Charles Allen has resigned as executive chairman of EMI's recorded music division after three months in the role as part of a management shake-up at the debt-laden music group, according to The Guardian last week.
Allen, former boss of ITV, took the top job in March following the sudden departure of chief executive Elio Leoni-Sceti, having previously been non-executive chairman. It seems that a strategic review which he led at the company, whose stars include Coldplay and Norah Jones, has made his position redundant. As part of the shake-up, EMI's recorded music business and music publishing operation will be brought under a single management structure under the command of Roger Faxon, head of the publishing arm.
Insiders said there was no question of Allen falling out with EMI's owner, Terra Firma, the private equity firm that bought music group for £4bn at the height of the credit boom in 2007. Allen will continue as an adviser to EMI and Terra Firma boss Guy Hands.
Another casualty of the changes is former BBC director general Lord Birt, who is stepping down as chairman of Maltby Capital, the holding company of EMI. Birt will move on to other Terra Firma assignments, focusing on acquisitions and strategy. His position will be taken by Stephen Alexander, a director at Maltby for nearly two years. An EMI spokesman said that the company was repositioning itself as "a rights management company that can take full advantage of global opportunities in all markets for music".
Although recorded music and publishing, which owns the rights to artists' songs, will continue to operate as separate entities, the new structure will bring them closer together than ever before. Faxon said: "We need to harness things a bit better and build a broader, deeper business overall."
The move reflects the diverse and changing landscape of the music market where artists are pitching their music over a much wider range of distribution channels. Faxon admits that the changes do not necessarily make EMI unique, "but the way we apply the concept should allow us to stand out from the rest of the industry".
Allen has tried to turn round the fortunes of EMI, which recently raised £100m from Terra Firma investors to cure a covenant breach. EMI owes £3bn to US investment bank Citigroup which could have seized control of the music firm if its capital raising exercise had failed. The company has been a disastrous investment for Hands because of its high indebtedness. Relations between Citigroup and Hands have soured and Hands has taken out a multi-billion dollar lawsuit, accusing the bank of making him overpay for EMI by pretending that another buyer was interested. Citigroup vigorously denies the allegations which will be heard in New York this summer.
Allen's time at EMI was yielding some results: in the last year before he joined, EMI Music's profits before financial charges were £51m. Last year they were £163m – though they were then wiped out by a £1bn writedown in the value of its music catalogue. Speculation continues in the music industry that EMI is about to be sold, most probably to Warner Music, which has been circling the group for much of the past decade.
A number of high-profile artists have ditched EMI since the Terra Firma takeover. Rock band Queen are the latest. Others include Radiohead, the Rolling Stones and Paul McCartney. Recently, it emerged that the pensions regulator could force EMI to stump up as much as £250m to plug a gap in its pension scheme. The pension fund's board of trustees is demanding that EMI make good the alleged shortfall. But EMI claims the deficit is negligible and stands at no more than £10m.
Coldplay blends and fanart (by Jen LondonSkies)
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