NOW EMI IS REALLY ROCKING
Jim Fifield loves rhythm and blues. The president of EMI Music fairly bubbles with enthusiasm when he plays you his old Freddie King records. Sit with him at a Tina Turner concert, though, and Fifield seems oddly out of place. Clad in white slacks and seated quietly in the 10th row of New York's Radio City Music Hall, Fifield looks like an affable suburbanite who bought tickets to see the Rockettes and wandered into the wrong show.
Both images have served James G. Fifield well as he turns EMI Music from an also-ran into a powerful worldwide record company. One moment, he's the plain-vanilla marketer who spent 20 years at General Mills Inc. Next moment, he's the music junkie who jets off to the Montreux Jazz Festival in Switzerland and schmoozes backstage with Turner and other EMI stars. Says Fifield: "I love the daytime part of the job and the nighttime part."
What's not to love? EMI recently reported record financial results for fiscal 1993. And rivals credit Fifield with catapulting his company into the front rank of worldwide players. With 15% of the global market, EMI is just slightly behind the industry's Big Three: Time Warner, Sony Music Entertainment, and PolyGram. "Jim has done a very good job of turning around his international company, which was sort of complacent," says PolyGram CEO Alain Levy.
That's putting it mildly. When British conglomerate Thorn EMI recruited Fifield to run its New York-based music subsidiary in 1988, the company was downright doddering. EMI's flagship label, Capitol Records, once recorded the Beatles and Frank Sinatra. But by the 1980s, Capitol had become as artistically outdated as its Los Angeles headquarters, which is shaped like a stack of LPs. "EMI's reputation was almost nonexistent--maybe that of a sleeping giant," says Shep Gordon, who manages Luther Vandross. EMI wasn't even so giant anymore, what with Sony and Bertelsmann assembling music empires.
Enter Fifield, who persuaded his British bosses to embark on an aggressive acquisition spree (table). In short order, he plunked down $418 million for a big independent label, Chrysalis, and SBK Entertainment World, a music publisher that owns and markets thousands of songs. Then, in 1992, Fifield made his brashest move, edging out Bertelsmann and MCA to buy Virgin Music Group for a cool $960 million. The last of the major independent labels, Virgin brought such stars as Janet Jackson and the Rolling Stones under the EMI umbrella.
SO FAR, SO GOOD. But many record executives thought Fifield had recklessly overpaid. While it's premature to say that he has repudiated those critics, early indications are promising. Virgin generated $77 million in profit for the first 10 months of fiscal 1993. That compares with only $25 million in its last full year as an independent. Fifield squeezed out more profits in two ways: First, he and Virgin CEO Ken Berry slashed costs--laying off 450 of Virgin's 1,200 employees and cutting its bloated artist roster in half. Second, EMI recaptured profits that used to go to other companies for distributing Virgin's music outside Europe.
Virgin lifted EMI's overall income 57%, to $287 million, on revenues of $2.2 billion. Excluding the Virgin acquisition, profits were still up 14.9%. More important, the company's return on sales rose from 11% to 13%. Fifield's goal is to boost EMI's margin to 16%, in line with those of PolyGram and Warner Music Group. The trouble is, he can't squeeze any more easy growth out of acquisitions or consolidating labels such as Virgin. So now, Fifield must grapple with EMI's remaining weakness: its artistic reputation in America.
Capitol and EMI's other U.S. labels do boast a few genuine stars--country colossus Garth Brooks and rap group Arrested Development among them. But farther down EMI's roster, you come across such obscurities as the Smithereens and Television. As a result, EMI's domestic market share of 11.2% lags behind all major recording companies except MCA. Concedes Fifield: "Everything we've accomplished so far is without North America coming up to my standard."
To rejuvenate Capitol and the other labels, Fifield recently named Charles Koppelman CEO of EMI North America. A garrulous showman who chomps on a Cuban cigar, Koppelman launched SBK Records in partnership with EMI in 1989. With pop trio Wilson Phillips as one of its first acts, the label got off to a spectacular start. Yet rival executives are chary because Koppelman has no experience running such a large company: "It's a gutsy move," says Irving Azoff, owner of Giant Records.
Koppelman is already making waves at Capitol. He recently replaced its president, fired 60 employees, and trimmed its artist roster. Fifield takes pride in giving plenty of latitude to creative types such as Koppelman. While they nosh with the likes of Tina Turner or Garth Brooks, he tends to the more prosaic marketing and distribution side. Such work is second nature to Fifield: Before joining EMI, he ran the toy business at General Mills and the CBS/Fox joint venture in home videos.
TENDER EGOS. Along the way, say colleagues, Fifield has also learned how to deal adroitly with the tender egos of performers. In negotiating record deals, for example, he is considered tough but forthright: "Very often in the record business, yes means maybe and maybe means no," observes Allen Grubman, a powerful entertainment lawyer. "With Jim, yes means yes and no means no."
Only on the topic of EMI's long-term prospects does Fifield become a bit elusive. He agrees that EMI Music has no synergy with the appliance-rental business that is Thorn's other major subsidiary. And he acknowledges that many media analysts expect Thorn Chairman Sir Colin Southgate to sell off EMI, since he has already divested everything from home appliances to a stake in a broadcast TV franchise. The last spate of rumors had Thorn talking with Paramount Communications about restructuring EMI Music as a joint venture.
Yet Fifield claims he never thinks about someday working for an American media company instead of a British conglomerate. And Southgate insists that breaking up Thorn EMI is "not high on the agenda." If Southgate ever has a change of heart, though, Fifield better hope he gets to go with EMI Music. He's not likely to find as fun a job, daytime or night, anytime soon.WHISTLING A COSTLY TUNE
EMI's key acquisitions/ Price Date
Major artists or songs Millions of dollars acquired
VIRGIN MUSIC GROUP $960 1992
Janet Jackson, Genesis, Lenny Kravitz, UB40
SBK ENTERTAINMENT WORLD* $297 1989
Singin' in the Rain, Pink Panther theme
CHRYSALIS RECORDS $121 1989
Sinead O'Connor, Arrested Development
SBK RECORDS $26** 1989
Wilson Phillips, Jon Secada
*Music publishing company
**Down payment on 50% stake that EMI doesn't already own; total payment could
be more than $100 million
DATA: COMPANY REPORTS, BUSINESS WEEK
Mark Landler in New York, with Julia Flynn in London and Ronald Grover in Los Angeles