Layoffs expected this week as Seagram absorbs PolyGram

LOS ANGELES (AP) -- Sources say Montreal-based Seagram Co. will lay off more than 500 people in the first round of job cuts as it merges its Universal Music Group with PolyGram NV, the former rival it acquired last month.    The layoffs, expected to begin as early as Thursday in New York and Los Angeles, will eventually include 3,000 of 15,500 music division employees, the sources said Tuesday.     In addition, as many as 200 artists could be cut from a diverse roster that includes Sheryl Crow, Boyz II Men, Nine Inch Nails and Luciano Pavarotti.     Bob Bernstein, spokesman for Universal Music Group, declined to comment on layoffs or discuss which artists would see their contracts terminated.     Seagram, hurt by a string of box office disappointments, said when it acquired PolyGram it would fire workers and artists as part of a plan to save $300 million US by combining the Universal and PolyGram music operations.    The company said previously the consolidation would include merging a number of record labels.     Island Records and Mercury Records will be merged into a single label. PolyGram's Verve and Universal's GRP jazz labels also will combine. Motown and Universal will merge, and Interscope, Geffen and A&M will become units of Universal's West Coast music group.    Wall Street has generally been positive about the PolyGram acquisition and the plans for cost savings in the music division, said Linda Bannister, an analyst with Edward Jones.    "There were some cost savings to be realized, and that includes head count reductions. It's definitely a positive step," she said.    Seagram was hurt in 1998 by box office disappointments and an exodus of key film executives.    Two of its big fall releases, Babe: Pig in the City and Meet Joe Black, were flops that led to the departure of Universal Pictures chairman Casey Silver and Universal's chief executive, Frank Biondi. Other disappointments included the political satire Primary Colors and the comedy BASEketball.     The company has had better luck so far this year. Patch Adams, the Robin Williams comedy, is among the hit films of the new year with earnings expected to top $100 million US this week.    The disappointments have taken a toll on Seagram's stock, which has fluctuated from a high of $46.68 3/4 US to a low of $25.12 1/2 during the past 12 months. Seagram shares dropped 31 1/4 cents to $42.50 US Tuesday on the New York Stock Exchange.    In a move unrelated to the layoffs, Seagram announced Tuesday it reached an agreement in principle to sell some PolyGram film library assets to Carlton Communications PLC for $150 million US in cash.    The sale includes about 200 movies, including The Eagle Has Landed and The Big Easy, along with 9,000 hours of TV programming.    (Figures in U.S. dollars, unless otherwise noted.) The url if you want to see it is: http://www.canoe.ca/JamMusic/jan20_deal.html