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The unavoidable question is, why now, in the midst of the stand-off between Terra Firma and Citigroup, with the very existence of EMI as it’s now constituted hanging in the balance?
I.B. BAD CATCHES REID'S HEAT, PARSES UNSETTLED BIG FOUR
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L.A. Reid’s IDJ is reheating at a fortuitous time, following a cold winter, with Ludacris expected to top next week’s chart boasting what's looking like a projected 120-130k bow. The company’s first #1 of the year will come on the heels of Rihanna’s album finally catching fire behind third single “Rude Boy,” while Justin Bieber continues to gain strength leading to the release of his second mini-album March 23, and fellow rookie Taio Cruz hits #1 on the iTunes singles chart.

Meanwhile, things are in a state of flux around the Big Four at the moment: EMI has parted ways with Elio Leoni Sceti while its ownership issues are still unresolved; the fate of current Sony Music topper Rolf-Schmidt-Holtz has yet to be revealed, even as some question his inability to resolve the long-standing culture clash between Sony and the former BMG; and UMG is preparing for the July 1 arrival of Lucian Grainge as co-CEO.

Last week’s revealing Time magazine profile of the English executive opened with an anecdote in which Grainge turned out the lights at a staff meeting in London, explaining, “That’s what it’s like if you don’t have any hit records.”

Grainge’s clever allusion goes right to the heart of the matter regarding the dilemma at EMI, whose current leadership’s re-engineering of the company’s infrastructure overlooked the very point that Grainge was making: if you don’t have hits, nothing else matters. Thanks to the diligence of EMI’s A&R and marketing staffs, the company has notched up a handful despite the obstacles, the latest being Lady Antebellum, with the follow-up to Katy Perry’s breakthrough 2008 debut album (1.2m) expected later this year, as well as new LPs from the Beastie Boys and Saving Abel.

But the problems run deep, as the abrupt termination of Leoni-Sceti after an 18-month run as EMI Music Chairman dramatically indicates. The unavoidable question is, why now, in the midst of the stand-off between Terra Firma and Citigroup, with the very existence of EMI as it’s now constituted hanging in the balance?

And what about Leoni-Sceti’s plan for making the company competitive again, ballyhooed in the March issue of U.K. business trade Management Today? The piece points out that said plan involved accelerating the strategic direction EMI has taken and setting out the components for revenue growth, but it made no mention of hits.

Successful record companies not only have hits, they have strong leadership, as Grainge’s own track record, and that of his mentor Doug Morris, emphatically demonstrate, and in this regard, EMI again has come up short. Many believe that international COO David Kassler, a Terra Firma alumnus, lacks the experience to lead the company on a global level, while the experienced Nick Gatfield has been limited to A&R, as is his international counterpart Billy Mann, and it’s curious that Gatfield has yet to make his announced move to the U.S. Fortunately, Kassler’s North American counterpart, Ron Werre, has done a solid job of unifying the company in the U.S., evidenced by the crossover success of Lady A.

One would’ve expected that Leoni-Sceti would be replaced by an experienced record executive, but Guy Hands and his advisors have opted instead to elevate former TV executive Charles Allen, who has logged 14 months in the music business, running EMI Music’s leadership team. Beyond that, his experience with music is limited to involvement in the launches of The X Factor and Britain’s Got Talent.

Ironically, the calmest major at the moment is Warner Music, which had been in a state of flux for much of the previous decade—although today’s events could change the vibe at the company in a dramatic and far-reaching way.

As rumors about Leoni-Sceti spread last week, revelations about a possible conflict of interest involving Richard Parsons also surfaced. The Citigroup head sits on the board of Providence Equity Partners, one of WMG’s biggest investors, leading some to jump to the conclusion that Parsons’ ultimate plan involves selling EMI’s recorded music operation to Warner. Others insist that Parsons’ lone agenda, assuming he gets EMI, is to get the highest possible price for it, and that will probably mean separately selling off the record and publishing divisions.

The intrigue surrounding EMI led a Wall Street insider to remark that if he were to buy the record company, he’d fire everyone, re-staff with 30 people apiece in London and N.Y. and make licensing/distribution deals with other majors on a worldwide basis, claiming these moves would result in a multi-million-dollar profit after the recouping the cost of acquisition.

Names in the Rumor Mill: Andy Lack, Strauss Zelnick, Jim Fifield, Edgar Bronfman Jr., Ken Berry and Bob Daly.

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