EMI, one of the big four label groups, has been sold to Citigroup. The group was sold by Terra Firma, an equity firm that had bought it in 2007 for $4.2 billion. The label group was acquired in a debt for equity swap, which reduces EMI’s debt from 3.4 billion Pounds to 1.2 billion Pounds, a 65% reduction. EMI CEO Roger Faxon called the move “an extremely positive step for the company,” and while an infusion of cash and reduction of debt can’t be seen as that negative, that doesn’t take away the fact that a major label group is now owned by a bank.
This is all conjecture, but I would think a bank has their eyes on the bottom line, and while EMI’s music publishing arm is doing well, the label side has been struggling, and it wouldn’t be out of the realm of impossibility for them to shutter or sell off some of the labels. According to sources, Citigroup had already been quietly asking around seeing if any parties might be interested in acquiring all or part of EMI. And the fact that Citigroup now owns EMI isn’t that big of a surprise, given that many in the industry thought that Terra Firma might have to give the group to the bank anyway as a result of not being able to keep up payments on the massive debt they had to pay off. Regardless, the statement Faxon made seems like the label is group is committed to its artists for the time being, so we’ll see what happens and remain cautiously optimistic that the EMI (which counts Virgin and Capitol among its labels) will stay as is for the time being.