Added on 07-May-2010
They once wanted to break free — and now they have: the veteran rock band Queen have quit the beleaguered music label EMI for its rival Universal.
Queen, who have been with the heavily indebted British label for almost 40 years, are believed to have been lured to Universal with a new contract worth tens of millions of pounds.
The band’s exit follows the departure of Sir Paul McCartney, who took his solo and Wings back catalogue to Concord Music this year.
There have been concerns that the financial turmoil at EMI, whose private equity owner Terra Firma is trying to raise at least £105 million to save the company from bankruptcy, could prompt an artist exodus. Music industry insiders have suggested that Pink Floyd could also quit the label.
However, people familiar with the situation said yesterday that Queen had moved to Universal primarily for the money. “EMI just decided they couldn’t compete. It was too much to pay and they want to spend that money on developing new talent,” one music industry insider said.
Another person close to the deal said that Queen, whose Greatest Hits has sold 5.4 million copies, making it the UK’s highest-selling album, would not move to Universal immediately. The band, whose former lead singer Freddie Mercury died in 1991, are expected to see out their contract, which expires at the end of this year.
The move comes as the Terra Firma boss Guy Hands tries to tempt the private equity fund’s investors to back a bailout of the music group, which it took private in 2007 for £4.2 billion. It is understood the investors have already been briefed about Queen’s departure and the move has been factored into a turnaround plan drawn up by EMI executive chairman Charles Allen.
Mr Hands has told Terra Firma’s investors they could make a profit up to 58 per cent if they invested an extra £360 million in the company. In a presentation sent to investors last week, he said that the “upside case” for saving EMI from its lender Citigroup with a bailout of that size is that, if the company were to be sold before 2015, investors would pocket £208 million, thus recovering all their equity investment.
The presentation also shows that Mr Hands has backed down from earlier plans to present a wholesale £360 million bailout as the only option for investors. Terra Firma had argued that a payout that big was the best way to ensure a turnaround at EMI because it would protect the company from Citigroup until 2015.Mr Hands is now asking investors for £105 million now, plus £255 million later. The music giant needs to find £105 million by next Friday to avoid a covenant breach and will fall into the hands of Citigroup unless investors stump up that money. People close to the situation said yesterday that Terra Firma has had verbal commitments from its investors that they will put in the £105 million.
Queen are essentially a catalogue act, although Brian May and Roger Taylor — two of the band members — still perform live, albeit infrequently.