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Deal Close Announcement Universal Music Group Release: Universal Music Group Announces New Worldwide Structure of Combined Unive

UNIVERSAL MUSIC GROUP ANNOUNCES NEWWORLDWIDE STRUCTURE OF COMBINED UNIVERSAL/POLYGRAM MUSIC OPERATIONS

New York, New York, December 10, 1998 – The new worldwide structure of the Universal Music Group (UMG), which encompasses the combined Universal and PolyGram music companies, was announced today by Doug Morris, Chairman and Chief Executive Officer of UMG.

""The new Universal Music Group, which will be the market leader in every region in the world, will embody the best of both Universal and PolyGram’s executives, artist rosters, and business practices,"" commented Mr. Morris. ""The integration of these two companies presents a rare opportunity to create an organization that is well positioned for profitable growth. UMG will be a lean, flexible organization that will benefit from economies of scale while nurturing a strong local entrepreneurial spirit in its management team around the world.""

Mr. Morris also announced the appointment of his worldwide executive team: Bruce Hack, Vice Chairman; Zach Horowitz, President and Chief Operating Officer; and Jorgen Larsen, Chairman and Chief Executive Officer, Universal Music International.

Mr. Hack, who formerly served as Chief Financial Officer for Universal Studios, will be located in New York and will be responsible for the company’s global strategy and business development; its functional areas including Finance, Human Resources, and Information Technology; and its global manufacturing, regional distribution centers and U.S. sales. Mr. Horowitz, who was promoted from his position as President of UMG, will be based in Los Angeles and, in conjunction with Doug Morris, will direct the day-to-day operations of the global music company including the North American record labels. He will also have direct responsibility for MCA Music Publishing and Universal Concerts.

Mr. Larsen, whose appointment had been announced in June, will be based in London and will manage and direct UMG’s activities outside of North America. He today announced the appointment of his key international executives who will direct activities within their regions: Norman Cheng, Chairman, Universal Music Asia/Pacific (formerly President, PolyGram Far East) and Manolo Diaz, Chairman, Universal Latin America (formerly President, PolyGram Latin America). Mr. Larsen will directly oversee the Universal Music Group’s businesses in Europe.

Mr. Larsen also announced the appointment of the managing directors who will run the integrated companies in the five largest music markets around the world:

Universal Music U.K. – Located in London, Universal U.K.’s operations will be directed by Chairman and CEO John Kennedy. Universal Music Germany – Wolf-D. Gramatke will serve as Chairman and CEO of Universal Music Germany, based in Hamburg, as well as oversee Universal Music Austria/Switzerland. Tim Renner has been appointed President, Music of Universal Music Germany. Universal Music France – Based in Paris, Universal France will be overseen by President and CEO Pascal Negre. Universal Music Japan – Located in Tokyo, Universal Japan will be directed by President Kei Ishizaka, reporting to Norman Cheng. Universal Music Brazil – Located in Rio de Janeiro, Universal Brazil will be headed by Managing Director Marcelo Castello Branco reporting to Manolo Diaz.

In North America, Universal Music Group will be the market leader, combining the best of both organizations. Management has been assembled from both Universal and PolyGram. Island Records and Mercury Records will be merged to form a more powerful label from the combined rosters. Located in New York, this label group will be headed by Jim Caparro as Chairman and John Reid as President. An east coast label group, located in New York, will be comprised of Universal Records and Motown Records and guided by Mel Lewinter, Chairman. He will be joined by Jean Riggins, currently President, Black Music, Universal Records. Kedar Massenburg will serve as President and CEO of Motown Records. Def Jam, which is 60% owned by UMG, will remain in New York under the management of Chairman Russell Simmons, Chief Executive Officer Lyor Cohen, and President Kevin Liles. Verve/GRP, located in New York, is the result of the combination of these two renowned jazz labels. The label will be led by Chairman Tommy LiPuma and President Ron Goldstein. A west coast group of labels, located in Los Angeles, will be comprised of Interscope Records, Geffen Records, and A&M Records and run by Co-Chairmen Jimmy Iovine and Ted Field and President Tom Whalley. UMG expects to purchase the half of Interscope Records it does not presently own. MCA Records, located in Los Angeles, will continue to be headed by President Jay Boberg. MCA Records Nashville will continue to be guided by Chairman Bruce Hinton and President Tony Brown. Mercury Nashville will continue to operate under President Luke Lewis. Universal Music Group (Canada), located in Toronto, will be headed by Chairman Ross Reynolds and President Randy Lennox.

UMG's U.S. sales and distribution arm, Universal Music & Video Distribution, will continue to be headquartered in Los Angeles and led by President Henry Droz, and Co-Executive Vice Presidents/General Managers Jim Urie and Craig Kornblau. The merging of the two companies will place UMVD as the leading single supplier of home entertainment product in the country.

A new combined special markets and centralized catalog division, overseen by President Bruce Resnikoff, will be responsible for creating and acquiring new catalog product (much of which will be released under the Hip-O label) as well as marketing each of the U.S. labels’ catalog product. They will also handle the exploitation of master recordings from Universal’s various labels through ancillary markets and non-conventional channels.

Other key worldwide announcements include the following: UMG’s Classical division, which represents 40% of world sales of classical music, will continue to be overseen by President Chris Roberts, who will also supervise marketing activities for jazz music outside of North America. Universal’s worldwide publishing operations, MCA Music Publishing, will be based in Los Angeles and headed by President David Renzer. With the merger of MCA and PolyGram’s international publishing operations, the new entity firmly becomes the world’s third largest publishing company, with a catalog of more than 650,000 copyrights. Neal Cravens will serve as UMG’s global Chief Financial Officer. Mr. Cravens was formerly Senior Vice President, Finance for The Seagram Company Ltd. Norman Epstein will be Executive Vice President of UMG and will work with Mr. Morris, Mr Hack, Mr. Horowitz, and Mr. Larsen in matters relating to the Music Group. Mr. Epstein was formerly Executive Vice President, Administration, UMG. Jonathan Manley, formerly Senior Vice President, Group Information Technology, PolyGram, will be the head of global Information Technology for UMG. Larry Kenswil will become the global head of Electronic Commerce and Advanced Technology for UMG, overseeing the company’s new initiatives in this area. He was formerly Executive Vice President, Business & Legal Affairs, UMG. Michael Ostroff will become the global head of Business & Legal Affairs for UMG. He was formerly Senior Vice President of Business & Legal Affairs, UMG. Jonathan Smilansky, formerly Senior Vice President, Human Resources, PolyGram International, will oversee UMG’s HR functions globally. The focus of the company’s manufacturing and physical distribution will be handled on a global basis. In North America, Pete Scifres will oversee those functions, and Cor van Dijk will supervise them outside North America.Universal Music Group is a unit of The Seagram Company Ltd., a global entertainment and spirits and wine company.

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