EMI shuffles board to win back investors
British music giant EMI Group Plc on Monday appointed former PolyGram president Alain Levy as the new chief of its recorded music division in a move aimed at reversing the decline at one of its main operations.
EMI, whose stable of stars includes Robbie Williams and Radiohead, said Levy would become the new chairman and chief executive officer at EMI Recorded Music, replacing Ken Berry, who had left the group by ``mutual agreement''. Levy will also take up a position on the main board. The company added in a statement its trading remained in line with expectations set out last month, when EMI warned investors of a fall in profits.
On September 25 EMI warned sales at EMI Recorded Music would fall from last year, and that it expected the division to record a small loss in the first half. Major record companies, such as EMI and Warner Music, have seen revenues slump due to dwindling CD replacement sales, music piracy and the global economic slowdown.
However, group chairman Eric Nicoli said in a statement that Levy's appointment was a step towards bolstering the company's financial performance. Nicoli highlighted the ``creative, commercial, strategic and leadership skills'' of 54-year-old Levy. Shares in EMI were down 6-1/2 pence, or 2.3 percent, to 271-1/2 pence by 1030 GMT, but fund managers welcomed Levy's appointment, and attributed the fall to a decline in the broader market. The FTSE 100 index was down 1.2 percent in late morning trade. ``We view the management changes as positive,'' said Tim Rees, director of UK equities at Clerical Medical, which owns around two percent of EMI's share capital.
EMI's recorded music division accounted for around 80 percent of last year's annual turnover of 2.7 billion pounds ($3.9 billion). Despite a strong release schedule, including albums from Janet Jackson and Radiohead, EMI in September warned its profits would slide 20 percent this year because of a slowdown in the global music industry.
The group said on Monday that trading and expectations remained in line with the September update. Analysts at investment bank Merrill Lynch also welcomed Levy's appointment. Levy left PolyGram upon its sale to Seagram in 1998. Seagram is now part of French media group Vivendi Universal SA .
They noted that Levy increased operating margins and market share during his time at PolyGram, as the company acquired successful dance labels such as Def Jam and Motown Records. However, Merrill said Levy was also responsible for what it called a costly foray into PolyGram's Filmed Entertainment business. Merrill kept a ``buy'' recommendation on EMI, with a price target of 400 pence. EMI has underperformed the Dow Jones Stoxx European Media sector by about 20 percent since the start of 2001.
On September 25 EMI warned sales at EMI Recorded Music would fall from last year, and that it expected the division to record a small loss in the first half. Major record companies, such as EMI and Warner Music, have seen revenues slump due to dwindling CD replacement sales, music piracy and the global economic slowdown.
However, group chairman Eric Nicoli said in a statement that Levy's appointment was a step towards bolstering the company's financial performance. Nicoli highlighted the ``creative, commercial, strategic and leadership skills'' of 54-year-old Levy. Shares in EMI were down 6-1/2 pence, or 2.3 percent, to 271-1/2 pence by 1030 GMT, but fund managers welcomed Levy's appointment, and attributed the fall to a decline in the broader market. The FTSE 100 index was down 1.2 percent in late morning trade. ``We view the management changes as positive,'' said Tim Rees, director of UK equities at Clerical Medical, which owns around two percent of EMI's share capital.
EMI's recorded music division accounted for around 80 percent of last year's annual turnover of 2.7 billion pounds ($3.9 billion). Despite a strong release schedule, including albums from Janet Jackson and Radiohead, EMI in September warned its profits would slide 20 percent this year because of a slowdown in the global music industry.
The group said on Monday that trading and expectations remained in line with the September update. Analysts at investment bank Merrill Lynch also welcomed Levy's appointment. Levy left PolyGram upon its sale to Seagram in 1998. Seagram is now part of French media group Vivendi Universal SA .
They noted that Levy increased operating margins and market share during his time at PolyGram, as the company acquired successful dance labels such as Def Jam and Motown Records. However, Merrill said Levy was also responsible for what it called a costly foray into PolyGram's Filmed Entertainment business. Merrill kept a ``buy'' recommendation on EMI, with a price target of 400 pence. EMI has underperformed the Dow Jones Stoxx European Media sector by about 20 percent since the start of 2001.
