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Edgar Bronfman Jr’s departure may signal Warner Music restructure

By | Published on Wednesday 7 December 2011

Warner Music

Could the decision by Edgar Bronfman Jr to step back from the Chairman role at Warner Music be a sign that some more radical restructuring is incoming at the major music company?

Probably not, after all Bronfman Jr had already given up any real control over the firm when he resigned as CEO in August, though his announcement this week that he’ll now relinquish the Chairman role in January has added to gossiping that newish Warner owner Access Industries is now planning some radical changes in 2012. Access man Stephen Cooper is now WMG’s CEO, of course, and it’s thought another Access board member could take over in the Chairman post.

And, according to Digital Music News, which cites unnamed sources, that restructuring will be motivated by serious concerns at Access that its $3.3 billion acquisition of Warner was not as good a move as the firm originally thought, especially now that rivals Universal and Sony, instead of Warner, will share the spoils of the EMI sale (regulator investigation permitting), leaving WMG as the solitary little major alongside two even bigger mega-majors. DMN’s source says Access Industries chief Len Blavatnik is “apoplectic over this acquisition” which was allegedly made with “lots of blind spots” about Warner’s future performance.

If the restructuring is motivated by serious concerns at Access about its most recent purchase, then the aim of any structural change will almost certainly be to reduce costs. Or in the words of DMN’s source: “There’s some serious buyer’s remorse happening here, and [Blavatnik] will be trimming the fat just like Guy Hands did”. Hands, of course, was the boss of private equity group Terra Firma, who instigated a radical overhaul and dramatic headcount cull after his firm bought EMI in a debt laden multi-billion deal in 2007.

All of the majors have been quietly making staffers redundant for years now of course, some to reduce overall staff numbers, some to downsize traditional record label operations to allow expansion into other areas of the music business such as merchandise, management, brand partnerships and label services. But Hands’ approach at EMI, a sudden radical cull of whole teams, labels and numerous senior and veteran execs almost overnight, really stood out. Could Blavatnik and Access be planning something similar at Warner?

You don’t get the sense that something so dramatic is about to happen in the Warner Music empire, though it is true that new owners do normally start making their most radical changes towards the end of their first year in charge, which would mean a spring restructuring wouldn’t be unexpected.



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