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Last Updated: Wednesday, 18 April 2007, 12:22 GMT 13:22 UK
Cost-cutting success bolsters EMI
Lily Allen
EMI, whose artists include Lily Allen, has seen sales slide
Ailing music firm EMI has said that it is already seeing results from it restructuring and cost-cutting plans.

The debt-laden firm said it had already executed most of its cost cuts, and would save 70m by March 2008 as part of a wider 110m restructuring drive.

EMI also said that it may securitise its music library, a move that would sell the rights to future royalties, and provide another source of revenue.

Signs that EMI is turning around sent shares 6% higher in London.

'Pleasant surprise'

David Bowie was the first artist to securitise his music, though others, including James Brown, have followed.

Music publishers are seeking new revenue sources as sales of records and CDs have faced tough rivalry from digital media and piracy.

Securitisation would allow EMI to sell bonds, that would be paid back using the company's slice of royalties from artists including Lily Allen, Robbie Williams and Norah Jones.

The prospects of recovery are beginning to show
Richard Hunter, Hargreaves Lansdown

The money raised from the bonds would allow EMI to pay down its debt.

David Bowie raised $55m (27m) with his Bowie Bonds, while James Brown leveraged hits including Get Up (I Feel Like Being) A Sex Machine and Papa's Got A Brand New Bag to bring in about $30m.

In the interim, EMI has suspended its dividend payments and warned that annual revenues from its EMI Music division were set to drop 15%.

The world's third-largest music firm said it was suspending dividends until its restructuring plan was completed.


Hargreaves Lansdown analyst Richard Hunter said the latest figures came as a "pleasant surprise".

"The prospects of recovery are beginning to show" he said.

However, despite the recent success, EMI has said that the market remains "very challenging".

EMI added that digital revenues at its music division were expected to have risen 59% in the past year, accounting for 10% of revenue.

Earlier this month, EMI announced that it would be taking software locks off better-quality music downloads available through sites such as iTunes.

EMI has issued two profit warnings already this year, but said its forecast for a 15% fall in revenue at EMI Music was in line with previous guidance given in February.

In March, EMI rejected a 2.1bn takeover approach from Warner Music as too low, adding it would led to operational and regulatory risks.

EMI takes locks off music tracks
02 Apr 07 |  Technology
EMI rejects 2.1bn takeover bid
03 Mar 07 |  Business
Warner planning cash bid for EMI
21 Feb 07 |  Business
EMI receives Warner bid approach
20 Feb 07 |  Business
EMI shares fall on profit warning
14 Feb 07 |  Business
EMI shares fall as executive goes
12 Jan 07 |  Business

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