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EDEL TO SHUTTER N.A. LABEL OPS
And After We Install Those New Shutters, Well Start To Work On The Window Boxes
On the heels of losing the distribution rights to one of its top earners in Roadrunner Records, comes word that financially troubled Edel Music will be closing its North American label operations in the near future.

Sources said the German indie is so strapped for cash that it will shut down its recently launched record company Edel Entertainment in North America. Its publishing unit, Deston Songs, and its RED distribution company will not be included in Edels latest cost-cutting move.

Edel is currently trying to sell RED but isnt having much luck finding a buyer. The Hamburg, Germany-based European indie acquired an 80% stake in RED Distribution from Sony last year for a reported $75 million. At the time, many insiders gauged REDs worth more in the $15 million range. Sources said Edel also put up more than $30 million to back Deston Songs, the publishing unit launched by Desmond Child, Winston Simone and David Simone.

Edel Entertainment officially bowed in the U.S. in February (hitsdailydouble.com, 2/7) under the guidance of President/CEO Ron Urban.

When it bowed, Edel Entertainment planned to use REDs distribution, RED's support services and marketing resources (RED Ink), its urban arm (RUMM) and its brand new RED Dance unit, while adding a core marketing and promotion team, headed by 25-year industry exec David Leach.

The future of Urban, Leach and other Edel employees was unknown at press time.

The impending label closure follows the much-talked about departure of Roadrunner and its roster, including platinum-plus horror-rockers Slipknot, from the Edel fold. Roadrunner is in the final stages of joining UMGs Island Def Jam (hitsdailydouble.com, 7/16).

Roadrunner chief Cees Wessels put 49% of the label on the sales block last month for $30 million (hitsdailydouble.com, 6/20). While it attracted numerous suitors, the deal was complicated by Roadrunner owing $17 million to Edel from a recent loan the German music company decided to call in. Source said potential legal issues concerning those involved and monies owed were worked out during the exit negotiations, effectively allowing Jim Caparro and Lyor Cohens Island Def Jam to ink Roadrunner.

The maneuvers by Roadrunner/Slipknot are a direct result of Edel being in severe financial trouble. German bankers tried to pressure Edel's chief Michael Haentjes to undertake a distressed-asset saleincluding REDor face a takeover. But the exec was reportedly able to negotiate a six-month extension on his loans.

The company has previously admitted it spent too much on acquisitions, burning through between $300-400 million. It has already sold its interests in Viva and Play It Again Sam at a major discount.

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