November 11, 2011
Universal Music has bought EMI for a reported $1.9 billion – or, according to CTV/Globe & Mail, a two-part $4.1 billion deal – meaning Universal will now account for a third of all music sales world-wide. The amalgamation represents one less major label on an incredibly shifting scope in the music industry and the decline of major labels.
We’re not sure what implications this will have on the local scene – will it be easier/hardier to get major label rep? Will current artist contracts be honoured? Will a shift in dynamics even be noticed? We’ll let you know what we hear. In the meantime, post your thoughts below.
The Guardian has a great breakdown. Here’s what they said.
Universal Music, the world’s biggest record company, is poised to announce the £1.2bn purchase of EMI’s recorded music division, home to the Beatles, Coldplay and Tinie Tempah.
The sale is the first part of the break-up of the 114-year-old British company, which is likely to be followed by the EMI’s music publishing division, most likely to a consortium led by Sony for in excess of $2bn (£1.26bn).
Although the enlarged Universal will now account a third of all music sales worldwide, company executives believe they can persuade regulators to allow it to swallow the business whole because the music industry is in such decline.
Nevertheless, Universal will respond by selling record labels or catalogues if the European Commission were to demand disposals. Its goal, however, will be to retain the Beatles material.
Buying EMI is a coup for Universal’s boss, Briton Lucian Grainge, whose bid had been considered opportunistic. Smaller rival Warner Music, recently bought by Len Blavatnik’s Access Industries, had been considered the front runner.
EMI is being sold by Citigroup, the bank that ended up owning the record company, after it seized control of the debt-laden business from venture capitalist Guy Hands.
However, Citigroup is retaining in deficit EMI’s pension fund, which has 21,500 members. The deficit was £162m according to the last set of publicly available accounts.
Earlier this week, it was reported that singer David Bowie was on the verge of leaving EMI, with both Universal Music and Sony Music thought to be in talks to sign the Thin White Duke when his 15-year association with the label comes to an end in January. Former Take That singer Robbie Williams also decided to walk away from EMI last month over reported disagreements about how the label was being run.
Universal, meanwhile, are being sued by Public Enemy’s Chuck D after he alleged that they had underpaid him his royalties for digital downloads, although a UMG spokesperson described the rapper’s complaint as suffering from “serious flaws and weaknesses”.