Bowie looks to EMI exit

Salamander Davoudi, Media Correspondent Financial Times 11/07/11

EMI holds the rights to David Bowie’s most popular work, including ‘Aladdin Sane’
David Bowie is poised to walk away from EMI, the troubled UK music group in the middle of an auction, after a 15-year relationship in which the label held the rights to the bulk of his back catalogue including classic albums Ziggy Stardust and Space Oddity.

The departure will come as a blow to EMI, which has lost a string of high-profile artists, including Robbie Williams last month, amid years of turbulence caused by management changes and heavy cost-cutting. EMI declined to comment.

Bowie, whose contract with the UK label comes to an end in January, is in talks with both Universal Music and Sony Music. Sony holds the catalogue for everything he has recorded since 1995. A final decision has not yet been made and Mr Bowie could decide to go it alone.

In 1997, the British artist struck a licensing deal with EMI for his back catalogue giving the group the rights to release 25 Bowie albums from between 1969 and 1990. These included his most popular work – Ziggy Stardust, Aladdin Sane, Hunky Dory and Let’s Dance – as well as unreleased studio and live recordings. The artist was guaranteed more than 25 per cent of the royalties from wholesale sales in the US.

The artist used the deal with EMI as collateral for investors who had bought into his 10-year “Bowie bonds”, which securitised the rights to future royalties. The success of the bonds was one reason Guy Hands and his private equity team at Terra Firma believed that EMI’s publishing catalogue could be securitised in the same way as he had securitised the revenue streams of pubs and motorway service stations.

That hope, which helped underpin his £4.2bn bid for EMI in 2007, was shaken as lending markets froze in the summer of 2007, and evaporated as the wider financial crisis set in.

The news of Mr Bowie’s departure comes in the middle of the auction of EMI by Citigroup, which seized control of the music company from Terra Firma in January.

Len Blavatnik, the Russia-born entrepreneur whose Access Industries group bought Warner Music earlier this year, has walked away from the $3bn-$4bn auction but is still watching its progress and could return. It is now unclear whether Citigroup will settle for offers below initial hopes or retain EMI for at least another year in the hope that financing markets improve.


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One Response to “Bowie looks to EMI exit”

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