Shake-up at the top of EMI

By Joshua Chaffin in New York and Andrew Edgecliffe-Johnson in London

Published: January 12 2007 00:37 | Last updated: January 12 2007 00:49

EMI will on Friday announce the dismissal of Alain Levy and David Munns, two of its most senior executives, in a drastic bid to restructure the faltering record company.

Mr Levy, the chief executive of EMI’s recorded music division, and Mr Munns, the vice-chairman, are two of the best known and most powerful executives in the global music industry.

Their departure will be accompanied by a profits warning at the London-based record company, and the announcement of a broader restructuring plan by chairman Eric Nicoli, which is expected to include hundreds of layoffs, according to several people familiar with the matter. An EMI spokesperson declined to comment.

After a weak start to the year, Mr Nicoli had hoped trading could be rescued with a new album from Robbie Williams and a remixed Beatles album, which were launched in time for the crucial Christmas quarter, when record companies typically make 40 per cent of their revenues.

Both albums have disappointed, however, and analysts were sceptical that a new album from Norah Jones, due out this month, could make up the difference. Even in the UK, EMI’s market share fell below 10 per cent over Christmas.

Friday’s expected profit warning comes at a time when record companies are struggling to replace a rapid decline in CD sales, once record companies’ most lucrative format, with legal legitimate downloads.

It is likely to stir debate about Mr Nicoli’s position as executive chairman, a corporate governance rarity in the UK. Mr Nicoli last year failed to cement a merger with Warner Music, the fourth such combination he had tried to engineer in seven years. While EMI has faltered, Warner was the only record company to gain market share in the US last year, and has launched a series of digital initiatives.

One person briefed on the departures of Mr Levy and Mr Munns said that they were dismissed because they had more direct operational responsibility for EMI’s shortcomings than did Mr Nicoli.

EMI was in talks late last year with Premira, a private equity firm, but turned down the offer, which was roughly 2.5b pounds.

Shake-up at the top of EMI