LONDON — A flat world-music market and the strength of the British pound continues to plague EMI Group, with pretax profits down 32.8% to £75.6 million ($127.7 million), on sales of $2.34 billion for the interim ended Sept. 30, down from $2.48 billion for the period last year.
To illustrate the impact of the pound, when calculated at constant exchange rates, EMI sales rose 4.9%, to $2.6 billion, and pretax profit was down a lesser 21% to $150.2 million.
EMI Music’s operating profit dropped 14.6% to $190.3 million, on sales of $1.7 billion, down 8.4%. EMI’s record store division, HMV Group however, performed better, with sales up 3.2% to $662.1 million, but posted an operating loss of $20.6 million due to expansion of the chain over the six months.
EMI’s top performer for the period was the Spice Girls debut “Spice,” which sold 8 million units during the period in addition to the 9.5 million it moved last year.
Radiohead’s “OK Computer” sold 2 million units, as did “Bridges to Babylon” from the Rolling Stones. Paul McCartney’s “Flaming Pie” and Meredith Brooks’ “Blurring the Edges” sold 1.5 million units each.
Meanwhile, it has been disclosed that EMI could be facing a $100 million lawsuit for unpaid royalties for songs from the ’60s and ’70s such as “To Sir With Love” and “Puppet on a String.”
The British Academy of Songwriters, Composers & Authors (Basca) said it is considering the action after months of unfruitful negotiations with EMI’s publishing division.
Most of the songwriters involved originally had signed with small British indie publishers that were later acquired by EMI.
These deals typically involved a 50-50 split between publisher and songwriter, and the songs were sublicensed outside the U.K. to foreign publishers who then took 50%, leaving 25% each for the writer and the U.K. publisher.
EMI discontinued the sublicensing agreements, then collected the foreign royalties itself but retained the 50% the sublicensees had been taking, a practice the trade org considers to be unfair.