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Industry watchers are applauding the merger of the two labels, pointing out that EMI had little choice but to become one company in the U.S. given the marketshares of the two labels.

I.B. BAD ON CAPITOL'S
NEW WORLD ORDER

Flom Brings in Trink and Kempler, Promotion Cut Back 20%
Jason Flom is beginning the heavy-lifting phase in the assembly of Capitol Music Group out of the parts of Capitol and Virgin, naming trusted Virgin lieutenants Lee Trink (his #2 going back to Lava) as President and Jeff Kempler as COO.

Together, they’re starting the process of consolidation and evaluation of the artist rosters, with the execution of the initial consolidation plan taking place this week.

Industry watchers are applauding the merger of the two labels, pointing out that EMI had little choice but to become one company in the U.S. given the marketshares of the two labels. By combining functions, CMG will have a realistic shot at becoming a profitable operation and hitting a 6% share. The move also ends the longstanding agony of Virgin U.S., which had been a red blotch on EMI’s balance seat since its acquisition of the label in 1992.

The plan, which had been under discussion for some time, was endorsed by Alain Levy in his final days as EMI Music head and carried out by Eric Nicoli soon after personally taking over Levy’s responsibilities.

It’s worth noting that EMI already has three profitable U.S. divisions in its Nashville-based Christian and Country operations, along with Bruce Lundvall’s Blue Note, paced by Norah Jones, whose new album bowed at #1 this week on 418k, while Celtic Woman debuted at #4 on 75k.

EMI insiders say that the only parts of CMG that will retain separate identities are the two label logos and the two promotion departments, which will continue to function as before under Virgin’s Hilary Shaev and Capitol’s Ed Green, following the blueprint devised at Warner Bros. during the Mo Ostin era and put into its present-day configuration under Roger Ames’ watch. The dual promotion model, which is also employed by Interscope/Geffen, gives a company more at-bats, so to speak. In all, total promotion department cutbacks have reduced the labels' staff by about 20%.

Added to the mix will be a newly formed Urban component designed to work in conjunction with both promotion departments on a project-by-project basis. This new entity will be headed by Ronnie Johnson, a known quantity to Flom and Trink in that the three worked closely together at Atlantic. Johnson exited Atlantic on Tuesday (2/6) in order to take the EVP post at CMG.

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