Terra Firma Saves EMI -- For Now
May 15, 2010 -- They
couldn't raise enough from outside investors to keep EMI afloat.
They couldn't sell it off to Warner, Universal or Sony. So Terra
Firma was forced to dump more money into the record label to
keep Citigroup from repossessing it.
Now they just have to figure out how to repay
the £3.1 billion ($4.6 billion) loan. They've got until
2015. Citigroup may still get it in the long run. More at the New York Times.
Sony Eyes EMI, Then Pretends They Didn't
May 12, 2010 -- On
Sunday, Sony Music CEO Rolf Schmidt-Holtz said that pursuing
the acquisition of EMI was "not out of the question." This
was reported by, well, everyone. Here are links to the UPI
version and the Reuters
version. On Monday, the
story changed significantly, with a "source" offering
the spurious logic that Schmidt-Holtz was not really talking
about EMI when he was talking about EMI.
Meanwhile, EMI is down to two days to fork
up a pile of cash or be taken over by Citigroup. I'm rooting
for Citigroup.
EMI Sues Citigroup For "Fraud and Lies"
May 8, 2010 -- The UK's Telegraph reports, " The lawsuit charges the investment bank with alleged
'fraud' and specifically accuses senior Citi banker David Wormsley
of lying about the presence of other buyers in the auction to
bid up EMI's price in 2007. Terra Firma, which is run by Guy
Hands, also accuses Citi of trying to drive EMI into bankruptcy
in order to bring about a long-expected merger with rival Warner
Music.
"It emerged over the weekend that a
leading Citi analyst in the US released a research note eight
weeks ago stating that if the troubled music giant does not merge
with US competitor Warner Music, then it may go bust. The note
has been interpreted by observers as an attempt by Citi to destabilize
the business."
Fraud in the 2007 bids for EMI? Why did they
wait until they were just days from bankruptcy to even bring
this up? As for the research note, "if the troubled music
giant does not merge with US competitor Warner Music, then it
may go bust." As much as I dislike Warner Music, this seems
to be a simple statement of fact. In fact, saying they "may" go
bust was really a pretty generous statement, as it implies there's
a chance EMI won't get repossessed in a week.
EMI's lawsuit is asking for £2 billion
(about $3 billion in U.S. currency). They owe Citigroup £3.2
billion (US $4.8 billion), so even if EMI wins the lawsuit (not
likely), they're still going to owe almost $2 billion.
Suing Citigroup seems like the best way to
guarantee that EMI gets absolutely no wiggle room whatsoever
when time runs out next week. It's just going to piss them off.
EMI's owners must realize that they're not going to meet their
financial deadline anyway, but this still sounds like a pretty
stupid move.
Thanks to Jens G. for the heads-up on
this one.
EMI Is Running Out of Time
May 5, 2010 -- The
sand is rapidly running out of the hourglass for EMI. They have
less than 10 days to "submit a 'compliance certificate'
to Citigroup showing EMI can meet the terms of its £3.2
billion loan," according the the Times Online. That's $4.8 billion in U.S. dollars. If you read the
complete article, as well as the
related story about cutting hundreds from EMI's staff, it's
easy to see the most likely outcome -- Citigroup is going to
own EMI next week.
I hope someone videotapes the day that Citgroup's
accountants take over and take a look at the books, especially
the ones which deal with royalties earned by the artists, who
have been auditing EMI non-stop for 40 years. According to former
AFTRA attorney Fred Wilhelms, in the entire industry, there
have only ever been two audits which showed the artist
had been paid what was due them.
If bank accountants take over, they're going
to quickly discover a huge mountain of debt that EMI has been
hiding for decades simply by not acknowledging it exists. I'd
advise having medical personnel available, just in case the shock
is too much for them.
EMI's New Owner
Threatens Artists - Or Not
By George Ziemann -- November 3, 2007
EMI's new boss is Guy Hands,
CEO of the Terra Firma group which purchased the UK-based record
company a few months ago. The
Financial Times reports that Mr. Hands "promised 'fundamental
change' in how EMI approached the music business, but warned
that artists would have to meet their side of the bargain."
This is the first thing Mr.
Hands wants to see changed, having noticed that some artists
"unfortunately simply focus on negotiating for the maximum
advance . . . advances which are often never repaid."
Perhaps Mr. Hands is not aware
of the music industry's long history of screwing over the artists
("previous investments have been in pubs, landfill sites
and cinemas," notes Financial Times). Even legacy acts like
The Beatles and King Crimson still have to audit and sue EMI
on a regular basis to collect royalties properly due them which
have been "overlooked" by the label's crack accounting
team. Of course, there are several ways to prevent artists from
earning royalties, some of which are actually legal, even if
they can't cross the bar to be considered ethical, like CDs that
were counted as returns, but "accidentally"
found their way back into the market.
For 40 years, it has been up
to the artists to catch their label screwing them over, and,
even when they do, they're still lucky to get 10 percent of what
was actually skimmed from their royalties. As a defense against
these practices, the artists simply started asking for more money
up front. Then it didn't matter so much that they never got a
royalty check. In fact, the current attitude is that if you DO
ever receive a royalty check, your attorney has failed to negotiate
properly.
So the new plan is for the
artists to trust the record label? Again? Come on, Charlie Brown,
Lucy promises she won't pull the football away at the last second
this time and laugh at you for being a chump, like she's done
every single time in the past.
Good luck with that.
But wait. There's some misdirection
going on here. Look at the BBC's
version of this story. And this
one at Boycott-RIAA. In both versions, you get the "focus
on negotiating for the maximum advance" quote, coupled with,
"It will be open to us to choose which artists we wish to
work with and promote." It comes off sounding like a threat
to only hire acts with poor negotiating skills, even though EMI
has always been able to choose which artists they work
with and promote.
In Hand's defense, he actually
said that this new selectivity will not occur until "EMI's
own standards had been raised" and he uses words that many
in the music biz have long ago banished from their vocabulary,
like "honesty, transparency and performance."
He has already identified one
of the prime reasons the industry has such a dismal failure rate
-- execs get a big bonus for signing bands, with no consideration
to the talent or marketability of the act, much less the potential
to recover the investment. This lets a persuasive exec with bad
taste make a pile of money by signing crappy bands, which explains
a lot of things. Decisions based on budgeting and
increasing the executives' personal
budget do not always mesh with
talent when
it comes to what gets released.
The other thing Hands has going
for him is that he's talked to current and former execs from
the other three majors, coming to the conclusion that "we
have not seen many who, in our view, add anything."
You can't argue with that.
So it's really too early to
assess EMI's new owners. While the idea of introducing honesty
and transparency into the music business is promising, it is
just a promise at this point. The artists have heard lots of
promises.
And the audience wants to know
if EMI is going to stop suing people.
EMI Tries Selling MP3 Files
December 6, 2006 -- Universal Music tried it first
with a Jessica Simpson song. EMI
has decided to sell a total of three songs in mp3 format.
Why?
"By selling MP3s, recording
companies can ensure they can be played on Apple Computer Inc.'s
market-leading iPod players without going through Apple's iTunes
Music Store."
The iPod plays mp3s!! It's
only taken three and a half years for EMI to figure this out.
We expect them to realize that higher bitrates than 128k exist
by 2009 at the latest.
October, 2006 -- The lawsuit, filed in Manhattan's
state Supreme Court, accuses EMI and Capitol Records Inc. of
violating a half-dozen agreements by "willfully and knowingly
underreporting royalties" by hiding the "true use and
disposition of Lennon's recordings." Ono's three-page filing,
which included a summons and notice but no detailed complaint,
also accuses EMI and Capitol of "intentionally and systematically
rendering dishonest and grossly deficient accounting statements."
Sept. 2006 -- From BBC (but rearranged into actual
paragraphs) -- The surviving members of the Beatles are to sue
music companies EMI and Capitol Records, after a New York State Supreme Court judge
denied EMI's request for the claim to be thrown out. The lawsuit
was triggered by an audit of the companies' books from the period
1994 to 1999, which the band says uncovered allegedly deceitful
behaviour.
The lawsuit, filed in December,
claims EMI and its affiliate Capitol wrongly classified copies
of Beatles recordings as destroyed or damaged "scrap"
but then secretly sold them. It
also alleges the number of units sold was under-reported, and
the firms classified some recordings as "promotional"
and as a result non-royalty bearing, but then sold the material.
Sir Paul McCartney, Ringo Starr
and relations of George Harrison and John Lennon want at least
£13.2m ($25m) in damages. They claim the record companies
used fraudulent schemes to "pocket millions of dollars"
due to the band.
The group also seek to reclaim
rights to all the Liverpool band's master recordings.
Follow-Up April 12, 2007
-- From
the BBC:
The Beatles have agreed a deal
with music giant EMI to settle the band's battle for £30m
in unpaid royalties. Sir Paul McCartney, Ringo Starr and the
widows of John Lennon and George Harrison took legal action in
2005, claiming money from album sales.
"I can confirm that we
have reached a mutually acceptable settlement and that we are
not going to say anything more than that," an EMI spokeswoman
said.
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