RouteNote Blog » citibank http://routenote.com/blog The World of Music Licensing and Distribution Thu, 09 Feb 2012 21:52:08 +0000 en hourly 1 http://wordpress.org/?v=3.1.2 EMI To Sell Abbey Road? http://routenote.com/blog/emi-to-sell-abbey-road/ http://routenote.com/blog/emi-to-sell-abbey-road/#comments Tue, 16 Feb 2010 15:54:14 +0000 Dashiel http://routenote.com/blog/?p=2832 abbey roadEMI (actually it’s parent the Gramophone Company) bought the house atNo. 3 Abbey Road in 1931, at the bargain price of £100,000 (around £20 million in today’s money) and turned it into a custom built studio complex capable of recording a full orchestra. The first of such being Sir Edward Elgar conducting the London Symphony Orchestra in recording sessions of his music. It is one of two that the company own, the other being Capitol Studios in L.A., and is most famous as the namesake of the Beatles album. Now it is being rumoured that EMI are considering the sale of the studio to help meet the financial targets imposed by the massive loan that their owners Terra Firma took out against the value of the company.

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]]> http://routenote.com/blog/emi-to-sell-abbey-road/feed/ 2 Hands on EMI http://routenote.com/blog/hands-on-emi/ http://routenote.com/blog/hands-on-emi/#comments Mon, 15 Feb 2010 13:20:42 +0000 Dashiel http://routenote.com/blog/?p=2807 Having admitted in the Financial Times that his investment in EMI has shed around £2 billion in value since the 2007 purchase, more information is being made public about the radical solutions that Terra Firma’s head has been considering – including splitting the company into it’s recorded music and publishing arms. This would have the effect of protecting the publishing arm in the event that EMI is unable to meet the financial requirements placed upon it by lender CitiGroup (with whom Terra Firma, EMI’s owner, is currently contending a lawsuit over whether or not they were lied to in the buying process). If the various stratagems that are being discussed can’t be enacted, and EMI fails to meet it’s responsibilities, then we will likely see the breakup of the massive record company into it’s constituent parts, or a merger into one of the other big 4 labels.

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]]> http://routenote.com/blog/hands-on-emi/feed/ 0 The Worm In the Apple – Terra Firma’s EMI Purchase looks Increasingly Sour http://routenote.com/blog/the-worm-in-the-apple-terra-firmas-emi-purchase-looks-increasingly-sour/ http://routenote.com/blog/the-worm-in-the-apple-terra-firmas-emi-purchase-looks-increasingly-sour/#comments Wed, 16 Dec 2009 15:40:51 +0000 Dashiel http://routenote.com/blog/?p=2369 As you may have read here on our blog Terra Firma are suing their advisors/lenders Citibank for perpetrating a fraud against them – essentially Terra are saying that Citibank mislead them about the amount of competition there was for the record label’s purchase, the benefit to Citibank being more than £92 million in fees and lending them £2.5 billion that they claim they didn’t need to borrow. The plot thickens when you realise that EMI was in a huge amount of debt to Citibank, among others and that it was in danger of defaulting on the debt if it wasn’t rescued by a purchaser. The specific accusation is that a Mr. David Wormsley, a Citi employee who was advising Terra Firma told a rather significant pork-pie in an attempt to prevent Terra from dropping out of the bidding for EMI, precipitating a ‘busted auction’ – something that would have massively decreased EMI’s stock price, and thus the value of Citi’s asset, as well as EMI’s ability to repay any value that was still outstanding in their loan from Citi.

These accusations may be coming from a party that is desperately trying to shore up a huge investment in a failing company (look at EMI’s previous 10-K’s for an idea of their year on year losses), but they are pretty frightening for the big 4 labels – file sharing may finally be on the wane, with big torrent trackers like Mininova and The Pirate Bay being forced to go legit, but costs at labels are still outstripping income, and copyrights on some of their biggest selling artists are going to begin running out over the decades to come: the first Beatles song will come out of copyright in the EU in 2012 (unless there’s a change in the law).

Apple, eMusic and some other download stores are breaking ground in making online music profitable, but there are indications that even iTunes market share is dropping – innovation is happening with streaming services like Spotify entering the fray with big-label backing, but the true form of digital music in the decades to come is as yet undecided. I wonder if EMI will be there to see the changes happen.

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]]> http://routenote.com/blog/the-worm-in-the-apple-terra-firmas-emi-purchase-looks-increasingly-sour/feed/ 3 EMI to be liquidated? http://routenote.com/blog/emi-to-be-liquidated/ http://routenote.com/blog/emi-to-be-liquidated/#comments Wed, 18 Nov 2009 17:42:22 +0000 Dashiel http://routenote.com/blog/?p=2132 EMI logoLike everyone else on Wall Street, and particularly in the music industry EMI is facing pressure from it’s creditors, and the outlook is not improved by the rejection of a recent proposal from Terra Firma (EMI’s owners) to pump £1 billion into the company, in return for Citibank (the sole major creditor to EMI) writing off a proportion of the £2.6 billion of the debt owed to it. Presumably this means that without a similarly radical solution, EMI is going to be facing issues maintaining liquidity or meeting it’s covenants (the agreements which govern the amount of debt it’s allowed by it’s creditors to operate with).

EMI 2009 ebitdaEven the upturn in their revenues, while encouraging, only represents a small percentage, and we’re not yet privy to their yearly report, which they’re holding off until after their talks with CitiBank have reached a workable conclusion. Looking at last year’s operating losses of -$258 million and a total loss (including things like amortisation and depreciation of assets) of -$757 million, the company is looking another thumping loss in the face, without much prospect of a return to the black side of the line in the short term (take a look at pg 33 of this report for the scary numbers).

Of course, as Digital Music News points out – there are more radical solutions to be considered: “One option is to simply liquidate”

As previously advised, Terra Firma has been in discussions with EMI’s lender. Until these discussions have come to a conclusion, it is not appropriate to publish an Annual Review of Maltby Capital for the 2009 financial year.

As already announced, EMI Music (the recorded music division) delivered a strong operational turnaround with EBITDA increasing from £51 million to £163 million for the year ended 31 March 2009.

EMI Music Publishing, the leading publisher of popular music, continued to deliver strong performance with EBITDA increasing from £112 million to £135 million for the year ended 31 March 2009. (via the EMI website)

[I'm not sure I agree that this upswing qualifies as a turnaround, in the face of their yearly losses overall...] If one of the big 4 were to fold under market pressure, what would happen to the rest of the industry? Collapse of the mega-label structure would surely spell anarchy in the music industry as a whole, but anarchy is good for change…

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