Will EMI survive after the wolves are finished?

On November 3, 2011

This week’s Music Week article reminded me of the ongoing problems over at EMI. The storied buy-out has been dragged out since Citigroup took control of the label from Terra Firma in February of this year. The latest reports claim that Warner Music owner Len Blavatnik has walked away from the bidding after a $1.5 billion offer was rejected by Citigroup. Bidding remains ongoing, and in an effort to recoup their £2.2 billion loss, Citigroup are willing to split the business for multiple buy-outs. So what will be left of the label when the feasting frenzy is over?

Let’s clarify who allegedly wants what: Warner Music is interested mainly in EMI’s extensive and historic music catalogue. KKR and Bertlesmann-owned BMG Rights Management is going after the publishing wing. Sony has asked for more time to whip up interest amongst its investors and is currently rumoured to be bidding on the publishing side only. Universal walked away last week after becoming the front runner in the negotiations but then apparently losing out in bidding to Blavatnik.

EMI CEO Roger Faxon was desperate not to split EMI and believes keeping it together will enable its overall value to grow. He has been rumoured to be integrating strategies between the divisions to make the split more difficult. But with no buyer willing to take on EMI as a single entity, the split looks likely. If a Warner bid is to be revived, it is likely EMI will cease to be a brand in the US market. If Sony acquires the publishing side, it will likely merge it with its own extensive works and those newly acquired from the Michael Jackson estate

It is also unclear where the likes of Abbey Road would lie if a split were to occur. Almost a year ago, the famous studios were under threat, with rumours of closure and sell offs. After a campaign by music fans and celebrities to safeguard the British institution, EMI held onto the site and considered touting the studio to third-party investors. Now, while its parent company dissolves, the first purpose built recording studio may find itself the unwanted furniture in the publishing v. catalogue divorce proceedings. But to many, Abbey Road is as historic and important as the 114-year-old label itself. From the technological discoveries of Alan Blumlein in the 1930s to The Beatles and Pink Floyd recordings in the 1960s, the building has a rich and important history of British innovation and creativity – one which should not be simply cast aside.

The bidding wars and rumour mills will continue while the staff and talent at EMI wait nervously for the final outcome. The Rolling Stones, Queen, Sir Paul McCartney and more recently Robbie Williams have left the label, the latter citing the ongoing turbulence as a factor in his departure. It’s difficult to see an ending that will be happy for all, especially for the likes of Terra Firma and Guy Hands who are still reeling from losing control. EMI, a brand and a symbol of the British music industry, may be torn apart and condemned to history. 

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