The future of EMI, a decades-old music titan in the throes of survival mode, will be forged in the weeks to come. And to quote the firm's most bankable property: It's getting better all the time.
If the London-based conglomerate can get over the hump of an overdue debt payment and convince investors to buy into its five-year restructuring plan, all the doomsday predictions about the world's fourth-largest music company -- fueled by a recent exodus of major talent, including Paul McCartney -- will seem like so much hand-wringing.
The difference: EMI artists are killing right now, from Lady Antebellum to Slash, and the company's market share has increased while the competition has slipped.
On top of that, insiders say, the turnaround plans of Terra Firma -- the British equity giant that bought the company three years ago -- are finally paying dividends.
“For the last 18 months, the suits are all gone -- and EMI is now being run by music people,” a financial analyst who's been closely watching events at the label told TheWrap. “And they are doing a good job.”
Still in question: Is it good enough -- and in time -- to save the company that houses the catalog of the Beatles, Coldplay, Katy Perry and Kylie Minogue?
Terra Firma seems to think so.
EMI is facing major challenges on many fronts: a debt payment to Citigroup in arrears; two years of corporate financing chaos; and a catastrophic decline in music industry sales overall.
Despite all that, Terra Firma has asked for $200 million from its investors, less than half the amount that initially was expected, to service its debt payment to Citigroup.
And the stakes are high. If Citigroup doesn’t get the money, which covers loan payments missed in March, by June 11, it will effectively control the company. In 2007, Terra Firma paid $6.51 billion for the debt-heavy 79-year-old label, with a loan of $4 billion-plus from Citigroup and the rest in equity.
(Citigroup did not respond to TheWrap’s requests for comment. However, the consensus in the investment community is that it has no desire to be running a record label. If Terra Firma cannot raise the money, Citigroup likely would move to sell all of EMI -- or slice it up and auction off the properties.)
Given the rosy picture EMI can present to its investors, however, all of this seems unlikely.
While other labels like Universal and Warner have dropped overall, EMI’s U.S. market share, according to Nielsen Soundscan and based on first-quarter numbers, is up. Contacted by TheWrap, an EMI representative would say only: “This first quarter is up significantly."
In fact, the label’s market share gained almost three points in the last year, from 9.03 percent in 2009 to 11.59 percent in 2010.
Since its release in September, "The Beatles Remasters" has sold more than 13 million units. But this growth isn’t just Beatle bounce. With albums like former Guns N’ Roses guitarist Slash’s latest solo effort to Gorillaz’s “Plastic Beach” to country trio Lady Antebellum, EMI has been riding high in the charts in recent weeks.
