LONDON (VIP NEWS) — British independent music company Sanctuary Group Plc says it is "making good progress" with its program of strategic disposals, and will undergo a realignment of its recorded product operations in the United States.
The ailing firm had admitted in November 2006 that it was looking to sell parts of its business, including its stake in the independent Rough Trade label.
In a statement issued Thursday to coincide with its annual general meeting in London, Sanctuary added, "In response to the significant changes currently underway in the U.S. music market, to which our U.S. operations have not been immune, the board has approved a proposal to restructure the recorded product division's U.S. operations."
The restructuring follows the departure in late 2006 of Merck Mercuriadis, formerly the company's U.S.-based CEO of Sanctuary Records.
Going forward, the company's U.S. division will now concentrate on "growing its higher margin digital and licensing businesses and continue to exploit out catalog rights," the company said. "The net financial cost of the restructuring is not expected to be material in the current fiscal year."
Sanctuary said the moves would provide the basis for a return to overall profitability by 2008 or later. Staff cuts were not disclosed.
After a string of profit warnings and a diving shareprice in recent years, Sanctuary launched a £110 million rescue deal earlier in 2006. Former British Airways CEO Bob Ayling was hired to the role as non-executive chairman in April, and Frank Presland, CEO of Sanctuary-owned Twenty-First Artists, took the reins as group CEO.
Sanctuary's founders Andy Taylor and Rod Smallwood have since split with the company.
According to Billboard