Major Labels

EMI Loses Another $802 Million, More Trouble Ahead

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UPDATED) In its report to investors this morning, EMI detailed a net loss of £512 or US $802 million. The company also wrote off another £602 million ($943M USD) in 2009-2010 and despite a recent round of refinancing still has £3 billion ($4.7B USD) in outstanding debt.

Just in case investors think that things can't get much worse, EMI also forecast that it may need another cash infusion as early as next year and that it will fall short of its banking covenants (the financial requirement of its lenders) every year until at least 2015. “EMI Music continued to be challenged by the overall decline in physical sales, which has not yet been fully offset by growth in digital sales.”

iTunes' Domination plus EMI Puts Postive Spin On Numbers

“The substantial dependence on a limited number of online music stores, in particular the iTunes Store, for the online sale of music recordings, and the resultant significant influence that they can exert over the pricing structure for online music stores,” created a growing risk to future profitability according to the report.

The good news? Sales from recorded music were up 6.5% from the previous year and music publishing sales were up 2.1%.

Here's the EMI press release putting a postive spin on the same numbers:


(London, 18 August 2010): Maltby Capital Ltd, the parent company of EMI, has today published EMI’s annual review for the year ended March 31st 2010.


  • EBITDA before restructuring up 14% to £334 million (5.5% at constant currency)
  • Operating cashflow up 55% to £250 million
  • Revenues up to £1.65 billion
  • Operating pre-tax profit* reaches £121 million (2009: £7 million)
  • Both EMI Music and EMI Music Publishing contribute to improvement in operating performance
  • Net loss (after restructuring costs and fair value adjustments) reduced by two thirds to £512 million

*after restructuring costs but before accounting impairment charges on goodwill and intangible assets

The review shows a significantly improved financial performance for the business with both divisions contributing to gains in revenue and EBITDA despite the continuing challenges in both the music industry and the wider economy.

The improved performance is the result of the significant restructuring of the business in the past two years combined with a number of notable commercial and creative successes.

Stephen Alexander, Chairman of Maltby Capital Ltd, said: “This report shows the very real operational progress that EMI has made in the past three years, in the face of the serious challenges faced by the music industry and the wider economy.

“The year was characterised by creative and commercial achievement in both divisions. EMI Music had particular success with the release of the remastered Beatles catalogue, which has sold more than 13 million albums to date, as well as strong sales from newer artists such as Katy Perry and Lady Antebellum. EMI Music Publishing has again been named publisher of the year in both the US and the UK, and the business is creating valuable new revenue streams on behalf of its unmatched roster of writers.”

Roger Faxon, CEO of EMI Group, said: “There is a clear opportunity ahead for EMI as a whole to develop a structure and approach that recognises the realities of the music environment, and that truly delivers success for the creative talent that the company is privileged to represent. The operating performance we delivered in the year under review gives us a strong platform, and I’m looking forward to working with our great staff and artists to develop the business further.”

Read the full report here.

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