EMI axes 1,800 jobs, slashes dividend

LONDON, March 20 (Reuters) - British music empire EMI Group Plc said on Wednesday it was slashing 1,800 jobs and halving its dividend pay-out as part
Author:
Publish date:

LONDON, March 20 (Reuters) - British music empire EMIGroup Plc said on Wednesday it was slashing 1,800 jobs and halving itsdividend pay-out as part of a drive to revive its fortunes in thedown-and-out music industry.

After making a splash by axing pop star Mariah Carey from itsroster, EMI said its revamp would bring 98.5 million pounds ($140million) of annualised cost savings but would cost 110 million, takingits exceptionals to a whopping 240 million.

EMI, the worlds third biggest music company, said the majority ofthe job cuts would be made by the end of this month, and will come froma workforce estimated at some 9,000. EMI will also slash its dividendto eight pence from 16 pence last year.

"Cost savings are coming through 33.5 million pounds ahead of theoriginal target, but at a significant (initial) cost," said SimonBaker, media analyst at SG Securities. "The bigger concern is that thiswill just be a short-term benefit."

EMI shares slipped 0.29 percent to 345 pence in the first 30 minutesof trade in London after a strong rally last week on hopes thathigher-than-expected savings would come from the revamp. Thepan-European DJ Stoxx index was flat.

The world's top five music giants have been under severe pressure todrive down costs and restructure after one of the industry's worstyears on record when an economic downturn compounded the effects ofwaning CD sales and rampant piracy.

EMI, home to Kylie Minogue, Robbie Williams and Mick Jagger, hasbeen hit more than most after seeing major mergers with rivals WarnerMusic and BMG fall through, and some of its multi-million dollar starsfail to score hits.

Desperate to reverse its decline, EMI sacked some of its topexecutives last year and brought industry guru Alain Levy on board toturn around the group. Levy has spent the last six months trawling thebusiness for savings and has already been wielding his management axeand restructuring EMI's top labels.

EMI stuck to its 2001 pre-tax profit forecast of 150 million poundsafter two profit warnings in the past six months. The group also set anoperating margin goal for its recorded music division of 11-13 percentwithin three years.

In additional to the 110 million pound cash cost of its revamp, EMIsaid there would a further exceptional item of some 92 million poundsrelated to the write-down of loss-making investments and other assetwrite-offs. The group is also taking an exceptional charge of 38million pounds for Carey's contract.

- REUTERS