Hands’ traditional MO is to buy unfashionable companies with reliable cash-flows (pub chains, cinemas, rental properties etc) and securitise the hell out of them. How does EMI fit that pattern ? Is it the vanity purchase of a very wealthy man; or a new business model - or does he see the same underlying business dynamics to be exploited one more time ?
I’d guess the latter: he is probably looking to extend the concept of securitising royalty streams, as pioneered by David Bowie. Accordingly, part of Hands’ due diligence was an attempt to assess what teenagers are willing to pay for downloads. Can there really be any stability in that ?
‘Trooble at mill’ from Mr Williams et al is perhaps something he has catered for in his planning, with his talk of 'incentivising' EMI acts (profit-sharing, I imagine, not percent of the gross). Likewise, with the vast increase in the number of bands spawned from the YouTube generation, perhaps he is anticipating a wholesale commoditisation of pop music, and consequent reduction in artist-power. But I also reckon he is expecting to run an efficient business with slender and predictable margins: he refers to his Odeon cinema chain as being in the popcorn business, not the movie business.
Good luck, matey: the pop industry may be fuelled on alcohol (and other substances) but music doesn’t flow quite as smoothly as beer.