5 Comments

Summary:

In 2008, Terra Firma hired the guy who ran the company which makes Cillit Bang and Air Wick to turn EMI Music around. But now the record lab…

Charles Allen
photo: EMI Music

In 2008, Terra Firma hired the guy who ran the company which makes Cillit Bang and Air Wick to turn EMI Music around. But now the record label finds itself seeking a reported £100 million to avoid breaching banking covenants.

So now executive chairman Elio Leoni-Sceti is on his way out; he’s being replaced by Charles Allen, the former CEO of the UK’s top commercial broadcaster ITV (LSE: ITV), on March 31. Allen has chaired the board since January 2009.

EMI, in its announcement, says Leoni-Sceti, who had been CEO of household goods maker Reckitt Benckiser, “has successfully led EMI Music through the first phase of its operational turnaround” – but there’s no explanation for the change, nor what phase two involves. “My job here is now done and it is time for me to move on,” says Leoni-Sceti, who has the cover interview in Management Today.

Indeed, within EMI Group itself, fortunes are looking up – 2008/09 earnings rose 7.4 percent to £1.56 billion, with recorded music (EMI Music) sales up 4.6 percent and music publishing (EMI Music Publishing) up 14.6 percent). The 2009/10 performance is likely to be better, benefitting from Beatles reissues including that Rock Band game.

But Terra Firma last year wrote off 90 percent of the $4.7 billion it spent on EMI in 2007 – ultimately, the label will be on high alert for yet more, wider changes. If Terra Firma loses control of EMI to its financier Citigroup, the bank may yet decide to break up or sell the label.

Leoni-Sceti undid some of the digital moves put in motion prior to his arrival – EMI hired high-profile Cory Ondrejka (Linden Labs) and Doug Merrill (Google) as digital strategy SVP and digital VP, before he bid them goodbye, wiping out digital as a standalone unit, replacing them instead with eight, more junior marketing execs.

You’re subscribed! If you like, you can update your settings

  1. Genius. Having proved inept at owning and running a content business, Terra Firma have managed to recruit one of the high priests of content and production destruction. Having decimated ITV and lost upwards of £1Billion on his disastrous ITV Digital foray, Allen is now given the keys to another British creative treasure trove. Once again the lack of understanding within the echelons of bean counters as to the value of content is breathtaking.

  2. Completely agree with the above – Charles Allen will do his usual and destroy the only remaining creative value in the company although I suspect that he’s mainly in there to get a cut of when it is sold on (no doubt to Warner who, one assumes, are biding their time until Terra Firma & Citigroup get desperate).

    Reporting on this story is slightly incorrect though; more accurate here:
    http://www.emimusic.com/news/2010/charles-allen-becomes-executive-chairman-of-emi-music/

  3. Genius! Allen is now given the keys to another British creative treasure trove.

  4. After a parade of bakers and candlestick makers – here comes the butcher. If you wish to run a music company he who runs it must first have a feel and understanding of the medium – then he may have an ability to understand the market. Especially since it can be argued that each artist, each substantial piece of music creates it’s own market.

  5. Phase two is of course collecting underpants

Comments have been disabled for this post