HITS Daily Double


Financial Times Report Says New Chairman/CEO Ready to Make Changes
Following last week’s announcement that Universal Music Group is selling its U.S. and European CD and DVD manufacturing businesses to U.S. company Glenayre Technologies (see story, 5/9), the Financial Times reports this morning that UMG is now preparing to revamp the entire structure of its international operations.

The restructuring would be the first move by newly promoted UMG International Chairman/CEO Lucian Grainge, who recently took over for Jorgen Larsen, who has been head of International since UMG merged with PolyGram in 1998. Larsen is stepping down after a 30-year career.

Grainge was previously UMG’s UK head, where, in addition to successfully marketing acts such as the Scissor Sisters and Keane, he implemented cost-cutting measures that reduced operational overhead by about $63 million. He is now likely to roll out a similar program across UMG’s entire International division, according to the FT.

“He will look at the structure and organisation and make changes quite quickly,” a source told the paper.

Expected changes include the formation of regional hubs to consolidate operations in certain groups of countries, and a revamping of the division’s management board structure.

According to IFPI data, European record sales fell 5.4 per cent to $12.3 billion last year, while sales in Asia fell 1.8 per cent to $6.2 billion. UMG as a whole has engaged in heavy cost-cutting already, resulting in higher operating income. The upcoming restructuring of International is seen as an extension of that mandate.

UMG has made no official announcement about the International restructuring as of yet. Last month, new Vivendi Universal Chairman/CEO Jean-Bernard Levy told shareholders that the company intends to hold onto the music company.