When EMI announced its restructuring in January that would tear down label walls and international boundaries, it said its new sleek, trim 21st-century music company would be able to operate with 2,000 fewer employees.
But sources say that the restructuring has faced some unexpected challenges for several reasons: issues concerning "key man" clauses in artists' contracts; clauses in executive contracts that allow top staffers to leave if their responsibilities change or the company comes under new ownership or management; and challenges meeting deadlines by certain sectors of the company.
An EMI representative called all three assessments "wrong," and noted that "as announced on Jan. 15, EMI's reorganization is on plan."
EMI is clearly making strides to complete its restructuring. An April 16 internal memo announced the appointment of a chairman's board, an operating board and a restructuring board, according to internal EMI memos. The company also made its first moves in presenting a new face with the hiring of Nick Gatfield as president of A&R for North America and the United Kingdom, following on the heels of the appointment of Douglas Merrill as president of digital business. Until Gatfield joins the labels, Ashley Unwin will be the interim president of A&R for those territories, with label heads in those countries reporting to him.
Roger Ames, who had been in charge of A&R for North America and the United Kingdom, will leave the operational side of EMI's business and work with Terra Firma on strategic acquisitions.
Former Terra Firma partner Chris Roling, who has served as CFO of EMI Music and COO of international labels since January, has been promoted to president/COO of EMI Music, according to the April 16 memo, obtained by Billboard. Roling will be responsible for managing the business on a global basis and on leading the company's operating board.
Chris Kennedy, who has been with EMI since 1993, will replace Roling as CFO. Earlier this month, EMI began the layoff process when the Nashville-based EMI Christian Music Group cut an unspecified number of employees (billboard,biz, April 2).
As for the overall restructuring, it is "slow because some people are missing their deadlines," an EMI executive says. "So the four people on the restructuring board have to oversee the process."
Pat O'Driscoll will serve as chairman of the restructuring board; each member will have responsibilities for particular segments of EMI. O'Driscoll will also oversee the restructuring of EMI's program leadership, legal and business affairs, human resources and facilities, and communications. Merrill will oversee the reorganization of North American and U.K. new music/A&R labels, marketing, licensing and synch, business development, and digital and global technology. Mike Clasper will oversee the restructuring of the Christian Music Group, Capitol Nashville, Classics, catalog, sales, procurement and logistics. Roling will oversee the restructuring of international, finance and back-office services.
But two other issues affecting the restructuring still need to be resolved, sources say. In the case of key man clauses-provisions that allow superstar artists to leave a label if a "key man" such as a label president or A&R exec who signed the act leaves or is fired-sources say Terra Firma may not have realized the extent to which they existed within EMI.
Meanwhile, sources say that a number of top current EMI executives want to leave, claiming breach of contract due to impending changes in title or responsibilities, but that EMI is fighting executives in instances where it believes it is in the right, senior executives at the company say. The newly appointed Gatfield is looking beyond the restructuring. He says he has the right boss to make things happen.
"I've read a lot about him and his many successes . . . [There's been] some of the emotional reporting being made of an acquisition of a British institute by a private equity firm. When you sit down and talk with [EMI executive chairman] Guy [Hands] about all the issues, he's very artist-centric. He believes that quality music is absolutely the key. He just believes that fundamental mistakes have been made to the business. It's about embracing customers and giving them what they want and also being able to find a business model which allows all artists of all genres various degrees of sales success to have long, happy careers."
Gatfield calls his opportunity at EMI unique: "There's no other job like it, embracing both the North American market and the U.K. It's a very music-centric role, in a company going through a transformation." Gatfield complimented the new structure at the company, noting that the "flux" EMI has been in even prior to Terra Firma's acquisition "is coming to an end. There is a structure in place, people who absolutely believe in the structure, and some seriously talented executives in there to execute the new vision."
Now it is Gatfield's job to create "repertoire, which is capable of being exploited worldwide. What is exciting for me about the structure is the clear open flow, channel of communication between the U.S. and the U.K. companies. You have a shared vision of what it is you want to build."
But he says he has a solid base to build on with "some amazing superstar artists."
"The key thing for us," Gatfield says, "is to get up and running extremely quickly, deliver some artists really quickly, and just prove that the model works-to the staff, and to the artists we want to embrace and work for."
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