News & Analysis

EMI shakes up its management structure

Roger Faxon, CEO of EMI’s publishing division, will take the reins of the whole company, following Terra Firma's £105m injection earlier this month to appease lenders.

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Terra Firma’s embattled music publisher EMI has shaken up its management structure in a move to improve communications between the two sides of its business – finding new artists and making money off the rights of published materials.

As part of the management shift, Roger Faxon, chairman and chief executive officer of the company’s publishing division, has been appointed chief executive of the entire group.

Charles Allen, executive chairman of the company, is stepping down into an advisor role to EMI and Terra Firma. Stephen Alexander, a director with EMI’s holding company Maltby Capital, will become chairman of Maltby.

The shake-up doesn’t represents a shift by the company to focus more on publishing rights, rather than finding and making money on new talent, a company spokesperson said.

“New music is critical to the operations,” the spokesperson said.

EMI Recording is tasked with finding and developing new talent – a process that can take time and significant investment before any money is made. EMI Publishing makes money by using songs from its existing artists in other ways, like in video games, commercials or television.

Earlier this month, Terra Firma injected £105 million (€126 million; $155 million) in cash into EMI to help the company meet the terms of its lending agreement with Citi, according to the spokesperson.

Terra Firma, led by Guy Hands, acquired EMI in a €3.8 billion ($4.7 billion) deal in 2007. The firm used €2.2 billion of equity in the transaction, split up between its second and third funds. The total amount represents about 30 percent of Fund II and 30 percent of Fund III.

LPs have questioned the exposure the EMI investment represents for Terra Firma. But the firm has fought since buying the company to make it successful. EMI has been battered by falling revenues – in part due to the proliferation of music piracy – and the long process of establishing new, money-making musical acts.

As of February, Terra Firma was valuing EMI at 10 pence on the pound.