The Paterno Papers -- Calling a bunch of artists ''losers,'' a confidential memo from Hollywood Records' boss leaks

Mariah Carey? She represents ”the safe pop music (that) is…the surest road to economic ruin.” Vanilla Ice? A ”fluke (who has) little to do with long-term label success.” Whitney Houston and Michael Bolton? ”They are part of the business with which I’m just not comfortable.” Natalie Cole? ”When Elektra signed (her), I thought they were crazy.” Bonnie Raitt and Heart? ”You couldn’t have found two bigger losers in the record industry.”

No, these aren’t the rantings of a rock critic having a hissy fit. They’re potshots from the latest hot read in Hollywood — yet another confidential Disney memo that has gotten itself clangorously leaked. Last January a missive about movie overspending from Disney studios chairman Jeffrey Katzenberg burned up fax machines all over town. Now it’s a letter by Peter Paterno, 40, a former heavyweight record-industry lawyer who heads up Disney’s two-year-old Hollywood Records. Addressed to Disney chairman Michael Eisner and president Frank Wells, the memo (now known in the company as the Paterno Papers) defends Hollywood Records’ $25 million loss this year while lambasting other labels and musicians.

Even Paterno’s own artists aren’t immune. Speaking of Liza Minnelli and Queen, he says, ”People will tell you (they’re) losers. Perhaps they are. However…the fact that these artists are available at the prices we paid for them is a function of the perception that they are washed up.”

Although Paterno’s memo hasn’t been reprinted in full (unlike Katzenberg’s), it has still set off a spirited reaction within the industry. And while he isn’t talking about the letter, many of his targets are. Paterno’s claim that Giant Records chieftain Irving Azoff will lose even more money than Hollywood Records was called ”ridiculous” by Azoff, who added: ”He’s brain-dead.” Geffen Records head David Geffen, who was also criticized, found the memo naive. ”I don’t think anyone can learn the record business (quickly),” said Geffen, ”and certainly Paterno has not.”

With the recession lingering and anxiety increasing in the entertainment business, memo leaks are becoming a powerful tool in getting messages to the media.

Coincidentally or not, the Katzenberg missive depicted the studio chairman as a thoughtful, analytic — if somewhat obsessive — boss who took great pains not to point fingers at other companies. The Paterno Papers seem to show the author as a shrewd but arrogant ego zapper. ”Everyone around there admired Peter for the up-yours way he was running the company,” says a former Disney staffer. ”But he should’ve shut up about it.”

Still, is a reputation for arrogance a liability in the music business? It’s far from certain that Paterno’s future is in jeopardy at Hollywood Records, the leak notwithstanding, though many insiders insist he’s history. ”It’s going to be very hard for him to function normally after this,” says Jeffrey Jolson-Colburn, music editor of The Hollywood Reporter. ”But he may stick it out.”

Meanwhile, in the wake of the two footloose Disney memos, just about everybody in the entertainment industry claims to be reexamining the idea of long, potentially damaging policy memoranda. Says one studio boss: ”You can bet that from now on, I’m going to be saying such things in person. Why leave around a loaded weapon someone can kill your career with?” Unless, of course, you think you can shoot someone else first.