Calling it “the final step in the reorganization of its North American recorded music operation,” EMI chief Ken Berry confirmed Friday the closing of both EMI Records and the Enclave, the latter the startup label helmed by Tom Zutaut.
As part of the shift, longtime distribution vet Russ Bach, the prexy of EMI Music Distribution, the arm responsible for the sales and distribution of the conglom’s products, has been asked to retire. He will be replaced by Richard Cottrell, who oversaw EMD’s U.K. operation.
“Given the current market environment, we must become more streamlined and focused to make us more effective at building success for both artists and our company,” said Jim Fifield, prexy-CEO of EMI Music.
The restructuring, which had been expected, (Daily Variety, June 19) suggests acts signed to the two labels and not dropped will be cherry-picked by Capitol Records and Virgin Records execs.
Zutaut will “stay on for a period of time to help manage certain artist projects” as part of the Enclave’s consolidation into Virgin Records, according to a statement released Friday by EMI execs.
With the stroke of a pen, sources estimate that Berry will save EMI between $80 million and $100 million annually in costs and staff redundancies. More than 135 staffers are expected to lose their jobs in the process.
Capitol and Virgin become “the company’s principal U.S. labels” and the restructuring significantly increases the clout and stature of Capitol Records prexy-CEO Gary Gersh and Virgin Records prexy-CEO Phil Quartararo — who are both on short-term contracts pending renegotiation of their long-term pacts. Other EMI labels such as EMI Latin, Blue Note and Angel Records will remain intact.
The move significantly reduces the East Coast presence of EMI, which will now have the majority of its labels headquartered on the West Coast. The statement said Virgin would be “building on EMI Records’ strength in East Coast urban music.”
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).
EMI Records chief Davitt Sigerson will step down.
EMI had some small successes during Sigerson’s run, such as Blessid Union of Souls, Jon Secada and Patty Rothberg, but the label never caught significant fire. An upcoming disc from Joshua Kadison held 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.
Under Zutaut, prexy and CEO of the Enclave, 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. World Party will now be worked by Virgin execs.
Berry, who was named prexy of EMI Recorded Music May 27, said “our North American team is extremely talented and committed to bringing their businesses to the next level of performance. With a strong set of releases backed by the new organizational structure, I am convinced that the company is now on the best possible footing for the future.”