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By orchestrating the early takeover in conjunction with Citi, and reportedly without Guy Hands’ knowledge, Faxon instantly became a hero to EMI rank and file.

I.B. BAD TURNS HIS EYES, AND EARS, ON THE TUBE

From the Grammys to Glee, Prime-Time TV Is the New Top 40; and Following Faxon’s Bold Move, EMI Is Where the Action Is
Between the anemic release schedule for the first two months of 2011 and the lack of resolution of key issues across the board, the music industry remains in a state of limbo. Fortunately, help is on the way. Columbia’s Adele (2/22) and Jive/JLG’s Chris Brown (3/22) and Britney Spears (3/29) will alleviate the Q1 retail doldrums, while, more immediately, this Sunday’s Grammys come at a particularly opportune time. While the Grammy platform has traditionally moved the needle for certain acts, TV exposure in general has become an unparalleled marketing tool for record sales; these days, nothing else comes close. One expected beneficiary of exposure on the tube is Eminem, whose pair of Super Bowl spots followed by his Grammy appearance and anticipated major wins should further elevate his status as the biggest male superstar of the moment. In terms of TV shows that consistently make a difference, American Idol remains a significant platform as it enters its second decade. The series is experiencing robust ratings as UMG takes over from Sony Music and attempts to revitalize its starmaking machinery under Jimmy Iovine and his savvy A&R team. Glee, Sony’s current meal ticket, has even more immediacy than Idol in the sense that the show breaks out and sells its own versions of current hits on a weekly basis. With two episodes this week, including one following the Super Bowl last Sunday, Glee now has eight of the Top 12 singles at iTunes, with their version of Katy Perry’s “Firework,” from last night’s episode, at #1. The cover of Michael Jackson’s “Thriller,” from the post-football game episode, is #2, followed by the Destiny’s Child song, “Bills Bills Bills,” also from that night, at #4. Four of the songs from Tuesday night’s episode also chart, including Paul McCartney’s “Silly Love Songs” (#6), Robin Thicke’s “When I Get You Alone” (#7), Queen’s “Fat Bottomed Girls” (#9) and Michael Jackson’s “P.Y.T. (Pretty Young Thing)” (#11). The cast’s take on Lady Antebellum’s Grammy-nominated “Need You Now,” from the post-game episode, rounds out the show'sentries at #12. In the coming months, Sony will be further strengthened with the addition of Simon Cowell’s X Factor, also on Fox, while UMG counters with The Voice, the latest offering from reality-TV pioneer Mark Burnett (Survivor), on NBC. In the meantime, the music business faces some other pressing issues... Citigroup’s quick and decisive takeover of EMI last week means that the first domino has fallen in terms of the next chapter for this remarkably resilient company. Roger Faxon orchestrated the early takeover in conjunction with Citi, reportedly without Guy Hands’ knowledge. In pulling off this coup, Faxon instantly became a hero to EMI rank and file. Interestingly, the company has gone through so much change in an effort to stay alive that costs have been reduced dramatically, improving its chances for continued survival and its status as an attractive acquisition target. Further, EMI, with its Faxon-initiated rights management focus, appears to be a better fit with the new BMG/KKR model than does WMG. Warner’s primary disadvantage as a potential acquisition stems from the red ink on its balance sheet, having lost $143m in fiscal 2010 and another $18m in the fourth quarter of last year. Not only that, but Warner doesn’t appear to be as motivated to sell as Citi. In another scenario, WMG could try to make a deal to merge with EMI, at which point Warner management would make every effort to secure the dominant position in running the combined company. But such an outcome would fall under the same degree of regulatory scrutiny as did WMG and EMI’s previous attempts to come together, whereas the sale of either company to BMG would likely meet with far less resistance… The latest round of conjecture leads to the question: Does BMG really want recorded music, or would that pickup merely be an intermediate step in the procuring of EMI Music Publishing?... In other points of interest, there’s been no apparent movement at UMG, with the anticipated changes involving the East Coast operations seemingly on hold. While Universal Republic’s Monte and Avery Lipman have received new deals from Lucian Grainge, speculation continues about the futures of Universal Motown’s Sylvia Rhone, who has two years left on her current contract and is expected to play a significant role in the revamped company, and IDJ’s L.A. Reid, whose deal is up at the end of 2011. For his part, Reid has continued to demonstrate his elevated A&R chops with the nurturing and breaking of Justin Bieber, turning in one of the most significant success stories of recent years—the budding superstar’s upcoming feature film serving as the latest step in his ascent. His history of successes would make Reid a highly sought-after free agent should he and Grainge decide not to move forward together. Although Vivendi has yet to release Doug Morris from his contract, which has 10 months left on it, the smart money has him making the move not long after Barry Weiss takes his new job at UMG. Industry observers are wondering what ultimate effect, if any, the current standoff will have on Morris and Grainge’s relationship—which has been close for more than a decade as Morris mentored and eventually anointed his protégé… Names in the Rumor Mill: Joel Katz, Paul Rosenberg, Daniel Glass, Troy Carter, Rick Rubin and Max Hole.
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