EMI to release sweeping changes

March 15, 2002 Posted: 10:01 AM EST

EMI's chart topping Janet Jackson

LONDON, England (CNN) - Britain's EMI Group, which paid $28 million to dump pop diva Mariah Carey, may announce sweeping jobs cuts next week.

London-based EMI, the world's third biggest music company, is expected to axe 1,000 jobs, the Financial Times reported. It may also sell property and its stake in HMV Media to cuts its $1.1 billion debt pile.

Alain Levy, brought on board to turn around EMI, has been trawling through the company's sprawling empire for cost savings and is due to present his findings to investors next Wednesday.

Amanda Conroy, EMI's spokeswoman, told CNN that Levy will outline strategy for the group's recorded music business but declined to comment on media reports.

EMI (EMI), which has issued two profit warnings in six months, like its rivals Warner Music, BMG, Sony Music and Universal, is suffering from a slowdown in consumer spending as the economic climate deteriorates.

CD replacement sales are waning as music lovers opt for new mediums, like MP3, mini disc players and free music on the Net.

Levy's biggest splash to date was to drop Carey from her multi-million dollar contract. EMI, with artists Radiohead, Janet Jackson and Atomic Kitten on its roster, has also severed contracts with David Bowie, as it moves to cut costs and stem a decline in profits as music sales in Asia and Latin American wane.

A 10 percent reduction of its 9,000 staff at its recording business could save about 100 million pounds ($140 million ) a year.

In February, EMI said profit before tax and one-time costs for the year ending March 31 is expected to be about £150 million ($214 million). Analysts had estimated a profit of between £160 million and £207 million.

Hopes that EMI would take radical step to cut cost, pushed its stock up 3.9 percent to 353.25 pence in midday London trading on Friday.

Its stock has fallen more than 30 percent over the last 12 month after planned mergers with Warner Music and BMG were scuppered by anti-competition concerns. The European Union was unwilling to see competition in the industry reduced from five players to just four.

EMI has said in the past that it plans to focus it recorded music business around is Virgin and Capitol brands. Its will also outline a schedule of new album releases.

The sale of its stake in HMV Media could raise £330 million, although it could double that if it chooses to float the company, Merrill Lynch estimates.

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