in the First Section of the Tokyo Stock Exchange since 1999.

From Billboard, 4 September 2004

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Pop Diva's Mentor Regains Control of Major Record Label

Avex Inc. has appointed former Senior Managing Director Masato Matsuura as its new president in a management shakeup to put an end to the internal squabble that has rocked the leading Japanese record label. Matsuura, 39 is one of Avex's founders and is a top producer who boosted pop diva Ayumi Hamasaki to stardom.

Managing Director Ryuhei Chiba, 40, a close ally of Matsuura who also serves as president of an Axev affiliate, was named as vice president.

The appointments, approved at the firm's board meeting on Tuesday, will take effect on the same day.

Incumbent President Toshio Kobayashi, 39, will become managing director.

Matsuura and Chiba quit Avex on Aug. 1 after they failed to pass a motion at a board meeting to dismiss then President Tatsumi Yoda, who was at odds with them over management policy.

Matsuura's departure cast a shadow over Avex's future as Hamasaki, the company's money spinner, threatened to follow suit in quitting the label. As a result, Avex shares tumbled on the Tokyo Stock Exchange.

Yoda resigned only days after Matsuura's departure, and Matsuura returned to Avex as operating officer.

From Jiji Press, 28 September 2004

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Poor disclosure buffets Avex shares

YASUHIRO MORIZONO, Staff writer

Singing star Ayumi Hamasaki slapped her label, Avex Inc., with a stinging comment at the beginning of August, saying, "Avex will come to an end." She was hinting that she might move to another record label in response to the resignation of board members, including Masato Matsuura, who had helped her become a pop-star icon.

For about two months, from the time when internal strife among executives at Avex, which was renamed Avex Group Holdings Inc. on Oct. 1, broke out until the firm marked a new start under the holding company system, the company's investor relations activities continued to underperform. Its stock price declined steadily from the end of July, when it stood at around 1,900 yen ($18), falling to a year-to-date low of 1,301 yen on Nov. 1.

The strife began at a meeting of its board of directors on July 30, when then Chairman and President Tatsumi Yoda and other executives advised Ryuhei Chiba, a managing director, to resign.

Matsuura and other directors in turn proposed a motion to dismiss Yoda, and after it was rejected, Matsuura and Chiba resigned.

The company failed to explain what was happening and on Aug. 2, the first trading day after the strife began, its stock price tumbled by its daily limit of 300 yen from the previous week's close to 1,608 yen.

The company's shareholders include many fans of its artists. News that leading performers including Hamasaki might leave accelerated sell orders.

An analyst at a foreign brokerage said he could not ascertain what the company was trying to do, and investors grew irate about the lack of information.

The company's public relations and IR division was part of the chairman's office at the time, and it was difficult to release information amid the internal strife. Under Yoda's strong leadership, the division had quickly disclosed management and business conditions, but it appears it lost its functionality when management became split between older and younger executives.

What's more, information disclosure to the TSE was handled by another section, which made it difficult to put information together.

On the morning of Aug. 3, the firm suddenly announced it would rehire Matsuura and Chiba. It appeared that their discord with Yoda and others had been settled.

The media was told that a press conference would be held that evening, but it did not begin at the scheduled time and was finally held at 10 p.m.

Yoda said he would retire and take the post of honorary chairman and abruptly announced that Toshio Kobayashi, a managing director, would become president.

"It is important to entrust management to younger people," Yoda said.

Asked why he had wanted Chiba to resign, Yoda said that the problem was expected to be solved, without offering further explanation. Since Yoda had been emphasizing the importance of compliance both in-house and externally, his silence left more unanswered questions.

On Sept. 28, an extraordinary shareholders' meeting reappointed Matsuura and Chiba as directors. Matsuura, one of the leading actors in the internal strife drama, was named president and appeared at a press conference the same day. He said Avex "will be born again as a comprehensive entertainment company through young power."

Yet Matsuura's only explanation of the two months of strife was that there had been no problems after all. An official from the PR/IR division later said that the dispute was within management, and the division did not know the details.

Although Avex has completely changed its management structure, its near-term business performance is weak.

For the year through March 2005, pretax profit is expected to rise only 1% to 7.2 billion yen on sales estimated at 78.4 billion yen, up 6%.

The market for music CDs is sluggish, and it is becoming more difficult to find huge hits.

"With its current business model, the company has little growth potential," said Eiji Tomaru, a senior analyst at Mizuho Investors Securities Co. Many analysts share that view.

After the shift to the new structure, the PR/IR division was separated from the chairman's office. It continues to emphasize promotions aimed at artists' fans and the media, since its stock price has responded sensitively to sales of Hamasaki's CDs.

While PR activities are important, the necessity of prompt disclosure to the market and investors has also become clear through the recent plunge in its stock price.

On Nov. 12, an explanatory meeting for analysts will be held for the first time since the strife ended to explain earnings for the fiscal first half ended September.

From The Nikkei Weekly, 8 November 2004 Edition