In this first post from new MIDEM(Net) Blog contributor Phil Hardy, the editor and publisher of theview takes a long, hard look at EMI…
Here’s three events. Can the dots be connected?
Item One is from Digital Music News:
“Guy Hands, Terra Firma, and Citigroup are sitting on a toxic asset, one whose debt payments and financial liabilities are monstrous. That demands resolution, and potentially paves the way for a WMG acquisition”. Never shy to suggest an alternative, Digital Music News also repeated the rumour of a possible sale of EMI Music Publishing – the diamond in the (slightly lacklustre) EMI crown – to the new Bertelsmann-KKR joint venture. WMG shares rose on news of the return of the possibility that it might be looking at EMI again (and again).
Item Two is an account of a recent speech by Guy Hands at the recent Private Equity Analyst Conference in New York:
Hands, the chairman and chief investment officer of Terra Firma, was emphatic about the role that luck and timing play in the success of investments. As an example, he pointed out recording company EMI. This has been a difficult investment for Terra Firma, which is currently negotiating with the company’s lenders on a debt restructuring.
Hands said he doesn’t know if the outcome of those talks will be one that allows the firm to retain its equity, but that “there is the desire of all parties” to find a win-win solution. Hands said mistiming played a big role in Terra Firma’s purchase of EMI, and that if the company had been auctioned even a little bit later, the firm wouldn’t have done the deal.
Item Three is an EMI press release concerning the release of the re-mastered Beatles catalogue:
THE BEATLES BREAK CHART RECORDS AROUND THE WORLD WITH 9-9-09 DEBUT OF RE-MASTERED CATALOGUE CDs
More than 2.25m albums sold in first five days in North America, UK, and Japan
LONDON, ENGLAND – 22 SEPTEMBER 2009 – Underlining their timeless appeal and unique status in music, The Beatles have broken multiple chart records around the world following the 9 September 2009 (9-9-09) CD release of their digitally re-mastered catalogue. In the major music markets of North America, Japan and the UK, consumers purchased more than 2.25m copies of The Beatles’ re-mastered albums, individually and in two multiple-CD boxed sets, one in stereo and one in mono, during the first five days of release (excluding non-traditional retail outlets whose sales are not tracked by the chart compilers).
The Beatles’ original UK studio albums were re-mastered by a dedicated team of engineers at Abbey Road Studios in London over a four year period, carefully maintaining the authenticity and integrity of the original analogue recordings. The result is the highest fidelity the catalogue has seen since its original release.
The most popular band of the 20th century, The Beatles are beloved by music fans in the 21st century, as evidenced by their current unparalleled global chart performance:
· US: During the first five days of release, consumers purchased more than one million copies of re-mastered Beatles titles, and the individual albums and boxed sets debuted strongly across multiple Billboard charts. On Billboard’s Comprehensive Albums chart, which lists the most popular album releases in the US, including current and catalogue titles, The Beatles set a new record for the most simultaneous titles by a single artist (18), including five of the top 10 and nine of the top 20. On the Pop Catalog chart, The Beatles achieved another new Billboard chart first for the most simultaneous titles in the top 50 (16), a record they previously set themselves with 12 titles in December 1995. The Beatles have nine of the chart’s top 10 titles, and all 14 re-mastered CDs are in the top 20, led by ‘Abbey Road’ at number one, 40 years after its original release in 1969, and ‘Sgt. Pepper’s Lonely Hearts Club Band’ at number two. On the Billboard Top 200 Albums chart, ‘The Beatles’ stereo boxed set debuted at number 15, and ‘The Beatles in Mono’ limited edition boxed set debuted at number 40.
· UK: In last week’s chart The Beatles had four titles in the top 10, seven in the top 40 and 16 in the top 75, including both the stereo and mono boxed, as well as 2000’s ‘Beatles 1’ compilation. This set a new record for the most simultaneous albums in the UK charts according to the UK Official Charts Company. In this week’s UK chart The Beatles have 13 albums in the top 75. A further 84,000 CDs were sold last week, bringing their total sales of the re-masters to over 354,000 in 11 days and their total UK sales this decade to 6,755,000.
· Japan: All 14 re-mastered titles and boxed sets debuted in the top 25 of the international chart, including seven of the top 10, led by the stereo boxed set at number two, the mono boxed set at number three, ‘Abbey Road’ at four and ‘Let It Be’ at six. Across all titles and boxed sets, more than 840,000 albums were purchased by consumers in Japan in the first three days of sales.
(The full press release, which covers sales in a further 17 countries, is available at the EMI website.)
Just start to think…. If WMG had bought EMI there’d be less debt, or at worst far less debt and the Beatles and EMI’s new owners would have benefitted from the re-issue programme. Separately, EMI Music Publishing would have either become the absolute largest music publisher in the world, or large bits of it would have been required to be sold off by the regulatory bodies.
But who knows. What is clear is that the EMI saga has a long time to run.