Is it one wrong note too many for Eric Nicoli?

EMI: Meat pies and TBI; Vivendi/BSkyB

EMI has hit so many wrong notes over the last couple of years that it's a wonder its chairman, Eric Nicoli, hasn't long since been booed off stage. Two failed mergers followed by a calamitous profits warning might be thought enough to sink the most battle hardened of CEOs, yet even after yesterday's disastrous 35 per cent plunge in the share price, there appears no particular appetite in the City for Mr Nicoli's head on a platter. The prevailing mood among large investors was one of resignation; this is the sort of thing you have to expect from the unreliable world of rock and roll.

That said, the City definitely wasn't expecting yesterday's corker of an announcement. Recorded music, the company's main business, has actually lost money in the first half after a disastrous September in which sales seem to have fallen off a cliff, not just in the US, which is understandable, but in Latin America and elsewhere too.

Mr Nicoli has put in train a whole raft of restructuring measures and he's continuing to explore ways of exiting the physical side of EMI's business by selling its manufacturing and distribution activities. The net effect will be to cut £65m off annualised costs. This, he believes, will combine with a busy schedule of new releases from a number of the group's top artists to ensure that second-half operating profits equal those of last year. He'd be a fool actually to forecast such an outcome given the current economic uncertainty. This is just a target, you understand.

For a change, EMI benefits from its lack of exposure to the US, relative to the other music majors, but things are pretty dire elsewhere too, particularly in Latin America and the Far East. The key point, however, is whether Mr Nicoli is performing any worse than his peers, and although others have yet to release comparable figures and business plans, the answer appears to be a qualified no. EMI claims that there has been no loss of market share, and in terms of restructuring, the company appears to be doing most of the right things.

The two failed mergers, first with Warner Music and then with Bertelsmann Music Group, remain a source of considerable embarrassment to Mr Nicoli. It is all very well to argue, as he does, that it was worth testing regulators attitude to another merger between music majors. But the reality is that the monetary cost of this wild goose chase, which was considerable, is almost certainly dwarfed by the unquantifiable cost in management time and distraction. The negotiations went on for well over a year, which is a long time to have your eye off the ball, and is almost certainly reflected to some extent in the latest profits warning.

After yesterday's pummelling, the shares are so low that they have taken the company into the FTSE 100 danger zone and made it a potential target even for a bidder from outside the industry. Both Rupert Murdoch's News Corp and Michael Eisner's Disney were once keen to add a serious music player to their media rostrums, and it seems unlikely that the price of doing so is going to get much better than it is at EMI right now. But those grand ambitions belonged to an era of starry eyed multi-media expansion, and the mood has changed a lot since then. The City may be stuck with Mr Nicoli for quite a while yet.

Meat pies and TBI

The Regional airports operator TBI has come a long way since it was a gleam in the eye of the Welsh meat pie magnate Stanley Thomas. So have TBI's chief executive Keith Brooks and finance director Caroline Price, who were but humble beancounters in the Thomas empire until he decided to expand into aviation and property and they were given a business of their own to play with. Now, however, as Vinci's £517m bid for TBI vanishes over the horizon and the share price heads south at a rate of knots, the dynamic duo have surely reached the end of the runway.

TBI's management had failed to inspire much confidence even before the French came along offering 90p a share. Once the bid landed, their performance became a catalogue of errors. First, non-executive directors were allowed to deal in the shares a fortnight after Vinci's initial, though unpublicised, approach. Then, when the bid was formally announced, TBI's first reaction was to jump for the white knight defence, seriously undermining their argument as to why shareholders would be better off sticking with the existing management. Unguarded remarks by Mr Brooks subsequently produced a rap on the knuckles from the Takeover Panel before the offer document had even been sent out.

But his gravest mistake was to continue insisting that the offer undervalued TBI even after the terrorist attacks on America sent the aviation sector into freefall. TBI belatedly woke up to its blunder and frantically switched from opposing the bid as "cheapskate" to recommending it as "fair and reasonable". Too late, alas, to prevent Vinci walking away on a technicality.

Shareholders are left sitting on stock worth just half what Vinci was prepared to pay and don't know whether to laugh or cry. Mr Brooks really ought to be thanked and shown the door but the Cardiff business community has a way of looking after its own. Just think of Graham Hawker who was given the consolation prize of running the Welsh Development Agency after his disastrous performance in so nearly sending Hyder to the wall. Perhaps Mr Brooks will find himself back counting meat pies again.

Vivendi/BSkyB

When the European Commission allowed Vivendi to merge with Seagram's media interests, it imposed a token condition ­ that Vivendi should dispose of its 23.2 per cent stake in BSkyB by November next year. In the circumstances, Vivendi was thought to have got off lightly, but still its chairman, Jean-Marie Messier, was livid with anger and ever since he's been attempting to wriggle off the hook.

Unfortunately for him, the regulator's word is law, and frankly Vivendi in any case needs the money. So yesterday Mr Messier came up with a peculiarly Gallic solution to the problem. Deutsche Bank has agreed to lend Vivendi the market value of the stake ­ 4.2bn euros ­ for four years and in return holds the shares as collateral. However, Vivendi retains its financial interest in the stake, gaining the benefit if the shares go up and taking the pain if they go down. It also has the right to sell the shares at any point to any third party, and presumably take them back altogether at the end of the four-year period if by then regulators can be persuaded to change their minds.

It scarcely needs saying that this is an entirely cosmetic scheme which drives a coach and horses through the intentions of the European Commission. Mr Messier is none the less confident that he'll gain the Commission's stamp of approval. For BSkyB, the exercise at least removes the immediate threat of a forced sale of the stake on the market, an overhang which has been holding back the share price. But it doesn't remove it for ever, and this hardly looks like a satisfactory outcome for anyone other than Mr Messier. BSkyB insists it has no say in the matter and is just an innocent bystander. Since when was Rupert Murdoch, Sky's still hyper-active chairman, an innocent in anything?

j.warner@independent.co.uk