EMI CUT-BACKS

EMI could use some help. A lack of big hits — just as CD sales are falling off a cliff — has left its recorded music business out of tune. (Its sister publishing business, which licenses the use of tracks from a back catalogue that includes The Beatles, is still a massive money-spinner.) Lacklustre sales from artists like the British singer Robbie Williams meant revenues tumbled 16% in the year to last April to $3.4 billion. But is a former Goldman Sachs trader with no experience in the music business the man to make EMI sing?

You'd expect a private equity firm to find the excess fat in a company; and one that operates in the decadent music business ought to be easier than most. But ensuring that company has a long-term future is trickier. On that score, Hands has a decent back catalogue. First with Japanese bank Nomura, and more recently at Terra Firma, the 48-year-old boosted the fortunes of a slew of companies, from a waste-recycling group to a chain of pubs.

But taking on EMI is a different proposition altogether. Private equity firms, unlike the stars on EMI's books, prefer to toil in, well, private, dissecting a business well away from the glare of the media. Way before Hands took an axe to EMI's payroll, Terra Firma's management of the business was caught in the spotlights. Worried that Hands wouldn't know his A&R from his R&B, alt-rockers Radiohead severed ties with the label shortly after it was sold to the private equity firm, and took the radical step of allowing fans to download and name their own price for the band's album In Rainbows. Others let their music do the talking. Robbie Williams, who bagged a $130 million record deal with EMI in 2002, has threatened to withhold his next CD, fearing the firm won't be able to market and promote it. "All we know," Williams' manager Tim Clark told The Times of London this week, "is they are going to decimate their staff."

And by shedding more than a third of its workforce, EMI didn't allay Clark's fears. But with only a few hundred of its 4,800 staff deployed in A&R — the business of scouting for and developing artists — Hands's plan to make it more central to EMI seems sensible. But it's also obvious. And by trailing something you'd expect to already be an aim of record companies everywhere, Hands has drawn suspicion. "Here's a business person trying to turn [EMI] into a more creative company," says Dave Allen, bass player with British post-punk band Gang of Four, a former EMI charge. "In my mind, it's smoke and mirrors.

Read the entire article@ http://www.time.com