Business Comment: Spice fails to make EMI flavour of the month
Wednesday 28 May 1997
Since the demerger from Thorn last August, the shares have underperformed the market by a third and yesterday they continued their downward spiral, oblivious to the prospect of Spice Girls: The Movie and the pounds 500m capital repayment Sir Colin conjured up keep investors happy.
In fairness, this underperformance is in some ways the flip side of the meteoric rise Thorn-EMI enjoyed as it prepared to do the splits and the market speculated on the premium the music business would command when it was snapped up by Disney, Seagram, Bertelsmann, take your pick.
But the deeper seated difficulties were always there. Growth in the music industry world-wide has slowed to barely half its trend rate of 7-8 per cent and no one expects much improvement for the rest of this decade.
Now, EMI has come up with some home-grown problems of its own. Rich Spice, aka Jim Fifield, the phenomenally well-paid chief executive of EMI Music, has discovered that rap does not travel very well outside the US and is having to spend pounds 117m to put things right.
If the bad news was unexpected then so was the good news. EMI was under no pressure to return 10 per cent of its capital to shareholders. So the plan to reward investors through some unspecified but presumably tax- efficient mechanism looks like a defensive move, notwithstanding all the talk about gearing up and reducing the cost of capital.
Whether the bid will come now that Seagram, the favoured suitor, is apparently out of the picture, is another matter. In the meantime, EMI and its other half, Thorn, which has performed even more abysmally, remain living testimony to way demergers can destroy shareholder value as well as enhance it.
- 1 I've been called an abusive and dangerous parent, when all I did was listen to my transgender child
- 2 Migrant crisis: Greek soldier saved 20 people singlehandedly off Rhodes beach
- 3 Sofyen Belamouadden murder: The inside story of a crime that horrified Britain
- 4 Company breaks open Apple Watch to discover what it says is 'planned obsolescence'
- 5 Ian Brady: Moors murderer announces his support for Ukip and the SNP
Migrant crisis: Greek soldier saved 20 people singlehandedly off Rhodes beach
Russian hack of President Obama's emails worse than previously admitted
Ian Brady: Moors murderer announces his support for Ukip and the SNP
UK weather: Britain braced for snow to replace sun as arctic air mass moves in
Nepal earthquake: US Pastor Tony Miano sparks outcry by suggesting Nepalis should convert and not rebuild their 'pagan shrines'
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband
The sickening truth about food banks that the Tories don't want you to know
Migrant boat disaster: Ukip candidate mocks victims in sickening Twitter post
Nigel Farage wants the BBC to stop making programmes like Doctor Who, Strictly Come Dancing, and Top Gear
Global warming: Scientists say temperatures could rise by 6C by 2100 and call for action ahead of UN meeting in Paris
General Election 2015: Britain would become a 'communist dictatorship' under Ed Miliband and Nicola Sturgeon, claims wife of Michael Gove
iJobs Money & Business
£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...
£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...
£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...
£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...