EMI’s new owners back their firm favourites

After years of failing to pull off a mega-merger, EMI has found itself bought
up, with chief executive Eric Nicoli and FD Martin Stewart stepping down as a

New owner Terra Firma has come on board with a swathe of executives,
including COO and CFO Chris Roling.

Roling, who has only served with Terra Firma for a few months, according to
reports, now has to help turn around a company that operates in an industry
facing major concerns about how to make money out of music.

What’s happened…
EMI has faced years of missing out on merger deals. Back in 2000, the music
producer was lined up to link with Time Warner at the time of its own AOL
transaction. But pressure from the European Commission over the creation of a
musical superpower was believed to have led to the EMI deal collapsing.

The company went through a series of board changes in 2002 as part of an
attempt to cut costs, but even with its impressive back catalogue including The
Beatles, Kylie and Robbie Williams, music file-sharing over the internet eroded
sales figures.

A prospective takeover by former executive Jim Fifield, understood to be
advised by PricewaterhouseCoopers, never materialised.

The group’s latest results, a £264m loss compared to a £118m profit a year
earlier, was the final straw. Along with the results announcement it revealed
Terra Firma’s successful bid for control for 265p per share ­ significantly less
than bids for EMI by Warner Music and Permira last year.

Along with Nicoli, CFO Stewart lost his job, although Stewart has his role as
chair of the audit committee for 2012 Olympics organiser LOCOG to look forward
to, along with a £1m payoff.

What’s going to happen…
A new supervisory board has been formed, with Terra Firma’s boss Guy Hands as
its chair. The move reportedly leaves Roling as effective chief of EMI.

Roling, who has worked at ICI and photo library Getty Images, might well
expect to live the high life in his new role.

But it seems that his appointment, as someone with no experience of the music
industry, is an attempt to have business people in charge that will not ‘live it
And he has plenty to keep him busy. Allegedly Hands has emailed management to
tell them to prepare a business plan for the company by October.

‘The initial focus will be to maximise the value of the significant assets in
EMI’s publishing business and to realise the digital opportunity in recorded
music,’ said Hands.

Of immediate concern will be persuading its artists that EMI is still the
place to
make music, while making money from digital music.

Related reading