I Read The News Today, Oh Boy
So we’ve had the news today that EMI are to sell Abbey Road studios; probably the most famous recording studio in the world. A sign of the times for sure however, unlike a fair few of the tweets I’ve seen on the subject, I don’t think this is a sad day for music. It’s a sad day for EMI for sure, they’ve just sold one of their shrinking number of profitable assets. The buildings, the instruments, the equipment and the personnel are surely to remain, the “Lady Madonna” piano, the bricks that witnessed the many great recordings in all the amazing sounding rooms, they’ll all stay.
On my last phone call with Abbey Road as recently as Monday, Abbey Road’s booking staff confirmed that Studio 2 (the smaller room/the Beatles room) can be booked in advance for the princely sum of £1,500-00 for 12 hours (leaving a minimum of 10 more hours per day of billable time) with a minimium booking period of two days, all rates exclude producer/engineer. Studio 1 is considerably more and given the standing of Abbey Road, it would have to be a major failure on the part of Abbey Road’s marketing and sales teams if the studio isn’t used at least 95% of the days in a year, a turnover of more than £2Million per year, before even considering the value of “Live at Abbey Road” sessions etc.
It strikes me as another example of big-music looking to the short term without addressing the overall problems. EMI were bought out by Terra Firma recently, and EMI have only this month posted a £1.56 billion net loss, and were recently bought out by private equity firm Terra Firma, however Terra Firma are currently trying to sue Citigroup (the deal brokers) for allegedly artificially inflating the price of EMI.
“At the heart of Terra Firma’s case is its accusation that Citigroup’s lead banker on the deal, David Wormsley, lied about the number of bidders interested in EMI at the time of a May 2007 auction of the company. According to the complaint, Mr. Wormsley told Mr. Hands that a rival buyout firm, Cerberus Capital Management, would submit a bid on May 21 and win the auction unless Terra Firma made its own offer.” – NY Times
You can download the complaint here.
Realising that Citigroup made an estimated £96 million from the deal, the further estimated £10 million pounds from the potential sale of the Abbey Road studio (it is as yet unclear whether this would include the Abbey Road brand, though that’s the real value here) seems to be a mere drop in the water for EMI, though they need to raise this cash urgently to service their £2.5 billion loan to Terra Firma.
It’s amazing to me that EMI are in this position. How much waste must they be creating to consider selling off such a major asset. It’s strikingly short-sighted to cut off your profitable arm whilst retaining your loss-making legs.
With Paul McCartney rumoured to be stepping in to keep the studio in a working state, here’s to hopefully many more years of music making for the illustrious studio.