Outlook: Lost opportunity for a British multi-media giant

TWO months ago, this column wrote that unless Sir Colin Southgate, chairman of EMI, pulled his socks up, he and his company were toast. It has taken longer than might have been expected, but finally the first bid has rolled in. Thanks to EMI's internal e-mail system, we even know who it is and what the price might be. The company apparently informed UK employees yesterday that it was Ed Bronfman's Seagram and that he was bidding 580p a share. Since the Stock Exchange was told only that an approach had been received from an unnamed party, this seems to be one of those rare instances of the staff knowing what's going on before the outside world.

But then this is the music business and they do like to play jokes, don't they. Hoax or not, the e-mail is an entirely believable one. Mr Bronfman is everyone's odds-on favourite, but his must surely be only the opening shot, bound to be followed in swift order by others. EMI is the only big international music company which it is remotely possible to bid for. Of the other major players, Sony and Time Warner are too big and diversified, Bertelsmann is privately owned, and Polygram is controlled by Phillips. This gives EMI a rarity value which ought to ensure a fierce and hotly contested auction.

Bertelsmann has sought Sir Colin Southgate's hand once before, but in the end the merger proposed was so teutonic in structure that the EMI board had little difficulty in dismissing the approach before putting it to shareholders. In any case, competition issues, and the fact that Bertelsmann has just bought Random House for cash, may keep the Germans on the sidelines this time round. Competition difficulties will be a big stumbling block for the rest of the big five too, but don't rule them out.

Meanwhile there are a host of powerful media players trying, in this multi-media world, to gain a foothold in the music business. Despite its best endeavours, Disney has thus far failed to grow a serious presence in the industry. The strategy here is to mirror Sony and Time Warner, which combine film and music product and distribution. Then there are the straight media distributors, such as Viacom. The list of possible suitors is almost endless, as well as almost wholly foreign.

How did it come to this - that Britain's leading music company should be auctioned off in this unseemly fashion in the showrooms of New York? The blame, if that is the right word, lies mainly with Sir Colin. In his pursuit of shareholder value, Sir Colin sold or demerged all around him until he was left with a pure music company which would obviously be attractive to bidders. No one can fault him for that. The problem is that since demerging from Thorn, EMI has been allowed to drift. As a symptom of that drift, there have also been some high profile management ructions, culminating in Sir Colin's failure to get his preferred successor, "Lucky" Jim Fifield, ratified by the board. To shareholders, the company has looked all at sea.

What's about to happen to EMI is a shame. In this company there was a chance to build a major British based multi-media company encompassing music, publishing and film. That chance seems to have been squandered.