EMI hemorrhaging money with huge losses
Johnny Rotten once sang; "blind acceptance is a sign, of stupid fools who stand in line like EMI". Yeah. He also sang "And you thought that we were faking, that we were all just money making" before doing a load of butter adverts.
So I don't know why I included those lines at the start of an article... unless you want to examine just what a vapid, crock of shit the music industry (and musicians) are.
It's so badly down the shitter currently that EMI is on the bones of its arse. This week, the music group will report that it lost around £1.5bn in the last financial year. That's a lot of cocaine (aka 'Flowers and chocolates') for the hangers on.
This figure is the worst in the firm's history and follows the take-over of EMI by private equity tycoon Guy Hands three years ago.
Sky's Mark Kleinman says: "He paid about £3bn for EMI and since then it's struggled particularly because of the conditions afflicting the music industry but also he has struggled to come to terms with the company's vast cost base."
A report in the FT is claiming that Hands will have to ask investors in his Terra Firma private equity group to inject another £100m so it can meet the terms of Citigroup's loans from earlier this year, largely because of EMI's failings.
"Guy Hands is taking legal action against Citigroup alleging he was misled during the sale process, so we have a pretty explosive situation here and then this loss will really shake those taking an interest in the company's future," said Kleinman.
Could this be curtains for EMI? If it is, it's all the more shocking seeing as they've got some of the biggest names in music on the roster. We're talking about big unit shifters The Beatles, Pink Floyd, Coldplay, Robbie Williams, Blur and... er... Falco.
Ritch Ames, head of online digital marketing firm Tomorrow Never Knows, said declining sales of albums were partly behind EMI's woes.
"The trouble for the labels in the current market place is that people don't like downloading albums, but prefer single tracks, and labels make more money from album sales than single sales. According to BPI figures, 2009 saw a huge jump in single sales, up 32.7%, mainly due to digital downloads, however album sales were down 3.5%.
"EMI's share of album sales were 7% last year, with albums from Robbie Williams, Queen and Cliff Richard doing the best for them. Compare this to their rivals, 40% for Universal, 32% for Sony BMG and 16% for Warners and you can see they are struggling."
Since Hands' Terra Firma group took over, EMI has been in all sorts of trouble. Most publicly, the artists signed to the label have been wanting out. Radiohead couldn't wait to get away and Roisin Murphy recently stated that she has left EMI because of difficulties she had while recording her second solo album 'Overpowered'. Joss Stone said she'd waive £2million+ just to jump ship. Last year, there were reports that EMI would stop selling albums to independent retailers in a bid to cut costs.
Things are looking pretty bleak for EMI, no question.