EMI Looks To Mortgage Its Back Catalog Of Music

In an attempt to reverse their financial turmoil, EMI is toying with the idea of licensing its music to the North American market, hoping to raise close to $600 million for the music company, owned by Guy Hands’ company Terra Firma.

EMI is reportedly presenting a five-year licensing deal of its music catalog to Warner Music, Universal Music Group and Sony Music.

The Wall Street Journal reports that under any deal, sales and distribution of music by EMI artists like the Beatles, Queen, Coldplay and Pink Floyd handled by a rival music company could bring in up to $150.1 million per year for EMI.

Times Online notes that while EMI does not need the approval of its artists to license their work, the music company must tread carefully because big earners such as Pink Floyd and Queen have already threatened to take their back catalog elsewhere.

The Rolling Stones and Radiohead bolted from EMI following the buyout of the label in 2007.

Because EMI (and subsidiaries like Virgin) have not had great luck introducing new bands and selling new music in the US market, a licensing deal actually makes sense; but then there is the timing issue and how long such a major deal would take to work itself out with a potential partner, the sticky issue of how an EMI artist might feel about their back catalog shuttled over to another label, plus any regulatory hurdles that might need to be dealt with.

This Hail Mary for EMI, if successful, would prevent the company from falling into the hands of its creditors later this summer. Citigroup, who helped fund the 2007 takeover of the label and is owed big money, would have to approve such a licensing deal between EMI and one of the rival music labels.