‘Songs From the Big Chair,’ Other Albums Turn Firm Around : Tears Bring PolyGram Happiness

There’s nothing like a No. 1 hit to make a record company president ebullient.

Guenter Hensler, the president of long-troubled PolyGram Records, was in Los Angeles on Wednesday to trumpet Tears for Fears, the rock group whose current album “Songs From the Big Chair,” on PolyGram’s Mercury label, this week climbed to the top of Billboard magazine’s chart of best-selling records and tapes.

Never as loquacious or colorful as some of his counterparts at other record companies, the soft-spoken, German-born Hensler was beaming as he discussed what he sees as something akin to a rebirth of PolyGram.

“It looks like we’re on our way back again,” he said. “We went through a cold stretch from the middle of last year to the middle of this year, but now we’re getting hot again with a lot of new releases coming out. After a not-so-good year last year, we’ll have a very good year this year.”

Since PolyGram, which is jointly owned by N. V. Phillips of the Netherlands and West Germany-based Siemens AG, is not a public company, Hensler declined to give any figures for last year. The most recent figures made public were for 1982, when PolyGram’s gross sales in the United States were about $170 million.

Although PolyGram has long been one of the most successful music companies overseas, with worldwide sales of about $1 billion in 1982, the company has encountered serious problems in the United States ever since it entered the market by acquiring the distribution system of United Artists Records in 1969. Despite some big successes with the sound-tracks albums for “Saturday Night Fever” and “Grease” in the late 1970s, PolyGram had--by its own account--lost $300 million on its U.S. operation by 1982.

In 1983, PolyGram announced plans to merge its record operations with those of Warner Communications.

However, that move ultimately was blocked by the Federal Trade Commission, which claimed in a lawsuit that the merger would be anti-competitive. During the year and a half of negotiations and testimony in the case, PolyGram was described by attorneys for Warner as an almost hopelessly inefficient company that probably wouldn’t survive in the U.S. market without the merger.

PolyGram’s own attorneys stated in a brief that the company “has concluded from its long history of losses that it is not possible effectively to manage a United States record operation from abroad.”

However, last month, after unsuccessful merger discussion with both MCA Records and Capitol-EMI, PolyGram surprised the industry by announcing that it was no longer seeking a U.S. joint- venture partner and would remain in U.S. distribution on its own. The company also announced that, in an effort to “strengthen” its sales and distribution operations, it was closing four of its 13 regional sales offices, two of three distribution centers and eliminating 30 to 35 middle-management and staff positions.

Hensler expounded Wednesday on the new “streamlined” structure of PolyGram. “We looked at our operations and found ways to do things better with substantial savings,” he said.

“In the aftermath of our huge success in the late 1970s, when all of a sudden we were in the same league with CBS and Warners, the company got grossly inflated in terms of a lot of unnecessary things that had more to do with ego than business. The mere fact that we had 250 to 300 artists on our roster, of which only 10 to 15 were really successful, really tells you the story.”

Classical Labels Big

The roster has been trimmed to between 75 and 80 artists, he said.

Hensler cited PolyGram’s strength in the classical music field as an “area of stability in the company.”

The company’s classical labels--London, Phillips and Deutsche Grammophone--historically have accounted for almost 50% of its sales. Its pop labels are Mercury, Polydor, PolyGram, RSO and Casablanca.

“You’re not dependent on hits in this segment,” Hensler said about classical records. “It’s a detail-oriented business, not sexy in terms of making big money quickly, but it’s a much more stable business.”

Leonard Bernstein’s symphonic arrangement of “West Side Story” on the Deutsche Grammophone label currently is No. 70 on Billboard’s charts.