Capricorn's second extinction?

Less than six months after LaFace Records shut down most of its local operations, Atlanta's other full-fledged major-label affiliate, Capricorn Records, appears headed for an even more decisive demise.
Signaling what will likely spell the end of a tumultuous 10-year ride since Phil Walden reactivated his famed '70s Southern rock label in 1991, a Capricorn spokeswoman confirmed that New York-based Volcano Records has signed a letter of intent to acquire all of Capricorn's assets.
A final deal, if agreement is reached, will be announced by Nov. 15. While Volcano Records declined to comment on the acquisition, the move is expected to eliminate Capricorn's Atlanta operations. It's unclear whether Volcano will keep the label name alive.
Capricorn's current problems began in early 1999, when the label was enjoying multi-platinum success with records from Cake and 311, and employed 42 staffers in its downtown office. In the restructuring that followed Universal Music's purchase of major label rival Polygram, Capricorn — at the time an independently operated joint venture with Polygram's Mercury Records — became a low priority at Universal, particularly after Mercury head Danny Goldberg got the boot.
"They got the music out there, but we weren't getting the promotion and publicity support," Capricorn's Michelle Roche says of Universal.
While Universal honored Capricorn's distribution agreement with Polygram, it declined to renew the deal when it came up this fall, leaving Capricorn with no means of getting its product to stores. By that point, both Cake and Athens band Widespread Panic had decided not to renew their contracts, significantly decreasing Capricorn's ability to attract deals. More recently, 311 filed a contract-infringement suit against Capricorn, claiming it had not sufficiently promoted the band's records. After a series of layoffs that began this spring, Capricorn's staff is down to 12.
The possibility remains that Walden and his relatives, four of whom work at Capricorn, will remain active in the music business, either retaining some Capricorn bands or launching an entirely new venture. Roche declined to comment on any plans.