US setback clouds pounds 500m EMI handout

Shares in EMI fell by 4 per cent yesterday as the music group disclosed that a streamlining of its North American music business would cost pounds 117m. The news overshadowed plans to return pounds 500m to shareholders.

Sir Colin Southgate, chairman, said the company had decided to cut costs to improve its position in the US. The process of restructuring EMI Music's North American division will result in roughly 35 job losses among senior management. The shares fell 49p to pounds 11.72.

Charles Koppelman, head of EMI Capitol, is to leave the company, and his role will be absorbed by Ken Berry, head of EMI Music International and Virgin Records. The head office of EMI Capitol in New York will be closed. Sir Colin blamed the cuts on a proliferation of retail outlets in the North American market.

Analysts said the announcement added fuel to the stock market's belief that EMI's strategy in the US was confused. One analyst said EMI should be making acquisitions in the US rather than rationalising its business.

The decision to return around pounds 500m to shareholders was seen by the City as a device to ward off bidders. Derek Terrington, media analyst at Teather & Greenwood, said the move was hard to rationalise as EMI was not an excessively cash-generative company. He added: "It's not as if they were paddling about in pools of money, so they're either looking quite a long way ahead or they're putting a prop under the share-price. "

Sir Colin said that authorisation to return 10 per cent of EMI's capital would be sought from shareholders at its annual meeting in July and implemented shortly afterwards.

Meanwhile Sir Colin attempted to quash press speculation that EMI had held merger talks with Seagram earlier this year, saying that he and Seagram's president, Edgar Bronfman Jnr, had not met since a social occasion last Autumn. He added that rumours that EMI was interested in buying Reed Books were also unfounded, but said that acquisitions in EMI's core area of catalogues and record labels were more plausible.

Pre-exceptional profit before tax was up 3.6 per cent to pounds 380.5m, in line with City expectations. EMI Music's "biggest success" was the Spice Girls, signed by Mr Berry when the group formed last year. Their debut album, Spice, sold 11.5m copies, contributing around two per cent of total group sales of pounds 3.39 billion. Sir Colin said he had no doubt there would be "some new material" this year.

EMI is also planning to repackage some of David Bowie's recordings after buying the world-wide distribution rights to his back catalogue earlier this month for $30m (pounds 18m).

Comment, page 21

Start your day with The Independent, sign up for daily news emails
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Evening Administrator

£8 per hour: Recruitment Genius: This Pension Specialist was established early...

Guru Careers: Executive Assistant / PA

£30 - 35k + Bonus & Benefits: Guru Careers: We are seeking an Executive Assist...

Ashdown Group: Graduate Application Support Analyst

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Reach Volunteering: External Finance Trustee Needed!

Voluntary post, reasonable expenses reimbursed: Reach Volunteering: Would you ...

Day In a Page

War with Isis: Iraq's government fights to win back Tikrit from militants - but then what?

Baghdad fights to win back Tikrit from Isis – but then what?

Patrick Cockburn reports from Kirkuk on a conflict which sectarianism has made intractable
Living with Alzheimer's: What is it really like to be diagnosed with early-onset dementia?

What is it like to live with Alzheimer's?

Depicting early-onset Alzheimer's, the film 'Still Alice' had a profound effect on Joy Watson, who lives with the illness. She tells Kate Hilpern how she's coped with the diagnosis
The Internet of Things: Meet the British salesman who gave real-world items a virtual life

Setting in motion the Internet of Things

British salesman Kevin Ashton gave real-world items a virtual life
Election 2015: Latest polling reveals Tories and Labour on course to win the same number of seats - with the SNP holding the balance of power

Election 2015: A dead heat between Mr Bean and Dick Dastardly!

Lord Ashcroft reveals latest polling – and which character voters associate with each leader
Audiences queue up for 'true stories told live' as cult competition The Moth goes global

Cult competition The Moth goes global

The non-profit 'slam storytelling' competition was founded in 1997 by the novelist George Dawes Green and has seen Malcolm Gladwell, Salman Rushdie and Molly Ringwald all take their turn at the mic
Pakistani women come out fighting: A hard-hitting play focuses on female Muslim boxers

Pakistani women come out fighting

Hard-hitting new play 'No Guts, No Heart, No Glory' focuses on female Muslim boxers
Leonora Carrington transcended her stolid background to become an avant garde star

Surreal deal: Leonora Carrington

The artist transcended her stolid background to become an avant garde star
LGBT History Month: Pupils discuss topics from Sappho to same-sex marriage

Education: LGBT History Month

Pupils have been discussing topics from Sappho to same-sex marriage
11 best gel eyeliners

Go bold this season: 11 best gel eyeliners

Use an ink pot eyeliner to go bold on the eyes with this season's feline flicked winged liner
Cricket World Cup 2015: Tournament runs riot to make the event more hit than miss...

Cricket World Cup runs riot to make the event more hit than miss...

The tournament has reached its halfway mark and scores of 300 and amazing catches abound. One thing never changes, though – everyone loves beating England
Katarina Johnson-Thompson: Heptathlete ready to jump at first major title

Katarina Johnson-Thompson: Ready to jump at first major title

After her 2014 was ruined by injury, 21-year-old Briton is leading pentathlete going into this week’s European Indoors. Now she intends to turn form into gold
Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

Climate change key in Syrian conflict

And it will trigger more war in future
How I outwitted the Gestapo

How I outwitted the Gestapo

My life as a Jew in wartime Berlin
The nation's favourite animal revealed

The nation's favourite animal revealed

Women like cuddly creatures whilst men like creepy-crawlies
Is this the way to get young people to vote?

Getting young people to vote

From #VOTESELFISH to Bite the Ballot