Queen Exits EMI as Investors Vote to Keep Label From Creditors
Queen, the British rock band that penned “Bohemian Rhapsody,” is said to be leaving EMI Music after almost four decades, as the label’s investors vote on providing more cash to prevent creditors from seizing control.
Queen will switch to Vivendi SA’s Universal Music Group next year, when the band’s contract with Guy Hands’s EMI Group Plc expires, two people familiar with the matter said today. Universal Music will handle the band’s recorded music contract outside North America, while publishing rights will remain with EMI, one of the people said, declining to be named because the talks are not public. Hollywood Records, a unit of Walt Disney Co., holds Queen’s U.S. recorded music contract.
“It’s hard to compete with Universal Music’s checkbook, especially when an artist may be asking for a substantial advance, which EMI is not in the position to afford,” said Claire Enders, a former EMI executive and the head of Enders Analysis Ltd., a London-based entertainment research firm.
Investors in Guy Hands’s Terra Firma Capital Partners Ltd., which owns EMI, vote today on whether to inject more money into the record label. The new funding call seeks to keep at bay creditor Citigroup Inc., which could merge it with a rival record company. Terra Firma bought EMI for 4 billion pounds ($6 billion) at the height of the buyout boom in 2007.
Today’s vote will “likely be driven by loyalty to Guy Hands from the people who made money from him in his ventures than from EMI’s business plan,” Enders said.
A long-term business plan by EMI Executive Chairman Charles Allen was sent to investors last month to help secure the funding. The record company, whose artists include Pink Floyd, the Beatles and Norah Jones, has also held talks with rival labels about licensing its northern American catalog.
EMI may sell its Japanese division and EMI Christian Music Group, according to a presentation Terra Firma sent investors April 27. It may also shutter its Latin American operations.
Terra Firma asked current and third-party investors for 360 million pounds in two parts, to restructure EMI’s 3.2 billion pounds in loans and bring the company into compliance with its debt agreements. The firm needs to corral support from 75 percent of fund investors and inform Citigroup, EMI’s lender, by May 14, according to the document.
EMI was unable to get money from other major music companies through a combination of licensing and outsourcing transactions, although talks are continuing, according to the presentation.
Queen, whose former singer Freddie Mercury died a day after announcing he had AIDS, first signed with EMI in the early 1970s.
Paul McCartney last month struck a deal with independent record label Concord Music Group that took his solo work away from EMI. Radiohead and the Rolling Stones have also quit the label in recent years.
Pink Floyd has been in talks with other record companies about leaving EMI, two people familiar with the matter said in March.
James Devas, a spokesman for London-based EMI, declined to comment on Queen’s departure. A spokesman for Jim Beach, the manager of Queen, declined to comment. Universal Music spokesman Adam White also declined to comment on the subject.
Queen’s exit from EMI was reported May 9 by the U.K.’s Sunday Times.