EMI plans jobs axe to revive profits

EMI Group Plc, the music company bought last year by private-equity financier Guy Hands, will cut as many as 2,000 jobs after a slump in music sales led to a record loss.

The revamp will help to cut costs by as much as 200 million pounds a year, EMI said in an e-mailed statement. Hands will cut between 1,500 and 2,000 out of EMI's 5,500 jobs.

"Guy Hands faces an enormous challenge," Anthony De Larrinaga, an SG Securities analyst in London who covered EMI in the past, said by phone. "EMI has been a laggard for quite some time and he needs to cut costs, expand the digital business, find new successful artists and identify the right market trends."

Some artists have protested Hands' overhaul efforts, including Robbie Williams, whose manager said last week the singer may withhold his next album.

The cutbacks focus on recorded music, which is less profitable than publishing. Hands wants to make more money from the back catalogue at EMI, the label of Norah Jones and the Beatles, by digitizing recordings.

Hands presented his plan to employees, performers and their managers yesterday at a cinema in London. EMI will reduce expenses by merging the sales and marketing units for its labels, which include Capitol, Parlophone, Blue Note and Virgin.

EMI's reductions come as music companies wrestle with a decline in global recorded music sales because of piracy and illegal downloading of songs over the Internet.

Almost a third of the albums sold worldwide are counterfeit, according to the International Federation of the Phonograph Industry. About 20 billion music files were downloaded illegally in 2006, the federation found.

EMI "has been struggling to respond to the challenges posed by a digital environment", Hands said in the statement. "We believe we have devised a new revolutionary structure for the group that will improve every area of the business."

Agencies

(China Daily 01/16/2008 page17)