EMI: Chart Success Amidst Financial Problems
February 8, 2010 at 4:17 AM (PT)
These last few years have been tough ones for EMI. Despite some recent sales and chart success, the focus has largely been on its owner -- TERRA FIRMA -- and its Chief Executive, GUY HANDS.
THE NEW YORK TIMES wrote, "after the GRAMMY AWARDS last SUNDAY, the stars came out for EMI’s party at the W HOLLYWOOD HOTEL. There was one person, however, whose absence was conspicuous at the soirée, GUY HANDS. HANDS was once a mainstay at such glitzy affairs. Now, he is less eager to be seen at those events because, by his own acknowledgment, the EMI acquisition has been a disaster for his firm and his investors."
On the financial side, CITIGROUP and TERRA FIRMA continue to clash. CITIGROUP financed the EMI acquisition. The TIMES writes TERRA FIRMA used only $3 billion of its investors’ cash to buy the music company; it borrowed the remaining $5.2 billion from CITI, which thought it could later offload this debt by selling it in smaller chunks to other investors.
But before the deal closed in AUGUST 2007, the credit market froze -- leaving CITI holding a large amount of debt that it designated as "substandard." It was the kind of deal that led CITIGROUP to need a taxpayer bailout -- the kind other banks also required during this financial meltdown.
HANDS tried restructuring his deal with CITI, reports THE TIMES, "but the talks broke down in OCTOBER. People familiar with the discussions, who requested anonymity because the talks are confidential, say CITI believes that TERRA FIRMA’s equity in EMI is worthless and that the firm should hand over the company to the bank."
A U.K Report Says EMI Draws Up Fresh Plan For Cuts
All these financial issues seem to have led to the U.K's THE TELEGRAPH report over the weekend that layoffs are on the horizon. The report says "the plan, which is being devised by a 12-strong executive team, was disclosed last night by EMI MUSIC chief executive ELIO LEONI-SCETI. The cost reduction efforts, likely to be overseen by new finance director SHANE NAUGHTON, who arrives from UNITED BUSINESS MEDIA TOMORROW, will amount to cuts of tens of millions of pounds in the division's cost base."
LEONI-SCETI said, "We will present a compelling new five-year business plan with particular focus on the coming year. It will involve both an acceleration in revenues coming from product innovation at EMI Music Services and some cost reductions from the introduction of new systems and technology and the elimination of some duplication. This will confirm our vision to evolve into a digitally-led music company. We have a strong business which is on the right track and that is our best guarantee of our future."
Despite These Issues, EMI Is Having Recent Sales And Airplay Success
EMI had four CDs in the Top 10 SOUNDSCAN Sales chart last week with successes in NORTH AMERICA:
LADY ANTEBELLUM "Need You Now"
LADY ANTEBELLUM "Lady Antebellum"
CORINNE BAILEY RAE "The Sea"
2010 GRAMMY NOMINATIONS "Various Artists"
There's also been lots of recent airplay chart success, with artists like LADY ANTEBELLUM, DAVID GUETTA, KEITH URBAN, DARIUS RUCKER, KATY PERRY, LILY ALLEN, COLD PLAY, SNOOP DOGG, V.V. BROWN, NORAH JONES, 30 SECONDS TO MARS, ALICE IN CHAINS, SICK PUPPIES, GORILLAZ and more.