EMI posts 6.6% profits fall amid Time Warner talks

Music group EMI today said talks about buying Time Warner’s recorded music division were at “an advanced stage” as it posted a 6.6% fall in profits to £39.4m (€56.18m).

EMI said the non-exclusive discussions about “a possible transaction” regarding the division, which is part of the Warner Music Group, had progressed well.

It had made a firm, fully funded proposal to Time Warner which it believed would create substantial value for the shareholders of both companies, EMI said.

Chairman Eric Nicoli said: “As soon as we are able, we will make a further announcement. It would be inappropriate to say more at this time.”

EMI said the 6.6% fall in adjusted pre-tax profits, before exceptionals, amortisation and music copyrights, from £42.2m (€60.17m) last time was due to higher interest charges, prompted by the group’s move to longer term debt as part of its debt restructuring programme.

Group operating profits in the six months to September 30 rose 0.9% to £79.7m (€113.65m) against £79m (€112.6m) beforehand.

It said the small increase had come against a global recorded music industry decline of more than 10%.

EMI’s recorded music division has artists including Radiohead, Coldplay and Robbie Williams in its portfolio.

It said both of its core recorded music and music publishing businesses maintained sales, operating profits and margins at last year’s levels and outperformed the industry.

Turnover in recorded music was broadly maintained at £758.6m (€1.08bn), while turnover in music publishing declined slightly by 0.2% to £201.7m (€287.6m) despite pressures from the declining recorded music industry, EMI said.

Mr Nicoli said it was too early to predict accurately the trends for the second half of the year.

But he added: “We expect to deliver in the year as a whole another solid result.”

Bottom line profits were £11.9m (€16.96m) against £194.4m (€277.22m) last time due to an operating exceptional charge of £21.8m (€31.08m) for unprecedented levels of retailer destocking in Japan, a reorganisation in EMI Music Publishing and a non-operating one-off gain of £174.8m (€249.3m) in the prior year.

The interim dividend to shareholders was maintained at 2p.