And you thought that we were faking
That we were all just money making
You do not believe we’re for real
Or you would lose your cheap appeal?

EMI – The Sex Pistols


It looks like Johnny Rotten’s recorded two fingers up to EMI – the record company that signed then dropped them quick smart – could be coming back to haunt them. The record label, which has one of the most lucrative rosters in the world, is actually making money in the music division, but looks to be in deep trouble elsewhere in the company.

Venture capitalist Guy Hands bought the company for his Terra Firma private equity company, paying £4 billion for it in 2007. Business pundits reckon that’s about £1 billion too much. Clearly his accountants didn’t check the company’s books close enough – even if they’ve no doubt cracked down on the practice of including costs for flowers and chocolates – record company accounting methods for hiding the costs of cocaine and hookers.

In releasing their 2009 results last week, the company booked a massive £1 billion loss, which when coupled with restructuring write down costs, adds up to a total loss of around £1.5 billion. Guy Hands is now scrambling to find several hundred million pounds to prevent Citibank, to whom his company owes a lot of money, from foreclosing on the debt.

The problem for Citibank is that it knows very little about running a record company and well, there aren’t too many of the big ones left. The only company capable of buying it and running it is Warners, but they’d be taking on a huge amount of debt to run it and competition laws may prevent them from doing so.

Expect more job losses as the fat is trimmed further, and for EMI to potentially be broken up and sold off. So, for once record industry people are as poor as the musicians they’ve been ripping off for decades. Next time you see a record company rep at a gig buy ‘em a beer – they can’t afford it.

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