Warner to Buy Out Maverick Co-Founder

Time Warner Inc. has negotiated a seven-year extension of its joint venture deal with Madonna’s hot Maverick Recording Co. under which the media giant will finance an estimated $20-million buyout package for the label’s co-founder, Freddy DeMann, who is expected to leave the company immediately, sources said.

Madonna and DeMann launched Maverick in 1992 as a joint venture with Time Warner’s Warner Music Group, which put up about $10 million to finance the partnership. The Beverly Hills-based label has since generated nearly $775 million in revenue selling music by such acts as Alanis Morissette and Prodigy.

DeMann managed Madonna’s career since her arrival on the pop scene in the 1980s and built Maverick from scratch. Sources said tensions between Madonna and DeMann began to mount four years ago after Guy Oseary--an executive hired and groomed by DeMann--was given a minority stake in the company for discovering mega-selling pop star Morissette.

Madonna soon dumped DeMann as her manager and joined Oseary in trying to lobby Warner for help in financing an exit package for DeMann, sources said. Representatives for Warner and Maverick have been meeting regularly for more than a year trying to resolve the matter.

Under the agreement struck this week, Warner will underwrite DeMann’s exit package as part of an advance on future sales generated by the company, sources said. Warner also secured long-term contracts from Madonna, Oseary and minority partner Ronnie Dashev to continue running the label.

Although DeMann has agreed to sell his 19% stake in Maverick, the 59-year-old industry veteran will continue to consult with Warner on other music industry matters as part of the agreement.