EMI CEO Nicoli faces the music

(Adds details, quote)

By Kate Holton

LONDON, Aug 29 (Reuters) - EMI EMI.L Chief Executive Eric Nicoli, who has been under fire in recent years over his handling of the British music group, is to stand down as part of a reshuffle by its new private equity owners Terra Firma.

Outlining its plans for the group in a statement on Wednesday, Terra Firma said it would appoint one of its managing directors, Chris Roling, to run EMI, and focus on developing the lucrative publishing division and growing digital music sales.

The announcement brings an end to Nicoli's eight year reign which has been dominated by takeover speculation, falling market share and wider problems in the music market.

EMI said Nicoli would stand down as CEO of EMI Group and its recorded music division, EMI Music, while Finance Officer Martin Stewart would also leave and resign as a director.

Roling, a managing director of Terra Firma, will become group Chief Operating Officer and Chief Financial Officer of both EMI Group and EMI Music.

Nicoli's role as chief executive of EMI Music will not be filled immediately while Roger Faxon, the head of the successful Music Publishing unit, will continue in his current role and remain on the board.

"Eric has steered EMI through a period when the industry has faced extreme change and we thank him for providing a smooth transition into our ownership," Terra Firma's Guy Hands said.

Terra Firma agreed to buy EMI, home to artists such as Lily Allen and Norah Jones, in May for 2.4 billion pounds ($4.8 billion), finally bringing an end to the music group's troubled tit-for-tat takeover battle with American rival Warner Music Group (WMG.N).

That takeover was always hampered by regulatory concerns and supporters of Nicoli say he has done a good job in very difficult circumstances.

But city analysts and the financial press have been more scathing.

EMI slipped last year to rank fourth among the world's largest music companies, according to the Music & Copyright trade publication, and on the day it agreed to the takeover, it published its full-year results, showing a 61 percent fall in underlying profit before tax.

The company has cited problems in the United States, the world's largest music market, where CD sales fell nearly 20 percent in the first half of the year, but it has also had a weak artist and release roster.

Analysts have said they expect Terra Firma to keep the lucrative publishing unit but there is more doubt over the recording division which could eventually be sold to Warner once the regulatory outlook is settled.

Terra Firma said it expects the group to delist on or around Sept. 18.

((Reporting by Kate Holton, editing by Richard Hubbard; Reuters messaging: kate.holton.reuters.com@reuters.net; +44 20 7542 8560))

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