EMI staff count cost of Carey

March 20, 2002 Posted: 10:46 AM EST

LONDON, England (CNN) - Britain's EMI Group, which paid $28 million to dump pop diva Mariah Carey, plans to axe 1,800 jobs.

EMI (EMI), the world's third-largest music company, said the job cuts, writing off Carey's contract and loss-making investments, would cost £240 million ($340 million).

The company -- like its rivals Warner Music, BMG, Sony Music and Universal -- is under pressure to cut costs as the industry suffers one its worst years because of an economic slowdown, declining CD sales and Internet related piracy.

Alain Levy, the chief executive of EMI's recorded music business, was brought on board in October to turn around the company, which has seen many of its multi-million dollar artist releases sink with out a trace.

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Since joining EMI, Levy has been trawling through the company's sprawling empire to find ways to improve profitability as global music sales decline.

His biggest splash to date was to drop Carey from her multi-million dollar contract in January.

EMI -- whose roster includes Kylie Minogue, Janet Jackson, Robbie Williams and Mick Jagger -- hopes the latest job cuts and reshaping of EMI Recorded Music will save £98.5 million a year.

"There are some real challenges facing the music industry at the moment," said Levy. "We are firmly on target to improve EMI's performance and we are optimistic about our ability to attack the broader challenges."

The majority of the jobs cuts would have been made by the end of this month, the company said. EMI has said in the past that it plans to focus it recorded music business around its Virgin and Capitol brands.

EMI also slashed in half its annual dividend to 8 pence. The company said the cut would enable it to invest the savings in the restructuring of its business.

Its stock fell 1.2 percent to 342 pence in early London trading on Wednesday. EMI has seen its shares fall by more than 30 percent over the last 12 months 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 is on track to meet its 2001 pretax profit forecast of £150 million, the company said, and set out an operating margin goal for its recorded music business of 11-13 percent within three years

Levy also said the company still plans to exit manufacturing and distribution but would like to bolster the businesses first. He expects sales to grow between 0-3 percent in 2002/03 and 3-5 percent in the following two years.

EMI's new Chief Financial Officer Roger Faxon told analysts he expects the group to end the year with net debt of about £1.1-£1.2 billion. He also repeated that the group would consider offers for its stake in retailer HMV Media as part of a move to offload non-core assets, according to Reuters.

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