Will Focus on Building EMI, Chairman-Designate Says

What could the head of a giant British biscuit company possibly know about selling music by such American stars as rapper Master P and country singer Garth Brooks?

That’s the question everybody in the record business was asking this week after EMI Group, the world’s third-largest music conglomerate, chose United Biscuits chief Eric Nicoli to take over the London-based company, whose roster includes such acts as Brooks, Master P, Yukmouth, Janet Jackson, the Beatles and the Beastie Boys.

EMI said Sunday that Nicoli, 48, will be appointed chairman-designate in May and succeed longtime EMI head Sir Colin Southgate in July when he steps down. The corporation Southgate built into a global music powerhouse has been dogged by sinking profit in recent years and has been the on-and-off subject of takeover speculation.

Southgate, 60, has been criticized for bungling talks that could perhaps have led to a sale of the company to Bertelsmann Music Group, Seagram Co. or News Corp.

Nicoli, a marketing expert and blues music fan who joined United Biscuits in 1980 and took over as chief executive 10 years ago, has been a nonexecutive director at EMI since 1994. In his first extensive interview, Nicoli spoke from London about his credentials and about speculation that he was installed by EMI’s board of directors simply to facilitate the sale of the struggling company.

Question: There’s a lot of snickering in the record industry about EMI’s bringing in a biscuit maker to run a global music company.

Answer: I’m completely relaxed about it. It’s true that I’m not an expert on the music industry. But we have Ken Berry and Marty Bandier [U.S.-based heads of EMI’s recording and publishing divisions], two of the biggest hitters in the global industry. The board’s idea was to appoint someone to run the group in the U.K. who brings complementary skills so that Ken and Marty won’t be distracted from doing what they do best, which is making music and publishing it.

Q: What role will you play in the day-to-day operations?

A: Ken and Marty are charged with running EMI day to day. I won’t be dictating to Ken how to do his job. I wouldn’t know where to start. I don’t manage by interference. I manage by challenge and support. But my role won’t be merely supervisory. We feel very comfortable with each other, but not so comfortable that we can’t challenge each other and get some progress out of that challenge.

Q: EMI is ranked third worldwide and last in the U.S. Where do you see EMI’s growth coming from over the next three to five years?

A: I’d rather talk about that toward the end of the year than right now. I need to get up to speed with the team, and I certainly don’t want to make pompous and arrogant pronouncements about what I’m going to do with this business before I get to know it better. I do happen to have a passionate interest in music, but that is almost coincidental, I guess.

Q: What kind of music do you like?

A: From a very early age I enjoyed blues. I was considered a bit of a weirdo in my teens because the Beatles and the Stones were happening here in the ‘60s, and I loved the blues--John Lee Hooker and Muddy Waters and rhythm and blues. I love Eric Clapton. I know he’s not one of our artists, but I have to admit to liking him. I’ve been ever-present at his concerts here at Albert Hall in London.

Q: Critics have blamed Colin Southgate for being an obstacle to the sale of EMI. You were on the board when News Corp. reportedly put in an offer for EMI last April. Southgate apparently didn’t think the offer was worthwhile. What did you think?

A: We supported Colin in the calls he made. Sometimes he would share approaches with us; sometimes he wouldn’t. He was the chairman and chief executive of the company and still is. If people make audacious approaches, they shouldn’t be offended if the board doesn’t get excited.

Q: Looking back now, in light of the criticism, how do you feel about it?

A: I don’t want to talk about whether or not we had offers. I read all the bid speculation just like you. And most of it was just that: speculation. We announced that we were having discussions on one occasion and that we had stopped those discussions. Colin and his top team were involved in those discussions. But I think it’s right for management to examine opportunities to expand the business. It doesn’t always have to be a takeover. I think management has to have an open mind to opportunities to create value and not be embarrassed to say: “Well, look, this doesn’t look like a great idea. Let’s move on”--which is what happened.

Q: Southgate is said to have thrown cold water on a $6.25-billion oral offer from Seagram last April. What is your opinion of how that deal worked out?

A: I don’t believe an offer was ever made. There were discussions, and they didn’t even nearly reach a conclusion. And Seagram moved on, didn’t they? And we wish them luck. The industry and press comment that followed was absolutely inevitable, wasn’t it? Because Seagram went on to buy another company, so the speculation was that presumably they could have bought EMI. They never made an offer, so there was never an offer to discuss. It’s quite normal for companies in the same business to talk about what they might do together. But it didn’t materialize.

Q: Many large shareholders, including Capitol Group in Los Angeles, would love to see EMI become part of a larger vertically integrated corporation. Are you aware of how unhappy such large shareholders are?

A: I think the smart thing for me to do is to meet them in due course, and if they are hostile, they’ll tell me. And if they have aspirations, I’m sure they’ll tell me. My job is to listen and to make the best calls going forward. I’ll do it together with the team. Our responsibility is to create value, but not just jump on the first idea that somebody comes up with. I think we need to examine all of the options.

Q: There is talk that you were installed to facilitate a sale, which some observers seem to think is inevitable.

A: That’s crap. I understand why some people would hope that’s the case--particularly those who might be interested in buying the company. But I wasn’t recruited to sell this company. I was recruited to build this company. And that is my commitment to the board and to the management.

Q: Some analysts see your appointment as an ousting of Southgate by the board. Is it?

A: Not at all. Colin has long declared his intention to retire about now. I think he would’ve gone a little earlier had I found the right succession earlier. He’s very happy with this arrangement.

Q: If you had to single out one thing that is wrong with the company, what would it be?

A: I would say that it is too busy thinking about speculation of a sale and not busy enough on building on what is an incredibly strong base. I don’t think the constant speculation is good for the company or good for the industry--even though I know it is perceived as exciting by the media.

Q: What would you say the immediate task at hand is?

A: I think my task is to develop a strategy that makes EMI an even more excellent world player in music. To examine opportunities to broaden the base. If I wanted you to take one message away from our conversation, it would be that I’m not going to make any calls before I’m ready to make them. I’m acutely aware of the excitement and the speculation going on in the industry and that doesn’t faze me at all. We will look at these things coolly and objectively and intelligently, and in the meantime, we’ve got a business to run.