Terra Firma Pumps More Money Into EMI
This story was written by Rory Maher.
It's pretty clear by now that record labels are struggling to manage the digital transition. The latest sign is the news that EMI parent Terra Firma has injected an additional $45 million into the company to avoid breaching its debt agreements. In addition, EMI's CFO will move into a role overseeing the firm's investments and will be replaced by Terra Firma finance executive Andrew Chadd, according to a report by the Wall Street Journal citing sources familiar with the matter.
The cash injection comes amid aggressive cost-cutting by EMI after Terra Firma bought it for $4.7 billion in 2007. Since the acquisition, Terra Firma has said its goal is to shave about $300 million from the company's operating costs, and reiterated during its latest earnings report that it was on track to hit that mark. In fact, cost savings of just over $70 million during the last quarter helped EMI achieve profits, before tax and exceptionals of $246 million versus $72.5 million during the prior year's quarter.
Still, EMI is facing a significant challengealbum sales, which includes full-album downloads as well as CDsdecreased 14 percent in 2008, according to Nielsen Soundscan (single-song digital downloads increased 27 percent in 2008).
By Rory Maher