$ign of the times: Bank Running EMI!

[sunshineonacloudyday]

http://www.bbc.co.uk/news/business-12339299

[jobeterob]

Thanks for this Sunshine.


EMI taken over by Citigroup in deal to write off debts
EMI, whose artists include Tinie Tempah, will eventually be sold on by the US bank US banking giant Citigroup has taken over the ownership of EMI, the music company where it was the major creditor.

The bank had loaned money to Guy Hands' private equity firm Terra Firma to help it to buy the business in 2007.

But the £4.2bn takeover was a failure, with Terra Firma believing it massively overpaid for the company.

Now it has been forced to hand EMI over to Citi after not being able to keep up interest payments on the loans.

'Positive development'

EMI, which is home to artists including Lily Allen, The Beatles, Coldplay and Tinie Tempah said it would continue under the same management and that it was now completely separate from its previous owner.

Citigroup said it would eventually sell EMI.

Industry speculation suggests another record label would probably be the buyer - with Warner Music among the more likely candidates for the recorded music business. Meanwhile its publishing operation may be sold to another private equity firm, KKR, says BBC business editor Robert Peston.

Terra Firma and its backers have lost the entire £1.7bn they put into EMI.

Meanwhile Citigroup has written down what it is owed from £3.4bn to £1.2bn - which meaning that it has incurred a loss of £2.2bn.

Continue reading the main story “
Start Quote
The takeover in 2007 of EMI by Guy Hands' Terra Firma - just as the bubble in financial markets was going pop - will go down in British corporate history as one of the worst ever deals”
End Quote

Robert Peston

Business editor, BBC News

--------------------------------------------------------------------------------
Peston: EMI loses backers £3.9bn
Analysts had predicted Citi would eventually seize control, but developments have happened more quickly than most had expected.

Citi vice chairman Stephen Volk said EMI now had a strong balance sheet and "the ability to invest in and grow its business".

"This is a positive development for EMI, its employees, artists, songwriters and suppliers. EMI is an iconic business and we are completely supportive of both its management and its strategy," he added.

In a statement Terra Firma said it was "pleased that EMI's debt burden has been reduced through Citi agreeing to write down a substantial proportion of EMI's debt".

'Devalued'

In October, a New York judge dismissed a claim by Mr Hands that Citi had misled it over the acquisition.

He had argued he had not been informed that a rival bidder had already pulled out, resulting in his firm overpaying for the record company.

Last month Terra Firma said its lawyers had appealed against that decision. The US Court of Appeals will now have to decide if the appeal can go ahead.

Over the past two, Mr Hands has floated all manner of possible solutions to raise enough money to prevent the bank seizing control of EMI.

They included splitting EMI into two and even selling off assets such as the world-renowned Abbey Road studios.

But his best hope was to lease the North American rights to EMI's back catalogue to another of the Big Four major labels - but that aspiration collapsed amid arguments over price.

The purchase of EMI by the private equity firm brought it into conflict with some of its artists who said that financial matters were taking priority over creativity.

Radiohead, one of the label's biggest acts, left EMI saying the owners did not understand the music industry, with lead singer Thom Yorke later claiming music was being "devalued" by the involvement of a private equity firm treating bands "as simply part of their stock".

The Rolling Stones and Joss Stone were among others who left the label under Terra Firma's ownership.

[theboyfromxtown]

The end of an era for some.

Shame...a real shame. But it's tough out there.

[sunshineonacloudyday]

I believe Citigroup was involved in recent deals with at least two media conglomerates who own a disproportionate number of radio stations in both the U.S., and the Middle East.

Clear Channel [[in the U.S)
http://www.clearchannel.com/Corporat...ReleaseID=2206

Rotana Media Group [[in the Middle East)
http://www.thenational.ae/business/m...n-rotana-group [[read to end of article)

Lemme see...So now Citigroup will produce the music that is played on radio stations in which they have a stake? Wouldn't this be a conflict of interest, i.e.;payola??

Can someone please explain?

[soulster]

They are only going to hold it temporarily. The bank certainly does not want to be in the record business. Someone like Sony/BMG or Warner Music Group will buy it.

[jobeterob]

I wonder if the price will be about 25% of what it was before????

Looks like the value is shot.

[sunshineonacloudyday]

Thanks Soulster. I imagine the bank certainly would not want to be in today's record business. But whether they are making or losing money, it still bothers me that a few conglomerates own [[and control) such a large portion of the entertainment media.

Last week a musician friend gave me one of his home-recorded CDs out of the back of his car. I flashed back to the days when little record labels handed records out of the trunks of their car. I hope this trend continues, lol...

[ms_m]

sunshineonacloudyday from what I've read this has been in the works for awhile although the sudden takeover did catch many off guard. Be that as it may, this is actually a good thing for EMI. Citigroup stepped in and relived much of EMI's debt. [[Citigroup owed that debt)

This gives EMI breathing room in maintaining their operations and being seen as a viable company. Sine EMI has been looking for a buyer for months, being seen as a viable company is imperative in order to get a good price for the company.

Current management is still in place although I can tell you from a personal perspective, it is somewhat frustrating trying to get things done [[ie. obtaining licenses) right now, but under the circumstances that's to be expected.

Once EMI is sold, there will probably be a management reshuffle but after that, things will go back to normal, just under a different company.

[marxthespot_]

With music sales so far in 2011 about 13% lower than the same period in 2010 [[CDs and downloads combined), the music industry is in trouble....Partially it is due to the ability of individuals to file transfer on the internet, but more so due to the music industry's disrespect of the consumer, not embracing the download technology and market soon enough, and ultimately the industry's own inherent greed.

That EMI is now being run by a bank isn't surprising. If there is an industry that can out-do the music industry when it comes to greed, it's the financial/investment industry.

If EMI merges with Sony/BMG, that will make it an extremely big conglomerate...Oh the layoffs.

Regarding Warner Music Group, I though that they are looking for a buyer for themselves, could/would they buy EMI?

[ms_m]

Marxs, I'll have to look for it but the last article I read said WM was looking for a possible buyer but was also looking into the possibility of acquiring EMI. Sounds like a fact finding mission to assess all their options.

[ms_m]

These are the two I remember reading but they may be duplicates of what's already been posting. Sorry, my attention is somewhat divided at the moment.

http://mediadecoder.blogs.nytimes.co...e-more-likely/

http://online.wsj.com/article/SB1000...710352572.html

[arrr&bee]

Hey those artist wanted to be[bankable]well now they are.

[tomato tom]

Another great British institution XXXXXX. We have nothing left except the Royal Family, and im sure the banks would sell them off as well, if they could. Paulo xxx

[jobeterob]

Well the banks pretty much sold away the whole United States, half of which is now owned by China, so EMI and the Royal Family are small change.

[marv2]

Why doesn't Diana Ross just record another CD for them? That should help everything work out.

[jobeterob]

This is a far bigger issue than Diana Ross and you should not be bringing her up here or in all the other threads you do. It's disrespectful to all the other posters and the owner.

Diana Ross, like all soul artists of her era, has no contract with anyone to record anything and none of it is selling much these days anyways; certainly not enough to help EMI.

As someone posted above, sales continue to collapse and probably no deal with any of these companies is going to save them. All the young people are downloading and most of them do it and will continue to do it for free and it's too late to close that door.

[marv2]

[QUOTE=jobeterob;33458]This is a far bigger issue than Diana Ross and you should not be bringing her up here or in all the other threads you do. It's disrespectful to all the other posters and the owner.

I will bring her up where ever I like! You do! Now what are you going to do?

Miss Ross is one of EMI's recording artists accordingto her fans. I don't know because I never buy her product.

You were the one that referred to pedophiles as "the Jesus Guys"! If that is not disrespectful, I don't what is!

[ms_m]

Jobeterob keep in mind, although the record division is sinking, the licensing division is still extremely lucrative. It's probably why there is talk of selling the two divisions separately. EMI Publishing is worth a large fortune.

This Citigroup deal should prop EMI up enough long for them to get themselves together without worrying about paying off a mountain of debt. If they play their cards right, they should come out of this ok. Maybe not as a British company, to the chagrin of many but ok none the less.

[sunshineonacloudyday]

Seemingly needing no time to bond with their new owner Citigroup, it looks like business as usual for EMI...

http://latimesblogs.latimes.com/musi...in-the-us.html

I'm not familiar with these music streaming services, but from what I understand, after paying your monthy fee you get to listen to their music, but do not get an mp3 file of the music to listen to once your subscription expires??

[sunshineonacloudyday]

I think Citigroup should hang onto the record division of EMI in spite of it being a money drain. They could form a focus group and target the young, hip demographic with vinyl 45s from their roster of new artists, revitalizing EMI with subsidiaries. After all, a bank-owned record label could easily continue the theme used by many record labels over the years with names like;

Money, Cash, Tender, Mo Do, Dinero, Cashmoney Records....Labels small and large who must've dreamed of the money just rolling in.

With the suits at the bank now directly involved, they could come up with new labels reflecting today's corporate enviornment while adding a special cachet [[cash-ay) to their product. How about...

Leverage Buyout Records
T-Bill Records
Dividends Records
Acquisition Records
P-R-R [[Prime Rate Records)

[marxthespot_]

This is a far bigger issue than Diana Ross and you should not be bringing her up here or in all the other threads you do. It's disrespectful to all the other posters and the owner.

Diana Ross, like all soul artists of her era, has no contract with anyone to record anything and none of it is selling much these days anyways; certainly not enough to help EMI.

As someone posted above, sales continue to collapse and probably no deal with any of these companies is going to save them. All the young people are downloading and most of them do it and will continue to do it for free and it's too late to close that door.

J-rob,

I do want to correct you on something - Diana Ross, after she left Motown was signed to EMI Worldwide except for North America where she signed with RCA and then back at Motown. That relationship with EMI continued to her last CD "I Love You." It is not inappropriate to bring her name up in a discussion of EMI. She certainly had bigger success in the UK & Europe for EMI than she did here for RCA & Motown in the 1990s ..Regardless of whether she has a new album or not, her catalogue titles still make money for EMI when they sell...

No one artist could save EMI...but every little bit helps.

[marxthespot_]

These are the two I remember reading but they may be duplicates of what's already been posting. Sorry, my attention is somewhat divided at the moment.

http://mediadecoder.blogs.nytimes.co...e-more-likely/

http://online.wsj.com/article/SB1000...710352572.html

Ms. M,

Thank you for the links. From reading them, it seems that the Citigroup wants to get EMI on the market before Warner Music officially puts itself out there for sale....But it is very interesting that WMG was considering a takeover of EMI at the same time...I am guessing that EMI's stock value must very low...As you pointed out, EMI Publishing is still a money maker...

[jobeterob]

Thanks Marx; is Ross still with EMI then? Or have they cut her loose like just about every artist as well? I read a report saying EMI Reports said I Love You sold 622,000 which seemed high to me but world wide, who knows.

You guys seem to know more about how EMI works than I do; perhaps carving it up, selling the profitable portion will work; or selling the unprofitable section for very little and keeping what is profitable. The trouble with that scenario is that the company is still stuck with the debt.

I agree that continued sales for product already issued should be making them a reasonable profit at little cost.

[ms_m]

The trouble with that scenario is that the company is still stuck with the debt.

...but that was the upside to this, Citigroup relived EMI of much of that debt. Now it's manageable.

[ms_m]

You're welcome Marx...

Yep, Warner was probably thinking they could pick them off in a fire sale type situation. Citigroup made that more difficult. This was a win/win for EMI.

[ms_m]

Side Note:

In this biz, the real money is in publishing. That's why these companies [[and artists/copyright holders) get so freaked out about having their songs on Youtube without authorization. [[read: no license obtained, no money paid to the copyright owner) ....not to mention, it's is against the law per copyright laws.

A lot of these companies obtained the copyrights from artist/composers on the cheap and the RIAA has powerful lobbyist in Washington to keep manipulating the laws to the point they can hold on to the rights forever and a day. [[figuratively speaking)

[nomis]

EMI has been in trouble for years It did ok in the late 90s CD boom when I worked there but has been spiralling out of control for some years now...Diana has now no association with the label in any shape or form..she has not made them any significant royalties for a few years now..they got a Gold certificate for Love and Life in the UK but her personal problems at the time preventing fom really promoting the CD..they had no real involvement in the I Love You CD and it looks like Diana has no recording contract today...