The boss of EMI owners Terra Firma, that crafty Guy Hands fella, told his financial backers last November that it was "essential" that the company be split into two - so that the struggling music major's recorded music and music publishing divisions would become separate entities - according to new documentation revealed by the Wall Street Journal this weekend.

Hands seemingly talked up plans to split his big music asset into two late last year, amid then ongoing negotiations to persuade EMI's money lenders Citigroup to restructure the company's debts. As previously reported, Hands wanted the US bank to write off a billion of EMI's debts (debts caused by the cash Terra Firma borrowed to buy EMI in the first place), in return for a commitment by the equity firm to pump a similar amount of new money into the faltering music concern. Citigroup refused to play ball, and since then Hands has launched legal action against the bank for alleged bad advice given to him by the bankers ahead of this purchase of EMI in 2007. Speculation has also risen that EMI will default on its loan commitments, allowed Citigroup to take control of the firm.

The correspondence between Hands and Citigroup regarding splitting up EMI's record labels and publishing units has come to light because of the legal dispute between the two companies. Also among documents filed with the US courts last week was an internal memo from EMI's recorded music chief Elio Leoni-Sceti warning Hands that morale among the record company's staff and artists (and those artists' managers) was at an all time below, the latter presumably making it difficult for the major to sign the sort new talent that a major record company needs on board to ensure future success.

Of course, it is widely known that it is Leoni-Sceti's recorded music division that causes EMI most of its financial problems, with EMI Music Publishing, in line with most of its competitors, being more resistant to slumping record sales; the publishing sector having always relied as much on broadcast, public performance and sync royalty revenues (all of which are up) as much as the songwriter and publisher's share of declining record sale revenues.

That EMI's more successful music publishing company be spun off from the flagging recordings business is not a new idea, and, indeed, before Terra Firma's acquisition of the company at least one of the other bidders for the music major intended to do just that had they successfully acquired the music firm.

That said, as the recorded music business becomes more and more about licensing sound recordings than selling plastic disks, the differences between record companies and music publishing companies start to decline. As a result, the case may now actually be stronger for merging EMI's record labels and publishing wing, rather than furthering the divide between them. It would be a bold move, but adopting the model being nurtured by BMG's new songs-and-recordings music rights agency might just work, even for a company as big as EMI.

Elsewhere in his banker exchanges, we see Hands admit that the music firm is worth £2 billion less now than what he paid for it in 2007 - with the equity man suggesting EMI Publishing is worth just under £1.5 billion, and the record company less than £800 million. Terra Firma has, of course, written down the value of the music firm on a number of occasion, with the value of the equity firm's overall portfolio of corporate assets taking quite a hit as a result.