EMI On Life Support, But Still Breathing

According to the Wall St Journal, Terra Firma (which ironically translates to solid earth), the private equity group that bought EMI a few years ago, has rallied another $150 million from investors to keep the entertainment company from defaulting (for the time being) to Citigroup. Who are these investors and isn't there something a little more stable or innovative they could be putting their money behind? The article goes on to say that the company will probably be split and they will sell off the different divisions, which seems about the only logical thing it can do besides slashing overpaid executive salaries.

Apple Buys EMI

This was the headline on today's Lefsetz letter. It took me a minute to ponder why Apple would want EMI, then I realized it's April 1st. EMI will probably end up a lot worse than having Apple take over. It makes no sense for Apple, but the move would probably save the hanging on by a thread music company.

EMI will sink (or be turned over to Citigroup) if it doesn't receive about $200 million by June 14. It's new executive chairman Charles Allen rejected offers from Sony and Universal yesterday for the right to license (not own) the music for 5 years. Read more at the Telegraph.

Another Music Exec Bites the Dust

Jason Flom who is for the moment Chairman of the Capitol Music Group, seems to be headed the way of Tony Wadsworth and company. He might be the last of the execs who actually listened to music. The Wall Street Journal is reporting that EMI is negotiating his exit. My one and only record company job was at Atlantic Records, when I was just out of college. Jason was there also and had just signed Zebra. His enthusiasm was over the top for that band. That was also the time when Yes had just completed Owner Of a Lonely Heart. Everyone was playing that song at 11. It's all you heard at Atlantic for weeks. I'm sure now at Atlantic or Capitol you can hear a pin drop.

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.

Another Industy Legend Leaving Label

TONY WADSWORTH STEPS DOWN FROM EMI GROUP
EMI Press Release: EMI Group announces that Tony Wadsworth is stepping down from his post as Chairman and CEO of EMI Music UK & Ireland.

I only had a few dealings with Tony when I managed Luscious Jackson, but he was always respectful, available and shared his love of music. He was one of the last great music people to hold a prominent post at a major label. Let's hope he finds a better way to share his legacy and continue to bring good music to the masses.