Majors Move In On Chrysalis
EMI chief Guy Hands is reportedly bidding for Chrysalis, one of Britain’s last big independent music groups, with Sony ATV and Warner-Chappell also looking to throw their hats in the ring.
Hands, who three days earlier announced he was cutting the EMI workforce by a third, looks to be in the lead with what The Times described as an "audacious bid."
It comes on the back of the EMI cutting somewhere between 1,600 and 2,000 of its workforce and facing open revolt from acts at the top end of its roster, with several of the U.K.’s papers also reporting The Rolling Stones might be leaving EMI and signing with Universal.
Hands may have questioned whether the act would ever make another record.
Of more concern will be the fact that Radiohead has already departed and the managers of such acts as Robbie Williams and Coldplay have expressed their doubts about where Hands is taking the company.
The moves for Chrysalis, a publishing company that holds the rights to artists including Blondie, David Gray, The Raconteurs, Black Rebel Motorcycle Club, Billy Idol and Outkast, come a couple of months after co-founder and company chief Chris Wright said he was sitting on "a jewel of a business," although he was skeptical about the prospects of receiving an attractive offer in the present economic climate.
Hands’ no-nonsense, eye-on-the-bottom-line approach means he’s likely to have been attracted by the constant revenue stream music publishing brings, although not huge in this case, and a business model that produces at least some return from developing smaller acts such as My Morning Jacket, Ray LaMontagne, Roisin Murphy, Velvet Revolver, Nerina Pallot and The Dandy Warhols.
According to a Financial Times business analysis, EMI’s middle managers currently outnumber talent scouts by 19 to 1 and 30 percent of its artists have never produced an album.
The Times says the Chrysalis bids are being tabled at about £150 million, about three-quarters of the annual savings Hands hopes to make through his job cuts.
says the Chrysalis bids are being tabled at about £150 million, about three-quarters of the annual savings Hands hopes to make through his job cuts.
The paper also says Jefferies International, Chrysalis’s adviser, has received an indicative bid from Warner Chappell, the music publishing unit of Warner Music, and a third offer believed to have come from Sony ATV.
Along with the Times, several of the serious papers’ business pages are saying there is also interest from private equity firms including Saban Capital Group, GTCR Golder Rauner and Apollo Management, and other specialist music publishers including Primary Wave and Cherry Lane.
In the last five years Wright has hived off parts of the "mini-media conglomerate," which once had interests in records, television, books and radio.
Wright and Doug Ellis created it as a record company in 1969, apparently naming it after a fusion of Chris and Ellis, selling 50 percent to EMI in 1989 and the rest a couple of years later.
In November, Wright said he’d prefer to wait for a sale but may find it hard to convince his fellow investors that there will be an upturn in the music business in general, although the publishers own figures show that profits have risen from £2.3 million to £3 million – despite turnover falling seven percent to £35.1 million.
