EMI to axe 2000 jobs
Tuesday 15 January 2008
Music giant EMI is to axe up to 2,000 jobs as part of a drive to save £200 million a year, its new private equity owner said today.
The cuts, which could affect up to a third of its workforce, will be focused on the group's recorded music division.
Terra Firma, which bought the group for £3.2 billion last year, said the cuts were needed because EMI had been "struggling to respond to the challenges posed by a digital environment".
EMI - whose artists include Coldplay, Robbie Williams and Joss Stone - has been struggling with falling CD sales across the industry due to the rise of digital downloading and piracy. The company made pre-tax losses of £263.6 million last year.
The group said the restructuring included measures to eliminate "significant" duplication within the group, focus the group's 40 labels on talent spotting, and maximise existing artist potential. It will also look to help artists open up new income streams such as corporate sponsorship.
EMI said the changes, which will be brought in during the next six months, followed consultation with staff, artists and their managers.
The company said: "The restructuring will also enable the group to capture significant efficiencies and cost reductions which are expect to reduce costs by up to £200 million per year.
"The restructuring is also expected to lead to a worldwide headcount reduction within the group of between 1,500 and 2,000."
Financier Guy Hands, Terra Firma's chief executive and EMI group chairman, has already signalled that around 400 middle managers faced the axe, as well as hundreds of other marketing and administration staff.
He said today: "We have spent a long time looking intensely at EMI and the problems faced by its recorded music division which, like the rest of the music industry, has been struggling to respond to the challenges posed by a digital environment.
"We believe we have devised a new revolutionary structure for the group that will improve every area of the business.
"In short, it will make EMI's music more valuable for the company and its artists alike. The changes we are announcing today will ensure that this iconic company will be creating wonderful music in a way that is profitable and sustainable."
The plans to cut costs across the business have angered many of the group's artists, who have gone public with their complaints.
Radiohead have quit the label and existing artists such as Robbie Williams are understood to have threatened to withhold new records and demanded assurances over marketing and distribution.
Williams' manager Tim Clark has described Mr Hands as a "plantation owner" after he called on artists to work harder, while Chris Martin-led Coldplay are also reported to be reviewing their options.
Around 100 staff braved heavy rain and strong winds to attend a meeting with Mr Hands and other executives at the Odeon cinema in Kensington, west London.
While most remained tight-lipped about the company's future, one employee, who did not wish to be named, said: "This is exactly what needs to happen to the company."
Mr Hands was mobbed by reporters and cameramen as he arrived shortly before the 10am meeting, but made no comment as he was ushered into the building by security staff.
Coldplay, who are one of EMI's biggest recent success stories with more than 30 million album sales, have been an active supporter of various social and political causes including Oxfam's Make Trade Fair campaign and Amnesty International.
The band's manager Dave Holmes told the Financial Times he was keeping an open mind before hearing the full plans about EMI's restructuring.
But he added that he would "definitely not" advise one of the new artists he represents to sign to the label because it was going through "too much change".
A spokesman for EMI said around a third of the proposed job cuts would fall in the UK, with posts being axed "over the next few months".
The group's total worldwide headcount is around 5,500.
Mr Hands has set up a board at EMI that includes former BAA chief Mike Clasper, former BBC director general John Birt and former Northern Foods chief executive Pat O'Driscoll.
Ms O'Driscoll, who has been brought in by Mr Hands to identify what talent the new slimmed down EMI needs, told the Financial Times she wanted to see the changes in place by the end of June.
"The faster you get through the process of change, the better," she said.
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