Q&A: Roger Faxon
Still in the getting-to-know-you phase with Citigroup, the EMI CEO keeps spirits up and debt low as the company faces the toughest music market yet.
The CEO of struggling music powerhouse EMI is trying to reinvent the company for the new music economy. No doubt Roger Faxon has his work cut out for him. A little more than six months into his new position at EMI (he was promoted in June from its music publishing division), the iconic company that’s home to Coldplay, Katy Perry and the Beatles was in court fighting for its very existence. Guy Hands, CEO of Terra Firma, the venture-capital firm that bought U.K.-based EMI in May 2007 for $4.7 billion, sued Citigroup, claiming it tricked his private-equity group into overpaying at the height of the credit market. A jury in November threw out Hands’ claim, and Citigroup seized control of EMI on Feb. 1. With 2,5000 employees and revenues of more than $5.6 billion in 2009, it’s the smallest of the four major labels and has also been saddled by several executive shuffles, claims of weak artist development and frivolous spending. Now significantly lighter — its debt diminished by two-thirds, $480 million in cash reserves and no plans for more cutbacks — Faxon’s company is poised for a fresh start, but some still wonder whether it can remake its tarnished image. (Winning 20 Grammys on Feb. 13 can’t hurt.) The New York-based Faxon, 62, who has two kids and began his career in movies at Lucasfilm and later as an executive at Columbia TriStar, believes it can.
Recent creative hires indicate that EMI is looking to bulk up its roster. How do you balance the adage “You’re only as good as your last hit” with the power of catalog?
We’ve had tremendous success with Katy Perry and the like, but we need to do more than that, so we’re in the process of reinvigorating our creative team. Their task first and foremost is to help artists express themselves and not try to be the latest flavor. We’re investing to expand our roster. We’re not afraid of the market. At the same time, Nat King Cole may be long gone, but he’s still a star at [EMI’s] Capitol Records. The Beach Boys, Bobby Darin, Bing Crosby — they’re all a part of this. Our covenant is to do right by them, and that doesn’t end when their contract expires or when they die. Their music lives on, and it’s our job to find as large a market as possible.
When you got the job, you wrote a 3,200-word introductory memo to the EMI staff. Would you call that your manifesto?
I wouldn’t call it a manifesto; that sounds very presumptuous. I think it was a way to give voice to what was already present at EMI and just needed to be said: to remind ourselves why we’re here. The music industry has been so caught up in dynamics, difficulty and corporate maneuvering that the basic reason why EMI exists was sort of buried. But it wasn’t lost. We’re here because we love music.
Whether it’s exec shuffles or artist relations, EMI weathers a great deal of criticism ...
More so here. Outside the U.S., EMI is a cultural icon —it is a brand to be reckoned with. A lot of attention is placed on it and has always been so. Some of the criticism is well deserved, and much of it is overwrought. People are interested in EMI because it’s the home of the Beatles, Frank Sinatra, Pink Floyd. … It has an image that’s vastly bigger than its size or its true influence, so it draws a lot of attention. And to be honest, it’s had its corporate problems, and that makes it all the more interesting to talk about, right?
With Citigroup’s recent takeover and rumors of an imminent sale, what are the odds EMI could stand alone?
It’s unlikely. You can’t look at EMI, a music company, and expect it to be owned by a financial services company over the long term. So it’s inevitable and only right that an owner whose long-term interest is in entertainment, media and technology — things that are more compatible with a creative business — will come forward. But we’re not, at this moment, for sale.
Is there a timeline?
Citigroup said to me that they would like the business to settle down and get its feet under itself in this phase. In their words, “in due course.” I think what they’re trying to say is that they’re not in any hurry to do this.
As CEO, how do you convey stability to the people who work at EMI?
Stability doesn’t come from one person with stripes but from a team of people who share the same values and view of the future. We have that. We believe in the future of music, and because we are an optimistic group of people, we believe we’re in control of our own future. If you’re in a business or company that feels that they’re failing, that sense of instability is omnipresent. Our primary focus is on the artist and songwriters we represent and what can we do for them. Like Amos Lee, who was No. 1 a few weeks ago: He sold 40,000 units in the U.S., which was the lowest sales tally for a No. 1 album ever, but we don’t think about it that way. His last album sold 15,000, so he’s been able to multiply that by two and a half. That’s the success.
EMI is headquartered in the U.K., you’re based in the U.S. and the Capitol tower is in Los Angeles. How much of your time is spent traveling?
At least 50%. I joke about being the Up in the Air guy, but there is truth to it. Actually, flying is not such a bad thing. It’s where I get my most sleep.