On Wednesday, Terra Firma chief Guy Hands released his quarterly letter to investors. He wrote about EMI's difficulties and the current credit climate.

EMI is certainly not highly correlated to the economy. The issues and challenges facing the recorded new music side of the company are not due to the economic cycle, but to more fundamental shifts in consumer behaviour that are affecting the whole music industry. We are addressing these challenges, and working to develop a robust business model for the future. Meanwhile, and importantly, our investment has strong downside protection in the publishing and catalogue assets of the business, where revenues are on an upward trend. ...

From a financing perspective, unfortunately, the crisis has been so deep that the debt package has had to remain on the balance sheet of the bank which provided it. Clearly, this is a time when all banks are under tremendous pressure, but this is not ideal for EMI. In all leveraged buyouts, your bank is your partner, and we have worked hard, and continue to work hard, to see if there are ways to help Citigroup syndicate or sell down this loan.

The New York Post hopped on the story. "EMI's debt has been viewed inside Citi as largely unsellable, sources said," wrote Brian Garrity.

The Daily Swarm has the text of an article at The Evening Standard that says "the private-equity magnate is open to offers to split the business, and is considering selling off the recorded music arm." EMI would retain the publishing arm of the company ("where revenues are on an upward trend" Hands wrote in the letter). In addition, Hands mentioned considering moving EMI's U.S. headquarters to Los Angeles, according to the article.

Such a sale would result in three major music companies that would account for about 80% of all recorded music sales in the U.S. Economic efficiencies, yes, but this has got to be close to the point at which regulators become too uncomfortable with the concentration of market share. It would be bad for sales, too. Labels merge, bands dropped from contracts, fewer acts developed, fewer titles released, fewer units sold. Good for catalog sales, but at that rate the majors would be in jeopardy of becoming archivists rather than creators.

There may be whispers and musings about a company like Apple or Nokia buying EMI's recorded music division. Nothing seems like a good fit right now. Apple doesn't need to buy EMI Music just to make another $0.30 per track, and Nokia needs to prove its sales model and technology before considering an investment in music assets. Besides, history is filled with examples of parent companies failing to realize synergies with a media subsidiary. It looks good on paper, but it doesn't always work in reality.

[music jobs] New York University is seeking a Department Chair for The Clive Davis Department of Recorded Music.