Griffiths' exit stuns BMG.

BMG Entertainment chief Rolf Schmidt-Holtz has stunned his company by sacking BMG Europe president Richard Griffiths after just five months in the role and replacing him with former GSA and Eastern Europe chief Thomas Stein.

The news was delivered to Griffiths last Thursday after he had been summoned to New York by Schmidt-Holtz, the Bertelsmann veteran who was made chairman and CEO of BMG in January. It is understood that although Griffiths and Schmidt-Holtz had had disagreements over the running of the European operation in recent months, the news was a complete surprise. BMG issued a statement last Thursday night saying Griffiths -- who is understood to have had four-and-a-half years left to run on his contract -- had left by "mutual agreement".

"Richard was stunned. He has been having an on-going battle with Schmidt-Holtz about all sorts of things including the direction of the company but he had no clue this was coming," says one senior BMG source. It is understood that one recent area of disagreement concerned proposed management changes at BMG's German unit, which has until recently been BMG's most profitable international division and which is currently headed by Stein's former number two, Christoph Schmidt.

Stein, who will be based in London in his new role, flew to the UK last Friday afternoon to host a meeting of BMG's senior UK and continental European management team. Speaking just before he went into the meeting, he noted that he was "quite busy". One senior UK source says that while everyone was shocked by the news, there is not expected to be any immediate impact on personnel within the UK company, which Griffiths had just restructured. UK-signed artists currently lining up new albums include Five, ...