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L.A. Comes to New York

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BMG moved to settle the chaos by naming a new president of BMG Entertainment: Rudi Gassner, a BMG chieftain who only months earlier pocketed a $7 million severance payment from the company, says a source, when he quit because of disagreements with Zelnick. Over the Christmas holiday, a week before he began the job, Gassner, a former professional soccer player, died of a heart attack while jogging. A successor, Rolf Schmidt-Holtz, was named the day after Gassner's funeral in Greenwich, Connecticut. If BMG concludes a simmering merger with EMI -- the two combined would create the world's largest music company -- Reid could have a fourth boss within his first year.

Reid hasn't taken the quick-fix route of signing boy bands: "I don't believe in chasing trends," he says loftily. To his credit, he would rather build credible career artists. But sales at Arista are down from last year's record high: One executive tracking the label's numbers says, "Right now, I doubt Arista will do $250 million this year." ("It'll be much higher than that," counters Reid, who contends that Arista wouldn't have grossed that much this year under Davis either.) Add the revenues lost when 'N Sync jumped to Jive; the $150 million the company may lay out for J Records, which may not turn a profit for several years; approximately $100 million to buy LaFace; and the severance packages for Zelnick (reportedly $20 million to $50 million) and Dornemann, and BMG's bottom line is stained with red.

Whitney Houston returns Reid's call, and he snaps into action, dispatching an assistant to retrieve a tape: "Right now, hurry up!" But when Reid picks up, his tone nearly melts the receiver. "Whitney!" He listens and chuckles warmly. "I am, honey. You know I am."

After a few minutes of talk about family, Reid explains that he's found an unreleased song he and Babyface produced for Houston ten years ago. He turns up the speakers in his office and plays it to her over the phone, bouncing in his chair. "Isn't that hot?" he asks excitedly.

A month before he took over Arista, Reid threw one more lavish party, his three-day wedding to schoolteacher Erica Holton in Capri, Italy. Guests arrived to find wine, bowls of iced cherries, and scented candles in their rooms -- "like Hollywood stars did back in the day," says Combs. The couple are expecting a child in April. (In addition to Ashley, 17, and Aaron, 10, his kids with ex-wife Pebbles, Reid has a son, Antonio Jr., 22, from an earlier relationship.) Guests -- including Usher, Mariah Carey, Veronica Webb, and Zelnick and Dornemann -- were required to wear white linen.

Though Reid has a lionish string of fights with close friends, he also evidently knows how to make peace afterward: Clive Davis didn't attend the wedding, though he sent a gift, flowers, and a card. And one of the two best men was Babyface, who is also currently working on his first album for Arista, to be released in the spring.

The singer has been consulting closely with Reid, who he says is "always pushing" artists to record stronger material, to load albums with extra hit singles. Babyface, who's usually known for his gentle demeanor, is prepared to return the pressure. "If the label isn't doing everything it should, then I gotta call him and say, 'Hey, you suck,' " he chuckles. "But he doesn't want to hear me call and say that to him."


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