The people who own EMI Music Group may regret the purchase, but here’s a tiny bit of good news: Sales crept up last year. And next year’s numbers, aided by the Beatles, may be better yet.
Are Warner Music Group and EMI, which have been circling each other for nearly a decade, finally ready to consummate their relationship?
That’s the obvious question in light of news that both Terra Firma, the private equity group that bought EMI in 2007, and Citigroup, which funded most of that transaction, have written down most of their investments in the music company.
Douglas Merrill, the Google vet tapped by struggling record label EMI to run its digital operations a year ago, is out. He doesn’t have a formal replacement, but the company’s top digital exec will now be Cory Ondrejka, whom Merrill brought in as his number two. Merrill’s hire in April 2008 was supposed to represent EMI’s willingness to break free from its old CD-based businesses, and a breath of fresh air. Merrill, who had formerly been Google’s CIO, cheerfully admitted that he had no background in the music business.
A lot of people couldn’t understand why Guy Hands, the private equity guy who bought EMI in the summer of 2007, was willing to pay so much for the music company. Now he says he agrees with them–his Terra Firma buyout firm has written off half the $3.2 billion he paid for the company. He may have to write off more before he’s done.
EMI Music Group PLC, which seems to have been going through a continuous reorg since private equity firm Terra Firma bought it in the summer of 2007, has announced yet another one. But the more important message EMI delivered today was to the company’s investors, who have lent it some $5.8 billion: “Don’t worry! We’ve got plenty of cash!”
How could the company behind the Beatles and other music legends lose $1.2 billion in 12 months?
We’ll be happy to tell you, says the people who own that company in a 101-page report.
(It’s the financial stylings of EMI Music’s owners: The United Kingdom’s Terra Firma private equity group, which bought the company for some $5 billion in the summer of 2007.)
Peter Kafka has been covering media and technology since 1997, when he joined the staff of Forbes magazine. Most recently, he has been the managing editor of the tech and media Web site, Silicon Alley Insider. Read more »
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