As I was reading through my RSS Feeds today, I found an article the caught my interest: Indie bosses and experts react to Citigroup’s EMI takeover. This takeover occurred Tuesday, February 1. I researched an article by Billboard.biz to gain background information on the buyout. Basically, Guy Hand, who owns Terra Firma private equity group, bought EMI in 2007 for 4 billion pounds. The debt due to Citigroup (3.4 billion pounds), could not be provided by EMI. So, Citigroup gave them an alternative, “debt-for-equity swap.” This deal decreased the debt by 65%, bringing it down to 1.2 billion pounds with approximately 300 million pounds available in cash. (Billboard Staff, 2011).

So now a bank owns a record label, what’s going to happen? EMI has signed artists such as Lily Allen, Beastie Boys, Lady Antebellum, Katy Perry, Snoop Dogg, and Thirty Seconds To Mars (EMI, 2011). There has been an array of reactions from influential people in the music industry. Alan McGee, former owner of Creation Records commented that, “The problem with Guy Hands buying EMI was that he bought it in 2007, at the height of the market. It’s like buying a house at the wrong time, obviously you’re going to lose money when the market dips” (NME, 2011). Peter Quicke, CEO of Ninja Tune label, felt that “EMI handled the last 10 years of the recession badly” (NME, 2011).

Another speculation, Ben Cardew the news editor of MusicWeek noted, was that Citigroup might break up the company (NME, 2011). Yet nobody can tell for sure what will happen to EMI. A question that came to me, Bob Lefsetz a music industry analyst, commented on: what would happen to the artists? Lefsetz believes that “new acts will be stranded,” but artists who are now involved in the industry will be fine. “If you’re developing, you’re screwed,” Lefsetz said (NME, 2011). Only time can tell what will happen to EMI and the artists it supports.

Resources:

http://www.nme.com/news/various-artists/54801

http://www.billboard.biz/bbbiz/industry/record-labels/citigroup-takes-over-emi-1005017112.story

http://www.emimusic.com/about/history/