Believing that EMI has slumped due to its seven-year focus on a merger and a continuous cost-cutting program, the new owners of the music conglom are planning a major restructuring that will be unveiled this week.
In a memo to staff, he wrote, “Put simply, focusing alone on the production of multimillion-selling albums cannot produce a sustainable business model.”
Terra Firma’s business plan, which will include considerable cost-cutting, will be drawn from studies of contractual relationships with artists; digital business; how to efficiently partner with artists likely to sell fewer than 200,000 copies of their albums; customer relationships; and services and products.
The plan, Hands wrote, is to create a company “big enough to serve anyone but small enough to truly care.”
Last week Hands told the Royal Television Society’s annual meeting that Terra Firma had acquired EMI because company toppers believed its team of experts could turn the business around.
“We look for the worst business we can find in the most challenged sector, and we get really happy if it’s really, really bad,” Hands told the society. “We’re just hoping EMI is as bad as we think it is.”
Terra Firma will not be selling either the recorded music business or its music publishing division.
Hands will spend the next month traveling to EMI offices to “meet as many of EMI’s employees as possible.”
(Gordon Masson in London contributed to this report.)