Industry News | April 24, 2008

Starbucks Restructures Entertainment Business

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In its continuing efforts to transform the company and reduce costs, Starbucks (NASDAQ:SBUX - News) today announced it is restructuring its entertainment business to focus on digital strategy and core content with music and books.

As part of this restructuring, Starbucks will continue its relationship with the Concord Music Group and will turn over the day-to-day management of the Hear Music Record Label to Concord. By assuming responsibility for current and future Hear Music recording artists, Concord will leverage Starbucks curatorial voice to provide music offerings for customers that are fresh and unique.

“As part of our ongoing transformation, we are committed to examining all aspects of our business that are not directly related to our core,” says Howard Schultz, chairman, president, and CEO. “We have had numerous successes in music and books including eight GRAMMY® Awards and three No.1 books on the,i> New York Times bestseller list. However, now is the appropriate time to restructure our Entertainment business to better align our efforts with our overall business strategies.”

Starbucks will continue its relationship with the William Morris Agency to identify book projects that it can offer in its stores as well as provide strategic counsel on opportunities in the entertainment space. With the Apple and AT&T strategic relationships, Starbucks will look for ways to enhance the customer experience through the use of Wi-Fi and other in-store technology.

As a result of the Entertainment reorganization, Ken Lombard, senior vice president and president of Starbucks Entertainment who resides in Los Angeles, has left the company to pursue other business interests.

“Ken was instrumental in shaping Starbucks entertainment strategy over the past several years and we are grateful for his numerous contributions to the company,” says Schultz.

Chris Bruzzo, chief technology officer, has been promoted to senior vice president and will assume the leadership helm of the Entertainment category as part of his responsibilities.

“Under Chris’ leadership, we will focus on providing customers with a superior Starbucks Experience, while building on our legacy of innovation through our redefined entertainment strategy,” says Martin Coles, chief operating officer.