ROGER’S LAST MEMO

It has been almost eleven months since Citi reached an agreement to sell EMI Music to Universal Music Group. From that moment to this, even as we worked tirelessly to help UMG reach the finish line, we have never wavered in our dedication to help our artists achieve their dreams.

That dedication has continued to fuel our success, and there is no greater evidence of that than our August results, which I have to say were simply great. And as of this moment it looks like we are set to do even better in September and bring the half year in well above budget!

While that is as good a reason to write you as any that I could think of, the actual reason I am doing so is that today we reached a milestone in our journey to new ownership. After many months of consideration, the European Commission has finally given its approval to the sale. With that approval and the imminent clearance in America, as well as those already received from other regulators around the world, UMG has cleared the final hurdle in its quest to become the owner of EMI Music.

So, we are now ready to close this chapter in the history of EMI. It now seems all but certain that in a week's time, on September 28th, UMG will finally take control of this great and historic business.

However as all of you know, to secure the approval of the transaction by the European Commission, UMG has committed to sell a substantial portion of our European business along with several of their own businesses. As a result, while in the coming days many of you will move on to become a part of UMG, others who are a part of the businesses that are to be sold will have to wait a while longer to know who will be the long-term owner of their businesses.

So what can each of you expect when the sale completes? For most everyone, certainly for some time to come, very little will change. As you have often heard me say, it will be pretty much business as usual.

But of course the sale and the further divestiture will affect the way we are organized and over time how we work.

The first step for those parts of the business that will be retained by Universal will be to change the reporting lines to connect each of our businesses into the UMG structure. It is UMG's aim to be sure that these lines of authority are understood by the affected executives even before they take control so all will move smoothly following completion.

Clearly it is UMG's aim to see the two businesses move closer together.

We will no longer be competitors, rather we will be working together to achieve a set of shared goals and objectives. To underpin that, a principle focus of the coming transition will be to unify systems and processes. Since that always takes time to accomplish, do not expect any great moves on day one.

On the other hand, the businesses that will be sold, as required by the agreement with the European Commission, will not be a part of the UMG structure. They will be brought together as a separate unit, managed independent of Universal. They will report to someone appropriately called the “hold separate manager.” His role is to be sure that these businesses continue to be a strong and competitive force on the market, through and beyond the point at which they are sold. He will report to a Trustee whose duty is to assure that the intent of the agreement with the Commission is met. In the next few days Lucian [Grainge] will be announcing who will be taking up this role and I am sure that everyone affected will be as pleased as I am about his choice.

I know this all sounds a bit complicated, but if you think about it this new unit is just a more concentrated version of the existing Europe+ Hub. It will draw on the resources of the central functions in the same way. And it will continue to participate in the MEA system, so repertoire will move freely under the existing intercompany terms.

So for some time to come it will indeed be business as usual.

However it goes without saying, that once they have a new owner they will move on and out of our system taking their repertoire with them. Though even then, it is likely there will be a further period of handover and transition.

With the completion of the sale on the 28th, it will be the time for [EMI Group COO Ruth Prior] and me to step aside from the business.

For those of you who are to be a part of UMG, you should look to Lucian and his team for leadership. They fought hard for the right to lead you, and I am sure that they will be a proud and committed steward of EMI and its heritage. I know that in the coming days Lucian looks forward to sharing with each of you his plans and aspirations for the future of the combined business.

For those of you whose business remains on the journey to its ultimate ownership, I am certain that you will be well guided and led in these coming months as the search for a new home continues.

No matter which direction our lives take us in the future, all of us will forever be a part of the EMI family.

We have accomplished so much together, broken new ground, learned so much from each other, built lasting friendships and had a lot of fun along the way. Our dedication to our artists and our commitment to doing the right thing on their behalf has enriched us, and changed their lives—and those of millions of music fans around the world—forever. That is the legacy all of us carry with us, as we move on to the next chapter in our lives.

I know I can speak for Ruth as well as myself that it has been both an honor and a privilege for us to have led EMI. You have made us proud.

We wish you all the very best—you deserve it.

Roger