EMI: Hands On

A lot is being written about Guy Hands who engineered the buying of EMI. He made a mistake in letting Tony Wadsworth go. With that exception, much of what he is saying and being chastised for is basically true. I read the article in today's WSJ. Most of the press involving EMI include a big photo of the Rolling Stones and claim that the band no longer wants to be at EMI and they are doing a one-off soundtrack for Universal. If Guy is smart and wants to turn around a company that has been in financial disarray for many many years now, signing the Stones would not make sense. I'm assuming the Stones would require large sums of money upfront. The Stones no longer sell enough record to warrant a large advance. EMI would never recoup. I don't think that having the Stones on the label will entice younger, prominent acts to sign with the label. I did read that the Stones have the rights to all their music post 1970. That is a carrot, but still not enough for a failing company to invest in.

In a meeting with band managers Hands sited Terra Firma's (his company) successful track record in his stewardship of UK movie theater chain Odeon Cinemas. "The cinema business isn't the movie business - it's the popcorn business." This did not sit well with the managers, but let's face the state of things: I'm sure theater chains make way more money on popcorn than they do on selling tickets. What other avenue is there for record companies to make money beside the selling of music? The music business doesn't have a "popcorn".

When Jack Welch took over NBC/Universal, the first thing he did was let go of the music arm. One look at the books and he knew the old model from 50 years ago wouldn't work and it would take too long to change things. I don't know how long it will take Guy Hands to re-engineer EMI and turn it into a profit center, or if he ever will, but I will enjoy following his travails.