Terra Firma, the private equity firm that bought EMI for $6.26 billion last year, has officially confirmed that it will cut up to 2,000 EMI jobs worldwide (roughly 1/3 of its staff), all in the Recorded Music division. The company will now save up to $392.2 million a year, a move that essentially makes its investment one hell of a payoff. Shifting away from just selling CDs to focusing on A&R, digital music, and corporate sponsorships, the new EMI is now in the "hands" of Guy Hands, who is most notably rich from his experience in the train and aircraft businesses. Yup. No worries though; I'm sure he listened to the radio at those jobs.
The next six months or so will see a lot of restructuring at EMI as it "respond[s] to the needs of artists and consumers," while current artists like Robbie Williams and Coldplay are withholding their forthcoming albums in a "revolt" against the company, fearing Mr. Hands is behaving more like a plantation owner than a savvy business man. Beyond that, it's hard to say whether Terra Firma invested in EMI to make a quick buck (it's happened a million times before) or whether these changes truly reflect something positive. Of course, job cuts are inevitable for the four major groups, especially when having more employees is now more of a liability than anything, but it'll be interesting what kind of follow-through EMI has up its sleeves.
Here's the full press release:
EMI Group announces fundamental restructuring of Recorded Music Division to respond to the needs of artists and consumersLondon, 15 January 2007 -- EMI Group is today announcing a series of wide-ranging initiatives within its Recorded Music division to enable the group to become the world’s most innovative, artist friendly and consumer-focused music company.
In a series of presentations to staff, artists and managers, Guy Hands, EMI Group’s chairman, is unveiling a fundamental reshaping of the business to reflect the rapidly-changing nature of the music industry. The changes include:
- Repositioning EMI’s labels to ensure they will be completely focussed on A&R and maximising the potential of all their artists
- Developing a new partnership with artists, based on transparency and trust, and helping all artists monetise the value of their work by opening new income streams such as enhanced digital services and corporate sponsorship arrangements
- Bringing together all the group’s key support activities including sales, marketing manufacturing and distribution into a single division with a unified global leadership
- The elimination of significant duplications within the group to simplify processes and reduce wasteThe changes, which will be implemented over the next six months, will enable the group to invest more in its A&R operations both to identify and sign promising new artists and to maximise the potential of its existing roster.
The restructuring is being carried out following an intense three-month consultation review of the business by Terra Firma since it acquired the business last year and many of the measures being implemented have come at the suggestion of staff, artists or their managers.
The restructuring will also enable the group to capture significant efficiencies and cost reductions which are expect to reduce costs by up to £200 million per year. The restructuring is also expected to lead to a worldwide headcount reduction within the group of between 1,500 and 2,000.
Guy Hands commented: “We have spent a long time looking intensely at EMI and the problems faced by its Recorded Music division which, like the rest of the music industry, has been struggling to respond to the challenges posed by a digital environment
“We believe we have devised a new revolutionary structure for the group that will improve every area of the business. In short it will make EMI’s music more valuable for the company and its artists alike. The changes we are announcing today will ensure that this iconic company will be creating wonderful music in a way that is profitable and sustainable.”
