EMI

EMI

The EMI Group is a British music company comprising the major record company EMI Music – which operates several labels and is based in Kensington in London, England, United Kingdom – and EMI Music Publishing, based in New York. EMI Music is one of the "big four" record companies.

EMI has been owned by Terra Firma Capital Partners since August 2007. Terra Firma bought EMI for £3.2 billion after a dramatic decline in sales and the announcement that EMI had sustained a loss of £260 million in 2006/2007. At the same time, EMI's British market share dropped from 16% to 9%. Following the transition, several important artists walked out of EMI, including Radiohead. Paul McCartney left ahead of the takeover. The Rolling Stones have signed a one-album deal outside of their contract with EMI, which expired on February 2008. That group on July 2008 signed a new long term deal with Universal Music Group.

Guy Hands, CEO of Terra Firma Capital Partners, came to EMI with restructuring plans to cut 1500–2000 jobs to reduce costs by £200 million a year. In January 2008, EMI's UK chief executive Tony Wadsworth left the company after 25 years. The cuts take effect over the year 2008, and would affect up to a third of EMI's 5500 staff.

History

The Electric and Musical Industries Ltd formed in March 1931 from the merger of the UK Columbia Graphophone Company and the Gramophone Company, famous at the time for its record label "His Master's Voice". From its beginning, the company was involved in both the manufacture of recording and playback equipment and the provision of music to play on its machines.

Manufacturing

The company's gramophone manufacturing led to forty years of success with larger-scale electronics. Alan Blumlein, a skilled engineer employed by EMI, conducted a great deal of pioneering research into stereo sound recording. Blumlein was tragically killed in 1942 whilst conducting trials on an experimental H2S radar unit. During and after World War II, the EMI Laboratories in Hayes, Hillingdon developed radar equipment and guided missiles. The company later became involved in broadcasting equipment, notably providing the first television transmitter to the BBC. It also manufactured broadcast television cameras for British television production companies, mostly the BBC, although the commercial television ITV companies used them as well alongside cameras made by Pye and Marconi. Their most famous piece of broadcast television equipment was the EMI 2001 colour camera, which became the mainstay of both the BBC and several ITV companies in the 1970s and early 1980s.

In 1958 the EMIDEC 1100, Britain's first transistorised computer, was developed at Hayes under the leadership of Godfrey Hounsfield. In the early 1970s, Hounsfield developed the first CAT scanner, a device which revolutionised medical imaging. In 1973 EMI was awarded a prestigious Queen's Award for Technological Innovation for what was then called the EMI scanner, and in 1979 Hounsfield won the Nobel Prize for his accomplishment. After brief, but brilliant, success in the medical imaging field, EMI's manufacturing activities were sold off to other companies, notably Thorn (see Thorn EMI). Subsequently development and manufacturing activities were sold off to other companies and work moved to other towns such as Crawley and Wells.

Emihus Electronics, based in Glenrothes, Scotland, was owned 51% by Hughes Aircraft, of California, U.S.A., and 49% by EMI. It manufactured integrated circuits and, for a short period in the mid-1970s, made hand-held calculators under the Gemini name.

Music

Early in its life, the company established subsidiary operations in a number of other countries in the British Commonwealth, including India, Australia and New Zealand. EMI's Australian and New Zealand subsidiaries dominated the popular music industries in those countries from the 1920s until the 1960s, when other locally owned labels (such as Festival Records) began to challenge EMI's market near monopoly.

In 1931, the year the company was formed, it opened the legendary recording studios at Abbey Road, London. During the 1930s and 1940s, its roster of artists included Arturo Toscanini, Sir Edward Elgar, and Otto Klemperer, among many others. During this time EMI appointed its first A&R managers. These included George Martin, who later brought the Beatles into the EMI fold.

EMI released its first LPs in 1952 and its first stereophonic recordings in 1955 (first on reel-to-reel tape and then LPs, beginning in 1958).

In 1957, to replace the loss of its long-established licensing arrangements with RCA Victor and Columbia Records (Columbia USA cut its ties with EMI in 1951), EMI entered the American market by acquiring 96% of the stock of Capitol Records. From 1960 to 1995 their headquarters, "EMI House," was at 20 Manchester Square. The stairwell is on the cover of the Beatles' "Please Please Me" album.

Its classical artists were largely limited to the prestigious British orchestras, such as the Philharmonia Orchestra. During the LP era very few U.S. orchestras had EMI as their principal recording company; an exception was the Pittsburgh Symphony Band, particularly during the years of William Steinberg's leadership.

Under the management of Sir Joseph Lockwood during the late 1950s, 1960s and early 1970s, the company enjoyed huge success in the popular music field. The groups and solo artists signed to EMI and its subsidiary labels -- including Parlophone, HMV, Columbia Graphophone and Capitol Records -- made EMI the best-known and most successful recording company in the world at that time, with a roster that included scores of major pop acts of the period including the Beatles, the Beach Boys, the Hollies, Cilla Black and Pink Floyd.

By 1967 EMI converted HMV to an exclusively classical music label, shifting HMV's pop music roster to Columbia. In 1969, EMI established a new subsidiary label, Harvest Records, which signed groups in the emerging progressive rock genre, including Pink Floyd.

Electric & Musical Industries changed its name to EMI Ltd in 1971 and the subsidiary Gramophone Company became EMI Records Ltd in 1973. In 1972, EMI replaced the Columbia label with EMI Records. In February 1979, EMI Ltd acquired United Artists Records and with it Liberty Records.

In October 1979 THORN Electrical Industries merged with EMI Ltd to form Thorn EMI.

In 1989 Thorn EMI bought a 50% interest in Chrysalis Records, buying the outstanding 50% in 1991. In one of its highest-profile and most expensive acquisitions, Thorn EMI took over Richard Branson's Virgin Records in 1992.

On August 16, 1996, Thorn EMI shareholders voted in favour of demerger proposals. The resulting media company was known by the name EMI Group PLC.

Since the 1930s, Shanghai's Baak Doi had been published under the EMI label. Since then, EMI had also been the dominant label in the cantopop market in Hong Kong. EMI divested totally from the c-pop market between the years 2004-2006. After that, all Hong Kong music artists previously associated with EMI have had their music published by Gold Label, a concern unaffiliated with EMI and with which EMI does not hold any interest.

On 2 April 2007, EMI announced it would begin releasing its music in DRM-free formats. Initially they are rolling out in superior sounding high-bitrate AAC format via Apple's iTunes Store (under the iTunes Plus category) . The tracks will cost $1.29/€1.29/£0.99. Legacy tracks with FairPlay DRM will still be available for $0.99/€0.99/£0.79 - albeit with lower quality sound and DRM restrictions still in place. Users will be able to ‘upgrade’ the EMI tracks that they have already bought for $0.30/€0.30/£0.20. Albums are available at the same price as their lower quality, DRM counterparts. Music videos from EMI will also be DRM-free. The higher-quality, DRM-free files became available worldwide on iTunes on May 30, 2007, and are expected to show up on other music download services soon.

Since then Universal Records has also announced sales of DRM-free music (which they described as an experiment).

Pop star Robbie Williams signed a 6 album deal paying him over £80 million ($157 million), which was not only the biggest recording contract in British music history, but the second biggest in music history.

Legal issues

On December 15, 2005, Apple Records, the record label representing the Beatles, launched a suit against EMI for non-payment of royalties. The suit alleges that EMI have withheld $50 million from the record label. An EMI spokesman noted that audits of record label accounts are not unusual, confirming at least two hundred such audits have been performed, but that they rarely result in legal action. A legal settlement was announced on April 12, 2007. Terms were undisclosed.

EMI and Warner Music Group

In May 2006, EMI attempted to buy Warner Music Group, which would have reduced the world's four largest record companies (Big Four) to three; however, the bid was rejected.

Warner Music Group launched a Pac-Man defense, offering to buy EMI. EMI rejected the offer. Representatives from both sides are thought to be still having meetings and deciding if one company will buy the other, however the European Commission's decision to overturn a previous decision allowing a similar merger between Sony and BMG is likely to have raised issues as to the wisdom of pursuing such a move at this time.

By most measures, a merged company of EMI and WMG would be even bigger than Sony BMG. Concerns regarding the creation of a monopoly may mean WMG will not receive approval from the European Commission. However Impala, a large independent, non-profit trade association of indie music labels, has given the Warner Music its blessings to acquire EMI, the third-largest music group. In return, it is suggested that the newly merged company will take responsibility for:

  • providing specified funding for (but taking no equity participation in) the recently announced Merlin initiative, the new global digital rights licensing platform established by the independent music labels to represent the world’s independent music sector;
  • ensuring the divestiture of certain recorded music assets to reinforce the market power of the independent sector; and
  • pursuing various other behavioural commitments which have the aim of benefiting the recorded music market as a whole and, in particular, the independent music sector.

Terra Firma takeover

On May 21, 2007 the board of EMI Group publicly recommended to the shareholders a takeover bid by private equity firm Terra Firma Capital Partners valued at £3.2bn including debt. Dresdner Kleinwort acted as sole financial adviser and broker to Terra Firma. EMI's sales had declined dramatically in the recent months, making a loss of £260m in the past year. EMI's board of directors recommended the 265 pence per share offer from Terra Firma, however the deal needed to be approved by the firm's shareholders.

On June 14, 2006 EMI received an initial unsolicited alternative proposal from Warner Music to acquire all of the share capital of EMI for 315 pence per share in cash. The Board of EMI considered this proposal from Warner Music to be wholly unacceptable and unanimously rejected it.

The shares of EMI traded significantly higher than the offer price since the takeover offer, suggesting the takeover attempt would probably fail. Indeed, Terra Firma (Maltby) was only offered some 3% of the outstanding shares by 27 June 2007, while it wanted to acquire more than 90%. Terra Firma then extended the offer period by a week until July 4th 2007, but did not obtain a significant amount of shares. Terra Firma subsequently extended its desperate bid by a further week until July 12th 2007. The shares continued to trade significantly above the offer price as holders realised the value of the company is much higher than the offer proposed by the private equity group. Terra Firma got no significant amount of shares tendered until July 12th, and extended the offer by a further week until July 19th, still not giving up. Terra Firma has now reached a 90% acceptance level, which allows the firm to declare the offer wholly unconditional and issue 429 notices, meaning that the now minority shareholders in the company are forced to sell.

EMI Group plc was delisted from the London Stock Exchange on September 18, 2007. Terra Firma bought EMI for £3.2 billion after a dramatic decline in sales, and announcement that EMI had incurred a £260 million loss for 2006/2007. At the same time, EMI's British market share dropped from 16% to 9%. Following the transition, several important artists walked out of EMI.

EMI came with restructuring plans to cut 1500–2000 jobs to reduce costs by £200 million a year. The cuts would take effect over the year 2008, affecting up to a third of EMI's 5500 staff.

Labels under the EMI banner

See List of EMI labels.

Past and present EMI musicians

EMI has signed many popular artists from multiple genres, including:

EMI Music Publishing

As well as the well-known record label the group also holds EMI Music Publishing, which is the largest music publisher in the world. As is often the case in the music industry, the publishing arm and record label are very separate businesses.

See also

References

Further reading

  • International Directory of Company Histories, St. James Press.

External links

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