Hundreds more staff face the axe at Coldplay's label EMI as managers prepare to present a five-year plan to investors to persuade them to pour more money into the troubled music group, the Times Online are reporting today. More discussion on this is at the Coldplay forum here onwards.
Charles Allen, chairman of EMI Music, is this week expected to lay out his vision to Guy Hands, the financier whose Terra Firma investment vehicle owns the music group, home to Coldplay and the Beatles back catalogue. Allen is expected to say that profits at EMI Music could be close to £300m by 2015 in the best case, against less than £200m for the year to March 2010. To get there, the former ITV chief executive will need to wield the axe again, as well as make a fresh attempt to lease EMI’s American music catalogue to rival record groups.
Analysts said he could slice up to another £100m from EMI Music’s £500m cost base. Since it was acquired by Terra Firma in 2007, the recorded music arm has suffered £200m in cost cuts, resulting in the loss of 2,000 jobs.
Terra Firma needs approval from 75% of investors to draw down £120m in fresh funds by June 14 or risk its lender, Citigroup, seizing control of EMI. Most of the backers’ initial £1.8 billion investment has been wiped out. Citi will this week be handed the music group’s trading figures for the last quarter so that it can calculate how much cash Terra Firma must stump up to “cure” a breach in the terms of its £3.3 billion loan agreement.
Hands thinks he can raise enough cash from investors to give EMI two years of breathing space. At the same time, he is suing Citi for allegedly misleading him over the sale of EMI. Including the contribution of its publishing arm, EMI believes it can push its profits as high as £550m by 2015, although a group target of £400m is thought to be more realistic.
EMI’s performance is in part down to the state of the global music market, where sales have dropped 30% in the past five years, with digital income failing to offset falling CD sales. KKR and Warner Music are plotting a break-up bid for EMI if it falls into Citi’s hands this summer. EMI is faring better in the US charts with three albums in the top five, including the country act Lady Antebellum.
Pictures of Coldplay at Estadio Universitario, Monterrey, Mexico (11th March 2010):
Photos by Galo González
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