Berry faces music, closes EMI, Enclave

Less than a month after taking the reins of EMI’s music operation, Ken Berry has decided to shutter both EMI Records and the Enclave, the latter the start up label helmed by Tom Zutaut. Acts signed to the two labels and not dropped will be cherry-picked by Capitol Records and Virgin Records execs.

With the stroke of a pen, sources estimate that Berry will save EMI between $80-$100 million annually in costs and staff redundancies. More than 135 staffers are expected to lose their jobs in the process, which also portends restructuring at other labels in the EMI empire.

The closures significantly raises the stock of Virgin Records prexy/CEO Phil Quartararo and Capitol Records prexy/CEO Gary Gersh — who are both on short-term contracts pending renegotiation of their long-term pacts — and whose respective labels are currently the crown jewels of the EMI family.

The move significantly reduces the East Coast presence of EMI, which will now have the majority of its labels headquartered on the West Coast. Berry recently moved from Virgin’s Beverly Hills offices, where he had been ensconced for more than a decade, to top-floor digs in the Capitol Tower.

The millions in cuts are expected to be in addition to the $64 million saved through the elimination of the management layer occupied by former EMI chairman/CEO Charles Koppelman and exec veep/G.M. Terri Santisi. The pair ankled their respective posts as part of the restructuring (Daily Variety, May 27).

Sources said EMI Records chief Davitt Sigerson met with key label personnel Wednesday and several staffers, including the company’s CFO, ankled their posts.

Human Resources execs and department heads were planning the label’s closure, which was not expected to be set in motion until Monday. Sigerson and veep Brian Koppelman could not be reached for comment.

EMI had some small successes during Sigerson’s run, such as Blessid Union of Souls and Patty Rothberg, but the label never caught significant fire. An upcoming disc from Joshua Kadison had high expectations.

EMI, which was formed when the Chrysalis, SBK and EMI labels were merged, had around 100 staffers and recently moved to new offices in the Flat Iron District of New York.

Zutaut, prexy and CEO of the Enclave, could not be reached for comment. Though the label was awash in red ink, its expenses were not unusual for a start up label and its work on World Party, an act shifted by Koppelman from EMI to Enclave, was beginning to pay off.

Berry, who was named prexy of EMI Recorded Music May 27, could not be reached for comment.

But sources said Berry has been meeting with label chiefs this week going over annual budgets and cutting costs where appropriate.

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