On this day, November 4th, in 1985, an auction was scheduled to sell off the bulk of the CTI Inc. recording master tapes. The sale had been forced by CBS Records. Notice of the impending sale appeared in Billboard, other magazines, and newspapers. Only, the sale never happened. This is the background to the story, the details of the court case, and why SONY today owns the master tapes and rights to most, but not all, of the CTI recordings.
The point of the auction was to raise money to pay off the secured debt. The auction should have gone to the highest bidder, anything in excess of the debt plus expenses would have gone back to Creed Taylor, Inc. – CBS as the secured creditor reserved the right to bid. Who knows how much the auction might have raised?
For those who are unfamiliar with the journey of CTI: Creed Taylor worked on a series of jazz labels in the late 1950s and 60s ABC/Impulse; rescued Bethlehem and put Verve back on course after Norman Granz sold it, but for most, Creed Taylor is synonymous with his own labels especially CTI and Kudu. CReed achieved notable successes with artists like George Benson, Milt Jackson, Bob James, Freddie Hubbard, Stanley Turrentine, Esther Phillips, Hank Crawford and many others. With engineer Rudy Van Gelder and Taylor making musical decisions, Creed Taylor, Inc. experienced a flourishing five years.
Creed Taylor, Inc. was producing records that were not only commercially successful but also critically acclaimed. Albums like Freddie Hubbard’s “Red Clay” and Stanley Turrentine’s “Sugar” became instant classics, blending jazz, electronic instruments with other genres like funk, soul and rock. This period saw CTI becoming synonymous with sophisticated, high-quality jazz production. Taylor and Van Gelder’s innovative approaches to recording and packaging set new standards in the industry, influencing countless artists and labels that followed.
An overexpansion and an expensive court case with Motown over distribution, where CTI accused Motown of selling and “dubbing” (meaning Motown created copies or versions of albums) led CTI to borrow money from CBS. To secure the loan they used their master tapes as collateral. Whether intentional or not, CBS would circle over CTI for the next few years, like vultures ready to pick over the remains. They started by hiring the talent. Over a period of a few years CBS employed Bob James and Peter Paul; Freddie Hubbard and Hubert Laws were signed with Columbia Records, and so on.
Independent record companies often succumbed to the temptation of huge financial offers or mismanagement of their resources. Deodato’s success with “Also Sprach Zarathustra” initially pushed the CTI label forward but eventually contributed to its downfall due to overexpansion. The label could not replicate the success and overspent, leading to financial strain.
Eventually, Creed Taylor Inc. would file for bankruptcy on December 8th, 1978 [1]CTI Enters Chapter XI Bankruptcy – Creed Taylor Produced. The CTI catalog was absorbed into CBS Records and became part of their reissue strategy for distribution.
It wasn’t paying off though. In 1979, CBS started heavily discounting its catalog, shipping 25 albums for free with 100 billed, retaining all the profit and forcing cuts onto distribution and sales. As seen on the lower left of this promotional card for Patti Austin’s “Body Language” album, it was still CTI branded. CBS had added “Produced by Creed Taylor” and had slanted the signature and added “© 1980 CBS Inc.”
In June 1981, out of bankruptcy, CTI was allowed to repurchase the masters with $400,000 in notes payable to CBS. The CTI masters library included approximately 130 albums.
CTI Would make partial payments on the debt to CBS, but without a full manufacturing and distribution partner would eventually fail to keep up with its payments. CBS would call in the loans and reclaim the master tapes. Without Taylor’s production talent, and without a stream of new artists CBS by 1985 decided to sell the masters. The sale was to be conducted by a specialist Manhattan law firm, with attorney Bruce Cholst overseeing the auction.
Compact Disc To The Rescue
Clipping: New York Daily News – September 8th, 1989
The Compact Disc (CD) was first released in 1982, it quickly gained popularity as a music format. As a result, CBS, rather than going ahead with the 1985 sale, decided to reissue some of the CTI catalog on CD starting in 1987. By 1988, musician and critic Leonard Feather wrote a homage to Creed Taylor’s productions while reviewing a batch of CBS/CTI compact disc releases in the Los Angeles Times on January 31st. He said:
The life of CTI corresponded almost exactly with the decade of the ’70s. What Taylor achieved during the CTI years is not now a matter for reminiscence but a living fact. Since last spring, many of his best works have become available again, the rights having been acquired by CBS.
Leonard Feather, Los Angeles Times, SUNDAY, JANUARY 31, 1988 Pg59
A new batch received recently offers illuminating testimony that fusion in many instances could achieve a healthy measure of validity. True, it didn’t always work; strings on a Milt Jackson album were a bit too saccharine, and the attempts to use classical compositions were at times debatable. Still, Taylor had more hits than misses, and a majority of his artists benefited from the treatment he accorded them.
These include Stanley Turrentine’s “Sugar,” which still sounds engaging
after 17 years, Hubbard’s in “Red Clay,” and Ron Carter’s brilliant
flamenco- flavored “Spanish Blue.”
CBS Systematically destroyed CTI?
By October 1988 that year, what was left of Creed Taylor, Inc. and Creed Taylor himself, had seen CBS making hay with CD sales and Creed filed suit in U.S. District Court in New York on Oct. 28 under provisions of the Racketeer Influenced and Corrupt Organizations (RICO) Act, alleging CBS Inc., CBS Records, Columbia Record Productions, and Epic Records engaged in “multiple schemes to obtain complete economic control over CTI.”
Michael Quitat, attorney for CTI and Taylor, alleged “over the last 10 years, CBS and its affiliates engaged in a scheme to systematically destroy CTI as an independent label, take over its assets, and use them for their own purposes,” the suit also accused CBS of painting Taylor “as a has-been and no longer a viable entity in the music industry.”
Selling the CTI catalog on CD generated funds far in excess of the amount owed by CTI. Taylor told Billboard “CD royalties are skyrocketing and I don’t think this would have gone so far had the CD explosion not been what it became.” [2]BILLBOARD NOVEMBER 26, 1988
On August 2, 1989, District Court Judge Robert L. Carter rejected CTI’s argument that CBS exerted undue economic influence and acted in bad faith. The claims were barred by res judicata, meaning they had been previously judged and could not be pursued again. [3]https://law.justia.com/cases/federal/district-courts/FSupp/718/1171/2269095/
The CBS company had effectively been acquired, merged, and subsumed by SONY starting in 1963; in 1988 fully taking over CBS Records; by 1989, SONY acquired Columbia Pictures. The fulfillment of the Sony Group’s ultimate strategy [4]https://www.sony.com/en/SonyInfo/CorporateInfo/History/SonyHistory/2-22.html – with a few exceptions, that is how Sony owns the bulk of the CTI masters today.
References
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