Guy Hands, the chief of the private equity firm Terra Firma is seeking to make a success of the British recording company EMI, which has distributed the work of artists like the Beatles.
One evening last autumn a group of about 10 artist managers, including representatives for the pop stars Kylie Minogue and Robbie Williams as well as an executive who oversees the Beatles catalog, clustered around a table in an executive dining room at the London headquarters of EMI. The purpose was to size up the new boss, Guy Hands, and discuss the future of the record business.
Other artists distributed by EMI include Chris Martin of Coldplay. Mr. Hands, the private equity financier who had made a fortune sprucing up pubs in England and gas stations on the German autobahn, told the gathering that Rupert Murdoch had privately scoffed at his acquisition of EMI by saying, “MySpace is going to be the future of music, not record labels."
“I said I was going to prove him wrong," Mr. Hands recalled in a recent interview.
It has been almost 10 months since Mr. Hands, through his private equity firm Terra Firma, bought EMI for about $6.4 billion, and by several accounts, including Mr. Hands's own, it has been a chaotic time.
The company now wobbles under a huge debt load, a leadership vacuum -- it has no chief executive and most major decisions are made by Mr. Hands -- and low morale among many of its employees. Mr. Hands said about 80 percent of the $6.4 billion paid for EMI was for the music publishing unit, which owns copyrights and provides a steady flow of cash.
It is the other side of the business, recorded music, that he says he overpaid for, and could wind up selling if market conditions do not improve.
A large restructuring, announced in January, will soon lay off 1,500 to 2,000 of EMI's roughly 5,500 employees. Most recently, the company has been negotiating the exit of Jason Flom, the chairman of Capitol Music Group who oversees recorded music in the United States.
By contrast, when a group of investors led by Edgar Bronfman Jr. bought the Warner Music Group in 2003 for $2.6 billion they moved quickly to restructure: the deal closed on a Monday, a restructuring plan was announced on a Tuesday and within a month $250 million in annualized costs were slashed.
In many ways, the pains suffered by EMI are typical for the music industry in the past few years. But for many culturally attuned Britons, EMI is a cherished institution.
