What were the folks at Access Industries looking for in a candidate to replace Edgar Bronfman Jr as CEO of Warner Music? Someone who knows the music industry inside out — or who can hob-nob with Warner’s money-makers such as Red Hot Chili Peppers, Missy Elliot, Randy Travis, and Aretha Franklin? Apparently not. The press release about Stephen Cooper’s new gig running Warner Music notes that he is on the board of “one of the world’s largest olefins, polyolefins, chemicals and refining companies” — and has “more than 30 years of experience as a financial advisor.” I suppose Warner didn’t want to come right out and say that Cooper is a turnaround expert who has worked with corporate basket cases including Enron, KrispyKreme Donuts, and most recently MGM as it went through bankruptcy.
Bronfman kept up appearances, saying that Warner Music is “well-positioned for its next exciting chapter.” He’ll switch jobs with Cooper, who had been chairman, to fulfill “my desire to focus on growth opportunities.” Cooper will handle day-to-day operations. Lyor Cohen, who runs the recorded music unit, and Cameron Strang, who’s in charge of publishing operation Warner/Chappell Music, will report to Cooper. He may have to make a lot of big decisions soon: Warner is one of the leading bidders for EMI as the auction, run by Citigroup, enters its home stretch. In addition to the Cooper appointment, Warner added financier Thomas H. Lee to its board, increasing the … Read More »
Warner Music is a step closer to becoming a division of Access Industries, the privately held chemical, natural resource, and real estate company controlled by Russian-born industrialist Len Blavatnik. Shareholders in the music company this morning overwhelmingly approved Blavatnik’s $3.3 billion takeover offer. The deal, which pays investors $8.25 a share, is expected to close in the third quarter. Investors also approved, on an advisory basis, the controversial “golden parachute” package that guarantees about $16.9 million in equity to CEO Edgar Bronfman Jr and $10 million to Lyor Cohen, the CEO of recorded music. Although they’re expected to stay at the company, they can cash in even if they leave.
Citigroup hung a “for sale” sign on EMI Group today, saying that it has “initiated a process to explore and evaluate potential strategic alternatives” that could include a sale, recapitalization or a public offering. The home of hitmakers including Katy Perry, Lady Antebellum, Nora Jones and Coldplay is in better shape financially than it was in February, when Guy Hands’ Terra Firma defaulted on its debt to Citigroup. The bank accepted a controlling equity stake in EMI and forgave about 65% of the music company’s debt. But Citigroup is into money, not music. Don’t be surprised if the bank considers splitting EMI’s recorded music operation from its crown jewel — the music publishing business, which includes the rights to standards including New York, New York; Ain’t No Mountain High Enough; Over The Rainbow; and Singin’ In The Rain. Access Industry’s Len Blavatnik, who’s in the process of buying Warner Music, also is probably salivating over the possibility of merging that company with EMI. Edgar Bronfman Jr. had the same dream before last month, when he accepted Blavatnik’s $3.3 billion offer for Warner Music. Citigroup says that “there can be no assurance” that its review will lead to a deal. The bank adds that it “does not intend to disclose developments” until the process is over, expected toward the end of this year.
Even though Warner Music Group’s net losses grew in the quarter that ended in March, CEO Edgar Bronfman Jr. could take comfort from the fact that Wall Street analysts expected worse. The company reported a net loss of $38 million, up from a $25 million loss in the same period last year, on revenues of $682 million, up 2%. The 25 cent-per-share loss in the company’s fiscal second quarter contrasts with the 28 cent loss expected by analysts who follow the company. Warner Music says that Bruno Mars, R.E.M, Wiz Khalifa, Cee Lo Green and Lupe Fiasco were among its top-selling performers. Bronfman says that he is “excited to see our digital revenue approach the 50% milestone for U.S. recorded music and to see 60% of our active global artist roster signed to expanded rights deals.” Last week, Warner Music said it has agreed to sell itself to Russian-born industrialist Len Blavatnik’s Access Industries for $3.3 billion.
Former Vivendi Universal executives Edgar Bronfman, Jr. and Jean-Marie Messier have been found guilty in Paris of criminal charges relating to misleading investors and insider trading. Ending a trial that began in June 2009, Bronfman, who at the time was Vivendi’s vice-chairman and now serves as CEO of Warner Music, received a suspended sentence of 15 years and a fine of $6.7 million related to insider trading. Messier received a suspended sentence of three years and a fine of $204,000 for charges that included misleading investors. He was found not guilty of a charge of manipulating share prices. The three-judge panel wrote that Messier “had awarded to himself, while the company was in grave difficulty, very large amounts.” Bronfman and Messier plan on appealing. In a statement, Bronfman said, “I am disappointed that the Court differed with both the Paris public prosecutor and the lead civil claimant in the case. As I have consistently stated, my trades were proper.” Messier, who left Vivendi in 2002, said that the ruling was “profoundly unjust” and that he had “always led this company with integrity.” Also convicted was former Vivendi finance director Guillaume Hannezo, who was fined and received a 15-month suspended sentence. The convictions follow a class-action lawsuit in New York brought last January in which Messier and Hannezo were cleared of misleading investors.