 EMI relies heavily on its back catalogue |
Record company EMI has reported an annual pre-tax loss of £1.75bn in the year to 31 March 2009 amid continued fears over the state of its finances. The results for EMI, which has deals with Robbie Williams and Coldplay, include more than £1bn in write-offs. The firm has been hit by illegal downloading and the move away from album sales to single digital tracks. EMI is at the centre of a legal dispute between private equity owner Terra Firma and US bank Citigroup. Terra Firma is seeking billions in damages linked to its £4bn purchase of EMI in 2007. It accuses the bank of inflating the price of the firm by not revealing that the only other bidder, Cerberus Capital Management, had withdrawn. Citigroup is contesting the claim, saying it will defend its role in the proceedings "vigorously". Shortfall EMI is now the smallest of the four major record labels, and has launched a turn-around plan to try to cut costs and boosting internet sales to compete against the likes of Universal and Warner. It has also cut about 2,000 jobs but lost some of its acts, including Radiohead, in the row that followed. BBC business editor Robert Peston said the results showed "one of the biggest ever losses on a private equity investment". EMI was sold at the height of the private equity buyout bubble in 2007. The business has been battered by its high debt levels and a weak performance as record companies struggle to make cash . The group warned of a "likely significant" shortfall when it had to meet covenants on its £2.6bn debt at the end of March 2010. Excluding its huge one-off write-offs, EMI saw operating profits of £143m, compared with £101m the previous year.
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Every single cent of Terra Firma's equity has been wiped out.
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