Layoffs Looming In U.K. As Uni Eyes Cost-Cutting

About 35 positions will be shed at Universal Music U.K. as part of global cost-cutting measures affecting Universal Music Group. Universal Music U.K., the market leader, employs about 400 people.

Chairman/CEO Lucian Grainge informed the staff of the changes yesterday. It is understood that most of the job cuts will hit the sales department. Sources say no artists are expected to be dropped. It is not known whether key executives will be among the casualties.

In an internal memo obtained by Bulletin, Grainge writes that UMG in October "began a global review which we knew would result in some difficult decisions at the U.K. company." He adds, "We have been working hard to minimize redundancies, but regrettably around 35 positions within the company are likely to be affected by the cost rationalization."

Grainge says in the memo that the music business "has been impacted by a number of global and national threats," citing illegal downloading, piracy, the collapse of the U.K. singles market and the decline in album margins.

The announcement yesterday begins a consultation process within the company, in accordance with the U.K.'s labor laws.

Sources at Universal Music U.K. say the company's three labels--Polydor, Island and Mercury--will remain as standalone units. Also, Mercury's offices will move to a new location.

"I have been determined to maintain the individuality and creativity of each of the labels and business units," Grainge says in the memo.