Crossroads

At the intersection of technology, finance and the Pacific Rim.

Friday, June 05, 2009

EMI and Terra Firma

We have emphasized before the role of PE in "managing the CEO".  And last week we talked about the difficulty of the investment in EMI, the music company. Though this paper is known more for its "gossip", rather than it rigorous journalistic standards, The NY Post writes:

The relationship between EMI chief Elio Leoni-Sceti and his boss, Terra Firma's Guy Hands, is so strained that whispers around the record label's halls are that Leoni-Sceti could be gone before the year's out, The Post has learned.

Though Leoni-Sceti and Hands used to be chummy -- their families went on holiday to Italy together in March, for instance -- multiple sources inside EMI or who have working relationships with the label said the pair recently had a falling-out. The crux of the friction centers on Ronn Werre, the recently named chief operating officer for EMI North America.

According to two sources with knowledge of the situation, during contract renegotiations Hands directed Leoni-Sceti to make Werre a "take-it-or-leave-it" offer, figuring that the music industry is in such disarray that he would jump at any new deal. Werre not only rebuffed the offer, but also got himself a bigger job at rival Sony Music.

That so surprised and incensed Hands that sources said he told Leoni-Sceti to do whatever he had to do to get Werre back. Sources said Leoni-Sceti chafed at the directive, both because he was acting like a good foot soldier in carrying out Hands' initial ill-conceived directive and also because he didn't want to go back to a supposed underling with hat-in-hand.

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