EMI merged its Capitol and Virgin Records divisions overnight. The new company is called The Capitol Music Group.
Virgin Records CEO Jason Flom as been announced as the head of the new company. Andrew Slater, President and CEO of Capitol Records has been removed from the company. Flom joined the company in November 2005. He will report directly to Eric Nicoli, CEO of EMI Group.
Although Capitol Records has a market share near double that of Virgin, Nicoli said in a statement "Jason Flom quickly demonstrated his leadership and artist development abilities since he has been at Virgin. I am confident that he will take us to new levels of success in the rock, pop and urban genres as leader of the Capitol Music Group."
EMI finished 2006 with a 10.2% market share in the USA, putting it last in the majors behind Universal, Sony-BMG and Warner. However, worldwide, the company is in third place.
The biggest weakness of EMI North America is its lack of local acts. The top 5 EMI artists of 2006 were four British and one Australia act. They were Coldplay, Robbie Williams, Gorillaz, K.T. Tunstall and Keith Urban.
The restructure has been designed to save the company $217 million annually and to do this, a staff reduction of 20% is expected.
EMI shares are down 9% so far this year.
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