EMI, the debt-laden music group, yesterday surprised the market with a shake up of its board just a week after it received a £105m bailout from its private equity owner that saved it from falling under the control of its bank.
As part of a wider strategy change, EMI said that Charles Allen – the executive chairman of EMI's recorded music division who was only appointed in March – was stepping down to become an "adviser" to the group and its owner, Terra Firma. Roger Faxon, the head of EMI's publishing division, has been promoted to be chief executive of the group.
In further changes, Lord Birt, the chairman of Maltby Capital, the holding company of EMI, is also stepping down to focus on other assignments, notably acquisitions and strategy at Terra Firma.
Stephen Alexander, a director at the holding company for a year-and-a-half, will replace Lord Birt as chairman of Maltby Capital.
Alongside the shake-up of its board, EMI said the group's two divisions – music publishing and recorded music, which releases CDs and signs new acts – will be united under the leadership of Mr Faxon, who has held a number of roles at EMI over the past 16 years.
Following a strategic review, EMI said the management changes would allow it to "reposition itself as a comprehensive rights management company that can take full advantage of all global opportunities in all markets for music".
In an internal note to EMI staff yesterday, Mr Faxon, who has been chief executive of EMI Music Publishing for the last three years, said: "I believe that the two businesses, working in concert with one another, sharing the same values, pursuing a co-ordinated strategy can and will deliver for our artists and songwriters no matter what challenges we face."
Over the past few years, the most profitable part of EMI's operation has been its music publishing division, which enjoys a robust flow of revenues from its enormous back catalogue.
Yesterday, Mr Faxon said: "We need to recognise the power and importance of the extraordinary catalogue of recordings we represent."
However, its music recording business has bounced back in recent months, driven by new initiatives including the digital remastering of the entire collection of The Beatles' albums, which were relaunched in September.
The decision by Mr Allen to step down surprised the industry because he had only been appointed executive chairman in March, following the former chief executive Elio Leoni-Sceti quitting.
Along with Mr Faxon, Mr Allen is understood to have been instrumental in formulating the new strategy to focus on rights management. Yesterday, Mr Allen, who became EMI Music's non-executive chairman in 2008, said the investment by shareholders gives the group "a firm platform for future growth. This repositioning and restructuring will benefit our artists".
Terra Firma, the private equity firm of tycoon Guy Hands, acquired the music group in 2007 for £4.2bn after borrowing £3bn from the investment bank Citigroup.
But the debt mountain has weighed heavily on EMI and investors had to pump £105m into the music group on 14 June to avoid a default on its debt and Citigroup seizing control of the company. Earlier this year, it emerged that Terra Firma is suing Citigroup for allegedly pressuring it into acquiring EMI in 2007 by claiming a rival bidder was still in the frame. Citigroup refutes this claim in the lawsuit, which will be held in New York in October.
For the year to 31 March 2009, EMI's owner Maltby Capital delivered a £1.75bn pre-tax loss but its operational performance is thought to have improved since then.