Rap mogul Sean “P. Diddy” Combs, one of contemporary music’s most successful entrepreneurs, has signed a distribution deal with Vivendi Universal’s Universal Records rather than sell the Bad Boy label he says is worth $100 million, the partners said on Thursday.
The three-year deal leaves Universal paying marketing and promotion costs and giving Combs an undisclosed upfront fee, which analysts saw as a way for the producer of such hit acts as Faith Evans and the late Notorious B.I.G. to get the backing of the biggest record maker without selling his own company in a down market.
Terms of the deal were not disclosed and industry sources gave conflicting accounts. One source said Universal had paid the producer a few million dollars up front and committed to $10 million in marketing and promotion over three years.
Another said the deal could be worth up to $75 million to Combs, formerly known as Puff Daddy.
Proponents of both sides emphasized the best would come after the new deal ended, if it produced hits.
“The bells and whistles will come in three years if this is successful,” said one source.
Prices for top talent have been falling in the hard-hit recording industry. Pop diva Mariah Carey got a more modest $20 million three-album deal with Universal’s Island Def Jam after a fallout with EMI Group Plc, which paid her $28 million to walk away from an estimated $100 million contract.
‘NO SENSE’ TO ONLY $10 MILLION
Combs, a financially successful and controversial figure who starred in the critically acclaimed film, “Monster’s Ball,” once dated singer/actress Jennifer Lopez and successfully fought a charge of weapons possession linked to a nightclub dispute, said he was getting more than $10 million up front.
“It doesn’t make sense. What would I do with $10 million at this point in my life?” he said in an interview. Combs says his companies, including his fashion studio, together have $300 million or more in annual sales.
Combs said he still believed Bad Boy Entertainment was worth $100 million, but he said he had not been bound and determined to sell the label.
In June he bought back control of Bad Boy for an undisclosed sum, ending a 10-year 50-50 joint venture with Bertelsmann AG’s Arista.
“I wasn’t going out there searching or begging for that number. I just went for the best deal,” he said. “Because of where the marketplace is at, I had to take my time. At the end of the day I got what I wanted.
“What we are doing is black history right here,” he said. “I retain 100 percent ownership. I just pay a distribution fee and get promotion.”
Entertainment attorney Jay Cooper of Greenberg Traurig said record companies were in no shape to make expensive acquisitions and that Combs had the opportunity to use someone else’s money to help develop acts and keep his ownership.