Poor third quarter causes company president to leave

THE PRESIDENT of America's biggest Christian record label Roland Lundy has exited the company. Lundy left Word Entertainment after a poor third quarter financial performance was reported. Malcolm Mimms, who was recently named executive vice president of Gaylord's Creative Content group, will assume Lundy's duties. Lundy, whose name and face has become synonymous with Word Entertainment's products and image, has spent his entire 28-year career at the company, including the last 11 years as president. In an unscheduled, all-employee staff meeting, Gaylord president/CEO Dennis Sullivan reportedly told the company that he had asked for Lundy's resignation. During the meeting, Sullivan reportedly said Gaylord does not intend to sell Word or merge with another company, commenting that the Provident Music Group deal, which has been the subject of widespread industry rumour and speculation for the last several months, was off. "(Sullivan) said the Word-Provident deal was 'one sided' and would not have been good for the company," an employee who requested anonymity said. Sullivan also noted that he would be making changes in Word's distribution deal with its general market distributor, Sony Music, and cited financial concerns and other problems as reasons why Gaylord was shifting the leadership of the company. In a conference call with financial analysts on Thursday afternoon, Sullivan was critical of Word's senior management, saying that inventory levels and accounts receivable were too high. "Overall, the management has been disappointing," he said. In its third quarter earnings statement released last Thursday, Gaylord posted a net loss of $19.1 million versus a net income of $7 million last year. Operating cash flow was a negative $5.5 million compared to a positive $13.1 million last year. Operating cash flow was a negative $6.3 million for Gaylord's Creative Content group, compared to a positive $4.7 million a year ago.

The exit of Lundy - who many have referred to as the "heart and soul" and "spiritual leader" of the company - has left those inside and outside of Word questioning the future of one of the three major Christian music/entertainment companies. Mike Atkins, manager for Word Record acts Point Of Grace, Jaci Velasquez and Wayne Watson, said he and his artists were "openly saddened" by the news. "Roland is one of the most integrity-filled, honest guys I've ever dealt with," Atkins said. "At the end of the day, I never had to question whether he was fair and honest with me and the artists." Word Records artist Point Of Grace's Shelley Breen said the news came as a "huge shock."

In another move, after several months of evaluation, Word Entertainment has merged its two contemporary labels, Word and Myrrh, into one under the Word Record trademark, an amalgamation which now sports one staff, a largely expanded artist roster and a new philosophy for reaching the label's customers. All of Myrrh's artists, including those from the label's Black Music Division, have been moved over to Word, bringing the total to roughly 30 acts. The new, 30-member Word Records team, headed by Elisa Elder, who has led Word Records since 1997, was selected from both labels' staffs. In the process, seven employees, some in key positions, were laid off because of the duplication of roles.