EMI Group plc has announced a major restructuring in an attempt to cut costs. The plan includes cutting 1,500 staff, dropping 20% of its artist roster, and exiting from disc manufacturing in Europe an
EMI Group plc has announced a major restructuring in an attempt to cut costs. The plan includes cutting 1,500 staff, dropping 20% of its artist roster, and exiting from disc manufacturing in Europe and the United States.
The London-based major says it expects the restructuring to yield annual savings of at least £50 million ($92 million).
Shares in EMI were up 7% in morning trading on the London stock exchange. More than 20 million shares changed hands in the first three hours, compared to a typical full-day trading of 16.6 million.
"The actions announced today represent another major step forward," says EMI Group chairman Eric Nicoli in a statement. "EMI will continue to be an agile and progressive music content company that fully embraces and profits from changes in technology and consumer trends."
The Recorded Music division will take the brunt of the job cuts, with an estimated 20% culled from its worldwide head count. EMI Recorded Music Continental Europe president Emmanuel de Buretel is understood to be among the executive casualties. About 900 cuts are related to the outsourcing of manufacturing.
Roster cuts will affect largely "niche and under-performing artists," says EMI. The dropped artists represent "a low single digit percentage" of EMI's total music volume, it adds.
In various smaller markets, marketing will be consolidated through a single department. This new structure, says EMI, will focus the best marketing executives on servicing the releases from both Capitol and Virgin.
In a move to improve its repertoire management, several smaller niche labels will be combined into larger label groups. In the United States, new age label Higher Octave is to be merged with Narada, and the Christian music labels Sparrow and Forefront are to become one label group.
EMI will transfer its CD and DVD manufacturing functions in Uden, the Netherlands, to local manufacturer MediaMotion. Its American manufacturing plant in Jacksonville, Illinois will be shuttered and manufacturing outsourced to Cinram.
The company said it would take a one-off charge of £75 million ($137 million) and a non-cash charge of around £80 million ($146 million) , related to writedowns and costs incurred through the downscaling of its artist roster. These costs will be incorporated into EMI's accounts for the financial year ending March 31, 2004.
"The time is right to further reposition EMI Music," says EMI Music chairman/CEO Alain Levy in a statement. "Exiting manufacturing in our two primary regions of Europe and the United States will allow us to lower our costs while flexibly meeting our supply needs in the future. These additional steps will more closely align us with the evolution we are seeing in our markets.
"We believe that by concentrating our efforts on a tightened roster of artists we will increase our revenue-generating potential while reducing our costs, even as we continue to invest in artists worldwide and in developing our digital capabilities."
At the same time, EMI says recorded music sales in the year to March 31 held close to the previous year's level, with "another solid performance" from its Music Publishing division. Preliminary results will be announced May 24.