EMI Group Plc. on Monday threw cold water on reports that it had agreed to pay pop diva Mariah Carey a lump sum to end her multimillion-dollar recording contract after her latest album, “Glitter,” flopped.
Recent reports suggested EMI had agreed to pay Carey off with as much as $50 million, just eight months after its Virgin label signed the star in one of the most expensive recording deals ever only to see “Glitter” sell a mere 2 million copies.
“EMI wishes to make clear that it has made no such payment or agreement,” EMI said in a brief statement on the stock exchange, in its first official comment on the opera-trained singer since rumors of a possible split emerged in December.
EMI, whose top artists include Robbie Williams and Kylie Minogue, was harshly criticized last year for paying excessively for a 31-year-old star past her prime when it signed the four-album Carey deal, worth an estimated 57 million pounds.
At the time, EMI justified the deal as building much-needed U.S. market share with the best-selling female singer of the last decade, who has sold more than 120 million albums.
EMI shares, which lost a third of their value last year as the music industry suffered one of its worst year’s ever, saw its shares fall 2.6 percent to 379-3/4 pence in London on disappointment EMI has not made a break with the costly star.
EMI declined to comment further on Carey, leaving the industry guessing on the star’s future at the music group.
Carey’s professional and private life has topped gossip columns ever since her marriage to Sony Music boss Tommy Mottola fell apart.
Carey suffered a painfully public breakdown last year, delaying her first EMI album, “Glitter,” which was then released on September 11. Ill health then prevented Carey from promoting the album. EMI had hoped “Glitter” would match the huge success of previous albums, such as “Music Box,” which sold more than 20 million copies.
“She had a great track record until last year. There’s no reason why she can’t get back on track with the next album, but it all depends on what cost pressure EMI is under,” said Brett Hucker, analyst at Merrill Lynch in London.
Rumors of Carey’s departure started after the executive who signed her recording contract, Ken Berry, was forced out of the British music group in a reshuffle following a dismal performance in the first half of last year and was replaced by Alain Levy.
Former PolyGram boss Levy immediately set to work reviewing the recorded music business in a move to slash costs. Old-timer David Bowie has already been axed from the EMI roster.
Levy’s strategic review of the business is due to be completed early this year, and investors are eagerly awaiting word on his vision. EMI has already said further job losses may be made while labels are expected to be restructured.
The group is expected to take a 100 million pound restructuring charge this year and an extra payment to Carey would not go down well with investors.
EMI, the world’s third-largest music group, has been under severe pressure to brush up its act, especially in the core U.S. market, after two failed merger attempts – first with Warner Music and then with BMG.
The music industry as a whole also suffered its worst year ever in 2001 after the September 11 attacks compounded already low growth due to piracy and waning CD sales, battering majors that also include Sony Music and Universal.
In a move to cut costs in a shrinking industry, a number of music groups have been offloading high-profile artists who do not sell enough albums to warrant costly contracts.