Sony to Drop Dr. Luke Amid Public Pressure Over Kesha, Internal Headaches (Exclusive)

“The fact that this hasn’t already been taken care of is confusing, especially for people in the building,” one insider said of music company

Update: Wednesday, 1:45 p.m: A representative for Dr. Luke issued a statement denying TheWrap’s report that Sony Music is expected to end its working relationship with the music producer ahead of his contract expiration in 2017. “This is not true. Luke has an excellent relationship with Sony. His representatives are in regular contact with executives at the highest levels at Sony and this has never come up,” a legal rep for the producer said.

Previously…

Sony Music is expected to end its working relationship with controversial producer Lukasz “Dr. Luke” Gottwald a year ahead of his contract’s expiration, knowledgeable individuals have told TheWrap. 

The output deal has become a public relations headache for the company since pop star Kesha’s sexual abuse allegations against Gottwald have resulted in a nasty court battle — and a groundswell of support for the singer from influential fellow artists like Adele, Lady Gaga and Kelly Clarkson.

A Sony Music spokesperson declined to comment on the matter.

After this story was published, a legal representative for Gottwald issued this statement: “This is not true. Luke has an excellent relationship with Sony. His representatives are in regular contact with executives at the highest levels at Sony and this has never come up.”

Kesha, signed to Gottwald’s Kemosabe Records imprint at Sony, filed suit in 2014 against both the producer and Sony to exit her own deal. The New York State Supreme Court has thus far sided with Sony given a lack of evidence to support the abuse claims, but the public relations nightmare has internally been deemed not worth the hassle, the insiders said.

“There is no contest. Kesha has no case in regards to her contract but they can’t afford the Adeles of the world out in the streets calling the label unsupportive,” one individual familiar with upper management’s thinking told TheWrap. “The fact that this hasn’t already been taken care of with Luke is confusing, especially for people in the building.” 

Gottwald, who has vehemently denied the claims, signed a five-year agreement in late 2011 that comes up in early 2017, two individuals familiar his contract said.

It’s currently unknown how Sony intends to free itself from the relationship, a decision that would fall on CEO Doug Morris and his boss, Sony Entertainment CEO Michael Lynton. Any unilateral dissolution of the contract would be a direct breach, so a negotiated exit would be most likely to save face on both sides.

“Somebody has been convicted via Twitter,” a second individual close to the decision said of Luke and the outcry over unsubstantiated accusations. “No court has convicted this person, so there may not be any legal basis to terminate an agreement. It would have to be mutual.”

It’s also unclear what would happen to Gottwald’s other signed artists. Many appear on Kemosabe as co-signees to more established Sony labels like RCA and Columbia Records. They include 27-year-old rapper Lunchmoney Lewis, who is expected to deliver an album with Gottwald in late 2016.

Gottwald’s deal has been widely reported to pay him $60 million over its duration, though an insider familiar with the terms told TheWrap that figure was inflated. Sony is believed to have hired Gottwald less for his ability to build a stable of artists under a traditional label model than to secure exclusive rights to his services as a producer of hit records.

“He’s the best guy at the moment, as far as a writer and a producer,” Morris told the New York Times in a 2011 profile in which he compared Gottwald to Jimmy Iovine — the storied producer who co-founded Interscope Records and developed talent like Tupac Shakur, Eminem and Gaga.

After five years, though, Kemosabe has not emerged as a mini-Interscope. The label’s biggest star is Kesha, who has not released new music since 2012. Rapper Juicy J, who was featured on the hit track “Dark Horse” with frequent Gottwald collaborator Katy Perry, and pop star Becky G are also on the roster.

“There have definitely been portions of the deal that are profitable,” another person familiar with the financial details of Gottwald’s operations told TheWrap, citing Prescription Songs, Gottwald’s music publishing operation.

As a producer, Gottwald has provided Sony with hits like Miley Cyrus‘ 2013 adult pop crossover “Wrecking Ball,” rapper Pitbull’s monster single “Timber” (featuring Kesha) and songs for Sony artist Nicki Minaj. He’s also been recruited to provide original music on soundtracks for Sony Pictures releases like “The Smurfs 2.”

In addition, Sony has received compensation when Gottwald has worked for non-Sony labels, the insider said, including on Katy Perry‘s hit record “Prism,” released by Universal’s Capitol Records in late 2013. Seven out of 13 of the “Prism” songs were co-written and produced by Gottwald and Swedish pop institution Max Martin. The record also landed a Best Pop Vocal Grammy nomination.

Earnings from Sony’s music division rose 4 percent in 2015 to $1.16 billion, according to the company’s annual statement. But operating costs climbed 20 percent to $122 million.

Sony’s top-selling records of last year included Meghan Trainor’s “Title” and Shogo Hamada’s “Journey of a Songwriter” — neither of which was affiliated with Kemosabe or Gottwald.