Although a few of its major acts are in open revolt over the way new owners Terra Firma are running EMI, Guy Hands’ private equity group intends to cut one-third of the music company’s workforce in a bid to save £200 million a year.
The cuts, which were announced January 15, leave between 1,600 and 2,000 of EMI’s 5,500 worldwide employees facing redundancy.
Four days before the cuts were announced, Robbie Williams co-manager Tim Clark told The Times that he wasn’t keen for his artist to put out another album through the struggling U.K. major.
"The question is, ‘Should Robbie deliver the new album he is due to release to EMI?’ We have to say the answer is ‘No.’ We have no idea how EMI will market and promote the album," he explained.
"They do not have anyone in the digital sphere capable of doing the job required. All we know is they are going to decimate their staff."
Jazz Summers, who represents The Verve and Snow Patrol and is chair of the U.K. Music Managers Forum, told the Daily Telegraph he was going to ask Hands to give him some assurances about the company’s future.
"Why would we deliver a record when EMI is cutting back on the marketing and is in financial difficulty?" he said.
Summers was reportedly leading a delegation of managers to meet with Hands within hours of the cuts being announced.
He was said to be angered by suggestions that Hands wants EMI to cut back on advances paid to artists.
"He has got not a clue of what this business is about. You only have big advances because you are not getting any royalties," he told the Telegraph.
Coldplay’s manager David Holmes told the Times that the band was considering its options after EMI’s head of music Tony Wadsworth left after more than 25 years at the company.
Wadsworth, chairman and chief executive of EMI Music U.K. and Ireland, was known as the "artists’ ally."
Clarke said he’d discussed Williams’ future with Hands but said the financier was acting like a "plantation owner" who had stumbled into the record industry via a "vanity purchase."
"While Mr. Hands’ no-nonsense, eye-on-the-bottom-line approach worked in aircraft leasing, pubs and waste treatment, it may find its nemesis in the music industry," was a Financial Times business analyst’s view of Terra Firma’s tactics.
However, the analyst also pointed out the absurdity of a company where middle managers outnumber talent scouts by 19 to 1, 30 percent of the artists have never produced an album, and £25 million per year is spent on scrapping unsold CDs.
Although the cuts were announced on the morning of January 15 via a presentation at the Odeon cinema in London, most of the major dailies had already revealed that Hands plans to reduce expenses by merging the music labels that run individual sales and marketing units.
According to FT, Pat O’Driscoll – the former Northern Foods chief exec – has been put in charge of the process of deciding what skills the newly structured company needs and whether they exist in-house or need to be brought in.
As much of half of EMI’s staff will have to convince O’Driscoll they have what Hands describes as the skills, the ethical approach, the determination and the passion to do the job.
"We want the organisation to be fully in place by the end of June. The faster you get through the process of change, the better," she told the financial daily.
All the non-A&R functions, from marketing and promotion to manufacturing agreements and digital strategy, have been placed in a new "music services" division under the eye of Mike Clasper, the former BAA chief exec.
"We are taking a business that is global that has only acted local and making it act globally," he told the FT.
A BBC Radio Five reporter who took a straw poll of EMI staff leaving the cinema after Hands’ address reported that most were resigned to what was happening because it was obvious that falling CD sales had put the company in a real crisis.