EMI cuts losses, but faces more debt woes
Beatles re-release helps; warns of power of Apple's iTunesRecord labels may need to wean themselves off Apple's powerful iTunes digital music store, music major EMI signaled Wednesday in reporting its latest financials. It also warned that it will need to raise more money to stay independent as it continues to struggle with a big debt burden following its private equity buyout.
EMI reported that it reduced its annual losses by two-thirds - thanks to the re-release of The Beatles' catalogue and hits from Katy Perry and Lady Antebellum, but warned that it needs millions more in the coming years to stay out of the hands of lenders.
While the company seems to generate enough cash to cover interest payments on its high debt burden, its banking covenants will tighten next year and beyond. Breaching them could lead to a takeover by lenders.
According to PaidContent, the company in a filing listed this one among risks it faces: "The substantial dependence on a limited number of online music stores, in particular the iTunes Store, for the online sale of music recordings, and the resultant significant influence that they can exert over the pricing structure for online music stores."
Meanwhile, Sky News reported that EMI's private equity owner Guy Hands and his firm Terra Firma will next month hold settlement talks with Citigroup in a multi-billion pound legal action. Hands has blamed Citi for overpaying in his £4.2bn takeover of EMI, saying it had claimed other suitors were still eyeing the music firm when they had already abandoned possible bids. Citi has denied the allegations.