Opinion and analysis of the day's music news.


How Much Could Terra Firma Be Awarded In Lawsuit?
-- The Wall Street Journal humorously downplays the impact of huge – but reduced – potential damages in Terra Firma’s lawsuit against Citigroup. Last week, the judge tossed one of the premises behind Terra Firma’s damages claim and Terra Firma withdrew another premise upon the judge’s request. Now, the maximum of damages Terra Firma could win is a mere $2 billion.

From the Wall Street Journal:
“The lowering of the possible damages means the best Terra Firma can do is recoup the roughly $2 billion it says it lost on the ill-fated investment in EMI, which has been buffeted both by diminished prospects for the music industry and an overly burdensome debt load.
If the possible damages are reduced further, or if Terra Firma loses the case, the fallout for the firm and Mr. Hands could be devastating, damaging both their standing with the banks private-equity firms depend on to finance their deals and making it harder for them to head off a possible default EMI faces on its roughly £3 billion ($4.8 billion) of debt early next year.”

The court determined the method used by a Terra Firma witness to calculate lost profits (an amount Terra Firma could have generated had it invested elsewhere) was “insufficiently reliable.” Terra Firma also withdrew the witness’s testimony on “locked in damages” of $3.2 billion.

A $2 billion victory could change the ball game – perhaps not entirely, but it could change the game. The chance of default on its Citigroup debt would be lower with such a sizeable cash infusion. Terra Firma and investors would basically recover their losses on the EMI investment. And it would give Terra Firma a lot of breathing room while it continued to overhaul and improve EMI. As for the damage Terra Firma is doing to its standing with banks, that bridge has already been crossed and one can safely assume Terra Firma believes the potential gain from the trial outweigh any risk to its reputation with banks.

Of course, there is no guarantee Terra Firma will win the case. If it does win, the damages could be well under $2 billion. And, as the Wall Street Journal pointed out, Terra Firma could face a backlash from investors. A decision is expected in a couple weeks. (Wall Street Journal, Billboard.biz)


Q&A With Country Network President Genovese
-- A Q&A with Tammy Genovese, president of The Country Network, a new country music television channel. Genovese is the former CEO of the Country Music Association. How can another music channel and set itself apart?

Genovese explains:
“When I roll out all the local opportunities that I can offer brand-new artists, we can build a buzz for an artist. We are playing brand new artists — and even before they get on country radio. If they're trying to launch an artist, I can partner with them on that in a local market where they really think that artist can have a huge opportunity, build a huge local fan base…

I can partner with a Hard Rock, a Cadillac Ranch, a Country Music Hall of Fame, or Hilton Hotels. I can provide programming to them and allow them to take that programming into their own facilities, turn that into a marketing and sponsorship opportunity for them. They can sell the advertising around it and make money with their partners.”

The Country Network started with 1 million homes in Alabama and extended into 25 markets through a deal with Sinclair Broadcasting in August. The network is currently being carried on digital multicast channels in ten of those markets (such as Minneapolis, St. Louis, Pittsburgh, Nashville and San Antonio).

The company expects to be in 25 million homes in the first quarter of 2011. The network shows country videos 24 hours a day and boasts a playlist deeper than those of its competitors in TV and radio. (The Tennessean)


Engaging Customers The Pandora Way
-- How can you tell when a company has a good product and a good relationship with its customers? When a “couple hundred” users gather on a Thursday evening in Hoboken, New Jersey, for a town hall meeting with Pandora founder Tim Westergren. He was in the area for the Advertising Age/Creativity IDEA Conference in Manhattan. AdAge hit the nail on the head:

“Pandora has fostered a devoted fan base by listening and responding to listeners -- real people answer 30,000 emails a month, and it has hosted more than 250 town hall forums…Fostering that kind of community paid off big time when Pandora called on listeners to lobby their Congressmen to enact the Internet Radio Equality Act.”

Not every company puts so much effort into engaging its customers – but more should at least give it a try. (Pandora blog)


U.S. Supreme Court To Hear Video Gaming Case
-- On Tuesday the U.S. Supreme Court will begin hearing oral arguments in Schwarzenegger v. EMA. The case pits a California law restricting the sale of violent video games against the video game industry’s First Amendment rights as well its argument the state lacks proof that such games have a negative impact on players. Games rated M (for mature audiences) make up about 17% of units sold, according to CNBC.

In an op-ed in the USA Today, James P. Steyer, CEO and founder of Common Sense Media, points to research that finds a link between video violence and aggression and asks for stronger parental controls. “We support the rights of developers to create games with whatever content they see fit — and we support the rights of adults to buy them. We simply believe that parents, not retailers, should decide which games are appropriate for their kids to purchase and play. That's exactly what the California law would ensure.”

A loss for the gaming industry could have a chilling effect elsewhere, says one analyst. “The idea that minors are dependent on retailers to acquire violent movies, videos or games seems naïve, in our view, and laws restricting access to content could spill over into the digital realm.” (CNBC, USA Today)