EMI was hoping everything with the Sex Pistols would all blow over. Instead, the British record label watched it blow up.

Leslie Hill, EMI’s managing director, had signed the Sex Pistols in October 1976, landing the fiercest figures of England’s burgeoning punk movement. Reportedly, EMI and Pistols manager Malcolm McLaren agreed on a £40,000 signing bonus for the band and planned to release its debut single in the immediate future. The label was good to its word, putting out the brazen “Anarchy in the U.K.” in November. The relationship began to sour shortly afterwards.

The problems began as “Anarchy” was being manufactured. Certain employees at EMI pressing plants refused to handle the Sex Pistols’ single, due to the provocative name of the group, the language in the song’s lyrics and the band’s general sentiment.

That issue was compounded by the Pistols’ December appearance on the Today news program, during which band members John “Johnny Rotten” Lydon and Steve Jones got into a row with host Bill Grundy and said a number of expletives on live television. Due to the media furor over the incident, the band became an overnight sensation – much of the establishment denounced them while demand for the Pistols’ single skyrocketed.

“Because of the outrage in the press, there were ladies at the factory who said: ‘We aren’t going to handle the records’,” EMI’s Hill remembered in Sex Pistols: The Inside Story. “Now that was why the records weren’t available for some time … the shops didn’t have it.”

EMI found itself in the middle of the controversy. Outside and inside forces pressured the label to dump the Pistols. Plus, the lack of product annoyed McLaren and the group, who felt that EMI hadn’t lived up to its promise to promote them. The media, with reports both substantiated and exaggerated, continued to add fuel to the fire.

At a December meeting, EMI chairman Sir John Reed discussed options with the label’s shareholders, which included parting ways with the Sex Pistols and trying to coax a rock band into acting more respectable to suit the well-heeled attendees. Reed acknowledged that he didn’t hold out hope for an attitude adjustment.

We will “do everything we can to restrain the Sex Pistols’ public behavior,” he said, according to the Guardian, “although this is a matter over which we have no real control.”

As the Pistols saw the majority of a December tour mostly cancelled due to the public uproar, the band’s label began crafting an exit strategy. Hill said EMI began working with McLaren behind the scenes on a mutually agreed-upon breakup. Hill explained that a mutual decision was important, because the Pistols still had fans at EMI who wanted to see the band succeed there.

“You had a lot of people internally who know and understand the record business, who were saying, ‘This is no different from the Rolling Stones in the mid-sixties’," Hill said. “So you had a total split…”

At the time, McLaren began taking meetings with other labels, some of whom Hill claimed he recommended because they were smaller and could give the Pistols more focused attention than a behemoth like EMI. Regardless of who knew what when, the members of the band – Lydon, Jones, Paul Cook and Glen Matlock – were surprised when they heard the news in January 1977 that the Pistols had been dropped. After only three months and one single, EMI and the Pistols were done.

Matlock, the band’s bassist before Sid Vicious came on board, got a call one morning while on tour in Holland (which had caused more salacious headlines in the tabloids of rude behavior). The Daily Mirror was on the phone to get a reaction from the band about the turn of events.

“This voice [was] telling me, ‘You’ve been sacked from EMI. How do you feel about it?” Matlock said in the 1990 memoir, I Was a Teenage Sex Pistol. “I said, ‘Well, that’s nice, isn’t it?’ I mean it ironically, but as it was the very first thing I’d said to anyone that morning, maybe it didn’t come out sounding that way. Of course, it came out in the papers as ‘Glen Matlock thinks it’s really nice that the Sex Pistols have been dumped by EMI.’ The rest of the band really gave me a hard time over that.”

After returning to the U.K., McLaren continued to meet with other labels – with the idea that all publicity was good publicity. In March, the Sex Pistols signed with A&M Records, only to have that relationship dissolve in less than a week. In May, the band found a home with Virgin. The relationship was the Pistols’ longest, even outlasting the band’s existence. EMI moved on to sign the Pistols’ precursor in media hullabaloo: the Rolling Stones.

Soon, the members of the Pistols began to see the failed collaboration with EMI as a badge of honor. Later in ’77, the band included a song dedicated to the experience, titled “EMI.” Lydon addressed his feelings on the issue in his autobiography in 1994.

“Look what EMI did for us – potentially the biggest band in the universe,” he wrote in Rotten: No Irish, No Blacks, No Dogs. “They froze. Adverse publicity was a new thing to them. They had never known anything like it. EMI dug their own grave with the money they threw at us… I honestly didn’t care. The check landed.”

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