EMI Takes Major Hit – Loses $1.2 Billion This Past Year
EMI Music Group has recorded a whopping £757 million ($1.2 billion US) for the year ending March 31st. Revenues dropped 19% ($2.3 billion) compared to year-earlier losses of $454.5 million.
According to EMI, the serious downturn is the result of weak performing artists, major accounting and restructuring write-offs, and various depreciation and financing costs. During the period, market share also dropped to 9% from 12%. EMI had to deal with a one-time restructuring hit of £123 million. CD sales alone plummeted 28% during the period and recording-specific revenues dropped a resounding 23%, not pretty.
Terra Firma unearthed a number of hazardous operational and incentive flaws at the company, including a practice of over-shipment CDs and “overcompensation for top executives.”
“The main factor behind the very large loss was continued operational poor performance, but more particularly accounting factors, in particular the revaluation of the balance sheet and the requirement to mark assets and liabilities to fair values,” disclosed Lord Brit, chairman of Terra investment arm Maltby Capital.