I don’t know if anyone here is a fan of the British mystery author, Agatha Christie, but her novel “And Then There Were None” certainly scared me to the bone as a kid. It took me several attempts to make it to the end of the book, and even then I had nightmares for days after. However, it was no surprise to me when every character in the book died. (and no, that’s not a spoiler; it says so right on the back of the book.)
In a dryly amusing twist, that book title and unsurprising ending is all too appropriate for what came to pass late last night.
And then there were none; as in, major record labels left in the United Kingdom. Formal announcements have been let out of the bag and Citigroup now controls England based EMI.
It’s hard to describe exactly how I feel about this. Or even if there’s a way one should feel, being an avid driver for keeping music from totally losing itself to corporate trends and mindless change. The fact of the matter is that EMI was already standing in hot water for quite some time now. Debt was flooding the label and just about a year ago, we were hearing same song and dance between EMI and Citigroup. The debt was so serious and floating around as fairly public knowledge, that EMI had to justify Katy Perry’s post-Grammy party by stating lack of expense to the company, thanks to sponsors Smasung and XBox. That’s pretty bad if you’re supposed to be the fourth largest music group in the world, don’t you agree?
Back then it was like this (who answers to who from the top down):
Citigroup’s £4.2 Billion loan
Guy Hands (British Fiancier)
Terra Firma Equity Company
Now don’t blink, because the hierarchy of control that led to yesterday’s power change involved a few more players.
Citigroup lends the £4.2 Bil. to Terra Firma Equity
Terra Firma Equity Group (controlled the interim holding company):
Maltby Investments Limited –> (which is the holding company) to:
Maltby Acquisitions Limited –> (which is the parent company) of:
Here’s where things are different from the 2009 threat:
1) Maltby Investments Limited had a breach of its loan facility with Citigroup.
2) Citigroup required immediate and full repayment of the £4.2 owed by Terra Firma, so:
3) Peter Spratt and Tony Lornas (of PwC,) were appointed Administrators yesterday, to MIL.
Maltby Acqusitions Ltd. gets sold to Citigroup….and voila, the end combination:
Citigroup (is now the parent company) of: EMI
If that’s not enough of a confusing organizational chart to follow, the funny thing about that whole shift in power is that EMI was like a passive spectator to its own sale. During that entire change of hands, no EMI figure was involved in any administrative action. Even more intriguing, is the breakdown of feelings vs. progress about all the change from the point of view of EMI’s CEO, other labels and even artists themselves.
Roger Faxon, the CEO of EMI expressed that he sees the change as an,
“extremely positive step for the company” and added, “It has given us one of the most robust balance sheets in the industry with a modest level of debt and substantial liquidity. With that solid footing, we are confident in our ability to drive our business forward.”
On one hand things are moving in a positive direction; at least with regard to EMI’s debt figure. It’s down from the current £3.4 to £1.2 billion because of Citigroup’s repossession. On the other hand, it’s a bit daunting to think of a big music player like EMI being possibly broken down into lots of smaller pieces and divided among multiple companies like some kind of kids candy sharing circle.
A figure affiliated with Citigroup explained that “[Citi] has already been in talks with all the relevant majors about selling off the various parts of the company.”
That hasn’t come to pass yet, which also means Warner and BMG haven’t gotten their hands on EMI’s recorded music branch, though the two are vying for it, which is another piece of deja vu with the threat back in 2009. Back then Terra Firma had suspected Citigroup was hoping to rapidly turnover what they thought was their imminent control of EMI, straight to Warner in a flip change.
And about the music…because that’s what we’re all here for, right? Faxon seems to believe that the changes are in the best interest of stability for the company and that
“The closer alliance between our two operating divisions is already delivering impressive results on behalf of the creative talent we are privileged to represent.”
Despite these words though, one is tempted to wonder how much should actually be deemed “impressive” and it will remain to be seen if Faxon’s assessment and description of the situation will convince EMI’s current and potential future artists. The debt and complicated nature of the relationship with Citigroup did previously cause unease that led to “several leading artists departing.” Only time will tell.
It’s a shame for the U.K. to find itself out of the circle of the Big Four. Britain is known for it’s rich pop-culture and music scene. To think of a U.K. with no major label is certainly disheartening. Who will control the Beatles next, I wonder? And on a final note of thought, one thing I’ve considered, with what’s transpired, is just how little artistic character and merit really have played into the action at all. No one artist is singled out and this isn’t about style or genre. Yes, controlling the Beatles’ catalog is a cause for major bragging rights, but really, the actual music is so far down on the reason for conflict. At least how I see it. Citigroup was concerned about its debt and who was/is ultimately going to answer for that. When it comes down to it, this series of events could cross the invisible boundaries of music style and artist image as easily as the common cold infects with a blind eye to any and every person with which it comes in contact. EMI works with plenty of pop-rock and mainstream contemporary acts, but honestly, plenty of classical artists are in the mix as well, and frankly, switch out one label name for another and this financial disruption could happen to the best of ’em.