EMI Group Ltd

The EMI Group is a British music company comprising the major record company EMI Music which operates several labels, based in Kensington in London, England, United Kingdom, and EMI Music Publishing, based in New York. EMI Music is one of the Big Four record companies, making it among the largest in the world.


History:

The Electric and Musical Industries Ltd formed in March 1931 from a merger of the UK Columbia Graphophone Company and the Gramophone Company. From its beginning, the company was involved in both the manufacture of recording and playback equipment and the provision of music to play on its machines.

Manufacturing:

The company's gramophone manufacturing led to forty years of success with larger-scale electronics. Alan Blumlein, a skilled engineer employed by EMI, conducted a great deal of pioneering research into stereo sound recording. Blumlein was tragically killed in 1942 whilst conducting trials on an experimental H2S radar unit. During and after World War II, the EMI Laboratories in Hayes, Hillingdon developed radar equipment and guided missiles. The company later became involved in broadcasting equipment, notably providing the first television transmitter to the BBC. It also manufactured broadcast television cameras for British television production companies, mostly the BBC, although the Commercial Television ITV companies used them as well alongside cameras made by Pye and Marconi. Their most famous piece of broadcast Television equipment was the EMI 2001 colour camera, which became the mainstay of both the BBC and several ITV companies in the 1970s and early 1980s. In 1958 the EMIDEC 1100, Britain's first transistorised computer was developed at Hayes under the leadership of Godfrey Hounsfield. In the early 1970s, Hounsfield developed the first CAT scanner, a device which revolutionised medical imaging. Hounsfield later won the Nobel Prize for his accomplishment. After brief, but brilliant, success in the medical imaging field, EMI's manufacturing activities were sold off to other companies, notably Thorn (THORN EMI). Subsequently development and manufacturing activities were sold off to other companies and work moved to other towns such as Crawley and Wells.

Music:

Early in its life, the company established subsidiary operations in a number of other countries in the British Commonwealth, including India, Australia and New Zealand. EMI's Australian and New Zealand subsidiaries dominated the popular music industries in those countries from the 1920s until the 1960s, when other locally owned labels (such as Festival Records) began to challenge EMI's market near monopoly.

In 1931, the year the company was formed, it opened the legendary recording studios at Abbey Road, London. During the 1930s and 1940s, its roster of artists included Arturo Toscanini, Sir Edward Elgar, and Otto Klemperer, among many others. During this time EMI appointed its first A&R managers. These included George Martin, who later brought The Beatles into the EMI fold.

EMI released its first LPs in 1952 and its first stereophonic recordings in 1955 (first on reel-to-reel tape and then LPs, beginning in 1958).

In 1957, to replace the loss of its long-established licensing arrangements with RCA Victor and Columbia Records (Columbia USA cut its ties with EMI in 1951), EMI entered the American market by acquiring 96% of the stock of Capitol Records. From 1960 to 1995 their HQ, "EMI House" was at 20 Manchester Square. The stairwell is on the cover of the Beatles "Please Please Me" album.

Its classical artists were largely limited to the prestigious British orchestras, such as the Philharmonia Orchestra. During the LP era very few U.S. orchestras had EMI as their principal recording company; an exception was the Pittsburgh Symphony, particularly during the years of William Steinberg's leadership, also Carmen Dragon who conducted the Hollywood Bowl Symphony Orchestra.

Under the management of Sir Joseph Lockwood, during the late 1950s, 1960s and early 1970s the company enjoyed huge success in the popular music field. The groups and solo artists signed to EMI and its subsidiary labels — including Parlophone, HMV and Columbia Graphophone and Capitol Records — made EMI the best-known and most successful recording company in the world at that time, with a roster that included scores of major pop acts of the period including The Beatles, The Beach Boys, The Hollies, Cilla Black and Pink Floyd.

By 1967 EMI converted HMV to an exclusive classical music label, shifting HMV's pop music roster to Columbia. In 1969, EMI established a new subsidiary label, Harvest Records, which signed groups in the emerging progressive rock genre, including Pink Floyd.

Electric & Musical Industries changed its name to EMI Ltd in 1971 and the subsidiary Gramophone Company became EMI Records Ltd in 1973. In 1972, EMI replaced the Columbia label with EMI Records. In February 1979, EMI Ltd. acquired United Artists Records.

In October of 1979 THORN Electrical Industries merged with EMI Ltd. to form Thorn EMI.

In 1989 Thorn EMI bought a 50% interest in Chrysalis Records, buying the outstanding 50% in 1991. In one of its highest-profile and most expensive acquisitions, Thorn EMI took over Richard Branson's Virgin Records in 1992.

On August 16, 1996, Thorn EMI shareholders voted in favour of demerger proposals. The resulting media company was known by the name EMI Group PLC.

Since the 1930s, Shanghai's Baak Doi had been published under the EMI label. Since then, EMI had also been the dominant label in the cantopop market in Hong Kong. EMI divested totally from the c-pop market between the years 2004-2006. After that, all Hong Kong music artists previously associated with EMI have had their music published by Gold Label, a concern unaffiliated with EMI and with which EMI does not hold any interest.

On 2nd April 2007, EMI announced it would begin releasing its music in DRM-free formats. Initially they are rolling out in superior sounding high-bitrate AAC format via Apple's iTunes Store [2]. The tracks will cost $1.29/€1.29/£0.99. Legacy tracks with FairPlay DRM will still be available for $0.99/€0.99/£0.79 - albeit with lower quality sound and DRM restrictions still in place. Users will be able to ‘upgrade’ the EMI tracks that they have already bought for $0.30/€0.30/£0.20. Albums are available at the same price as their lower quality, DRM counterparts. Music videos from EMI will also be DRM-free. The higher-quality, DRM-free files became available worldwide on iTunes on May 30, 2007, and are expected to show up on other music download services soon.

Since then Universal Records has also announced sales of DRM-free music (which they described as an experiment).

Legal Issues:

Early in its life, the company established subsidiary operations in a number of other countries in the British Commonwealth, including India, Australia and New Zealand. EMI's Australian and New Zealand subsidiaries dominated the popular music industries in those countries from the 1920s until the 1960s, when other locally owned labels (such as Festival Records) began to challenge EMI's market near monopoly.

In 1931, the year the company was formed, it opened the legendary recording studios at Abbey Road, London. During the 1930s and 1940s, its roster of artists included Arturo Toscanini, Sir Edward Elgar, and Otto Klemperer, among many others. During this time EMI appointed its first A&R managers. These included George Martin, who later brought The Beatles into the EMI fold.

EMI released its first LPs in 1952 and its first stereophonic recordings in 1955 (first on reel-to-reel tape and then LPs, beginning in 1958).

In 1957, to replace the loss of its long-established licensing arrangements with RCA Victor and Columbia Records (Columbia USA cut its ties with EMI in 1951), EMI entered the American market by acquiring 96% of the stock of Capitol Records. From 1960 to 1995 their HQ, "EMI House" was at 20 Manchester Square. The stairwell is on the cover of the Beatles "Please Please Me" album.

Its classical artists were largely limited to the prestigious British orchestras, such as the Philharmonia Orchestra. During the LP era very few U.S. orchestras had EMI as their principal recording company; an exception was the Pittsburgh Symphony, particularly during the years of William Steinberg's leadership, also Carmen Dragon who conducted the Hollywood Bowl Symphony Orchestra.

Under the management of Sir Joseph Lockwood, during the late 1950s, 1960s and early 1970s the company enjoyed huge success in the popular music field. The groups and solo artists signed to EMI and its subsidiary labels — including Parlophone, HMV and Columbia Graphophone and Capitol Records — made EMI the best-known and most successful recording company in the world at that time, with a roster that included scores of major pop acts of the period including The Beatles, The Beach Boys, The Hollies, Cilla Black and Pink Floyd.

By 1967 EMI converted HMV to an exclusive classical music label, shifting HMV's pop music roster to Columbia. In 1969, EMI established a new subsidiary label, Harvest Records, which signed groups in the emerging progressive rock genre, including Pink Floyd.

Electric & Musical Industries changed its name to EMI Ltd in 1971 and the subsidiary Gramophone Company became EMI Records Ltd in 1973. In 1972, EMI replaced the Columbia label with EMI Records. In February 1979, EMI Ltd. acquired United Artists Records.

In October of 1979 THORN Electrical Industries merged with EMI Ltd. to form Thorn EMI.

In 1989 Thorn EMI bought a 50% interest in Chrysalis Records, buying the outstanding 50% in 1991. In one of its highest-profile and most expensive acquisitions, Thorn EMI took over Richard Branson's Virgin Records in 1992.

On August 16, 1996, Thorn EMI shareholders voted in favour of demerger proposals. The resulting media company was known by the name EMI Group PLC.

Since the 1930s, Shanghai's Baak Doi had been published under the EMI label. Since then, EMI had also been the dominant label in the cantopop market in Hong Kong. EMI divested totally from the c-pop market between the years 2004-2006. After that, all Hong Kong music artists previously associated with EMI have had their music published by Gold Label, a concern unaffiliated with EMI and with which EMI does not hold any interest.

On 2nd April 2007, EMI announced it would begin releasing its music in DRM-free formats. Initially they are rolling out in superior sounding high-bitrate AAC format via Apple's iTunes Store. The tracks will cost $1.29/€1.29/£0.99. Legacy tracks with FairPlay DRM will still be available for $0.99/€0.99/£0.79 - albeit with lower quality sound and DRM restrictions still in place. Users will be able to ‘upgrade’ the EMI tracks that they have already bought for $0.30/€0.30/£0.20. Albums are available at the same price as their lower quality, DRM counterparts. Music videos from EMI will also be DRM-free. The higher-quality, DRM-free files became available worldwide on iTunes on May 30, 2007, and are expected to show up on other music download services soon.

Since then Universal Records has also announced sales of DRM-free music (which they described as an experiment).

EMI and Warner Music Group:

On May 5, 2006, EMI entered preliminary talks to buy Warner Music Group, (NYSE : WMG), which would reduce the world's four largest record companies (Big Four) to three; however, according to Warner's site, its board has rejected the proposal.

Warner Music Group launched a Pac-Man defense, offering to buy EMI. EMI rejected the offer. Representatives from both sides are thought to be still having meetings and deciding if one company will buy the other, however the European Commission's decision to overturn a previous decision allowing a similar merger between Sony and BMG is likely to have raised issues as to the wisdom of pursuing such a move at this time.

By most measures, a merged company of EMI and WMG would be even bigger than Sony BMG. Concerns regarding the creation of a monopoly may mean WMG will not receive approval from the European Commission. However Impala, a large independent, non-profit trade association of indie music labels, has given the Warner Music its blessings to acquire EMI, the third-largest music group. In return, it is suggested that the newly merged company will take responsibility for:

* providing specified funding for (but taking no equity participation in) the recently announced Merlin initiative, the new global digital rights licensing platform established by the independent music labels to represent the world’s independent music sector;

* ensuring the divestiture of certain recorded music assets to reinforce the market power of the independent sector; and

* pursuing various other behavioural commitments which have the aim of benefiting the recorded music market as a whole and, in particular, the independent music sector.

Terra Firma Takeover Proposal:

On May 21, 2007 the board of EMI Group publicly recommended to the shareholders a takeover bid by private equity firm Terra Firma Capital Partners valued at £3.2bn including debt. Dresdner Kleinwort acted as sole financial adviser and broker to Terra Firma. EMI's sales had declined dramatically in the recent months, making a loss of £260m in the past year. EMI's board of directors recommended the 265 pence per share offer from Terra Firma, however the deal needed to be approved by the firm's shareholders.

On June 14, 2006 EMI received an initial unsolicited alternative proposal from Warner Music to acquire all of the share capital of EMI for 315 pence per share in cash. The Board of EMI considered this proposal from Warner Music to be wholly unacceptable and unanimously rejected it.

The shares of EMI traded significantly higher than the offer price since the takeover offer, suggesting the takeover attempt would probably fail. Indeed, Terra Firma (Maltby) was only offered some 3% of the outstanding shares by 27 June 2007, while it wanted to acquire more than 90%. Terra Firma then extended the offer period by a week until July 4th 2007, but did not obtain a significant amount of shares. Terra Firma subsequently extended its desperate bid by a further week until July 12th 2007. The shares continued to trade significantly above the offer price as holders realised the value of the company is much higher than the offer proposed by the private equity group. Terra Firma got no significant amount of shares tendered until July 12th, and extended the offer by a further week until July 19th, still not giving up.

Terra Firma has now reached a 90% acceptance level, which allows the firm to declare the offer wholly unconditional and issue 429 notices, meaning that the now minority shareholders in the company are forced to sell. EMI Group plc was delisted from the London Stock Exchange on September 18, 2007.

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