Terra Firma Writes Off $1.7 Billion In EMI Investment
IS THAT LOW ENOUGH?
EMI owner Terra Firma has written off half of its €2.6B ($3.3B US) investment in the music group. The "impairment" shows that the private equity firm and its head Guy Hands believe that they have little chance of ever recovering their investment. Many other equity firms are alslo devaluing investments at a time when the global economy shows no signs of a turnaround.
But further write offs may be neccessary. By comparison, Media Memo points out that Warner Music Group stock has fallen 86% to a mere $1.86 cents a share since August 2007 when Terra Firma beat WMG to purchase EMI.
EMI EARNINGS RISE AS A&R TAKES BACK SEAT
Thanks to agressive cost cutting, EMI's earnings for the last 9 months of 2008 rose from £12M to £104M before interest, tax, depreciation and amortization. Earnings in the music publishing division increased from £81M to £91M.
But apparently artist development, the lifeblood of most record labels, is not at the core of the EMI turnaround strategy. In a hint of things to come, Terra Firma said in its gloomy annual report that EMI would be even "more selective" in its signings.
Just because they have decided to be more selective does not mean they won’t be developing great artists.
That conclusion is a quite a leap and has as it’s foundation the failed idea that an increased number of signings will lead to an increased number of hits.
Have we not yet learned that gathering tons of shit to throw at the wall and see which sticks is epic fail?
On the other hand, just because they are being more selective doesn’t mean they will make great selections.
There is no conclusion to be drawn here. The AnR weren’t getting the job done signing everyone and there’s certainly no guarantee that the suits will do a better job signing 3 acts a year.
brendan b brown
wheatus.com