EMI to axe workforce by 1,500 to slash costs

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The Independent Online

EMI Group has announced its second major restructuring in two years, confirming a report in yesterday's Independent that the music group was planning a new round of job cuts to bolster its recorded music operations.

EMI Group has announced its second major restructuring in two years, confirming a report in yesterday's Independent that the music group was planning a new round of job cuts to bolster its recorded music operations.

The Independent reported that the company's management, led by its chairman Eric Nicoli, was looking at fresh job cuts as part of a wider restructuring of the company.

Two years ago EMI announced 1,900 job losses in an effort to cut £100m from its costs. Yesterday the company said that a further 20 per cent of its workforce would be axed in a move that will result in 1,500 redundancies. It also said a number of its record labels would be reorganised along with a clearout of its artist roster, which is being reduced by 20 per cent.

Most of the acts that will be affected will be European ones that have either proved failures in terms of sales or are too specialist for EMI to continue backing. Revenues from the axed artists are a "small single digit" percentage of EMI's overall sales, the company said.

Of the 1,500 job losses, 900 will come from EMI's CD and DVD manufacturing operations that are going to be outsourced. As part of its announcement the music company also said that its full-year recorded music sales would be "close" to last year's level of £1.7bn. The guidance suggests the decline in sales that has dogged the music industry has bottomed. The £1.7bn figure for last year was a 12.6 per cent decline on the year before.

EMI said its restructuring would deliver savings of £50m, half of which will be delivered in the financial year ending March 2005.

There will be a one-off cash cost of £75m to deliver these initiatives. The company is transferring its Dutch CD and DVD factory operations in Uden to MediaMotion, another Dutch manufacturer. It will also close its factory in Jacksonville, Illinois in the US.

EMI said the shake-up of its artist roster in Europe was aimed at focusing the company's efforts on those with the greatest potential, both globally and locally. It has been trying to nurture longer-term talent to help secure its future revenue streams. Alain Levy, the chief executive of EMI's recorded music divisions, said: "The time is right to further reposition EMI Music. Exiting manufacturing in our two primary regions of Europe and the US will allow us to lower our costs."

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