Waiting’s a funny thing, isn’t it? I spent most of today waiting for the sale of EMI’s recordings division to be announced, trying to second guess what time an announcement would arrive.
Midday, as Wall Street wakes up and the first US newswires go out (ie 7am there)? Nope, we were pretty sure it was Universal Music Group getting the EMI labels, and that it would be them making the announcement, and its parent company Vivendi isn’t listed in New York so Wall Street’s not relevant. But would it come from UMG’s New York office? In which case nothing was likely to be said before 9am their time, giving me time to go and grab lunch. But then wouldn’t UMG’s owner Vivendi actually make the announcement, and it’s in Paris an hour ahead of us. I wonder what time French people go for lunch.
The day was speeding by and nothing was happening. Was the press release actually going to come from UMG CEO Lucian Grainge’s HQ in LA? In which case, what time would I have to stick around til? But not to worry, because just before 3.30pm UK time Vivendi HQ did the honours, telling us that Universal Music Group had agreed to purchase EMI Music for £1.2 billion.
Phones rang, statuses were updated, a story was written and posted, suddenly the CMU office was alive with activity, where previously all had been calm. It’s quite exciting when that happens. Now I’m sat here writing this in the aftermath.
Although the sale of its publishing division has still not been formally announced, this nonetheless confirms that EMI is definitely being split up, and the music world’s fourth major label is set to become no label at all. Its recordings will be absorbed into Universal’s catalogue, and most likely Sony/ATV will grab the publishing division – insiders say that’s a done deal, though our sources tell us the formal announcement may now not come until next week.
Announcing the deal, UMG Chairman and CEO Lucian Grainge said: “This is an historic acquisition for UMG and an important step in preserving the legacy of EMI Music. For me, as an Englishman, EMI was the pre-eminent music company that I grew up with. Its artists and their music provided the soundtrack to my teenage years. Therefore, UMG is committed to both preserving EMI’s cultural heritage and artistic diversity and also investing in its artists and people to grow the company’s assets for the future. As a result, we will be better positioned to fully capitalise on the many new and exciting opportunities in the current marketplace, and also able to better serve our artists, songwriters and business partners, while offering fans even more choice”.
All of this, of course, depends on the deal getting through the various hurdles now facing it. Pan-European indie labels trade body IMPALA had already said it would oppose any Universal/EMI deal, and confirmed that again following Vivendi’s announcement. With Universal already the world’s biggest music company, IMPALA and others feel it absorbing EMI’s record labels will give it an unfair control of the music market.
IMPALA similarly opposed the merger of the Sony and BMG record labels back in 2004, and although it did not succeed in completely blocking the two companies from joining, it did slow down the process and force certain concessions to be made. Even more so when Universal merged its publishing division with BMG Music Publishing in 2007. UK indie label trade body AIM is also likely to react negatively to the news, and it’s expected that competition regulators will launch an investigation in the not too distant future.
However, Universal seems confident that it can get the deal approved, possibly by selling off some of its existing catalogue – it has already confirmed that it will sell off up to half a billion euros worth of “non-core assets” just to finance the takeover. Presumably, so long as it ends up with the Beatles, Coldplay, Radiohead, Pink Floyd, Beach Boys and Radiohead recordings, the company will be happy to lose whatever it takes.
Still, after all this excitement, it’s a shame that this means that EMI will all but disappear. Following the rocky years the company spent owned by equity firm Terra Firma, it emerged leaner, fitter and more forward thinking. The strategy of encouraging a closer relationship between the publishing and recording divisions was both sensible and starting to show signs of paying off. And EMI has launched other interesting initiatives in the last eighteen months, most recently an API giving app developers access to content. What will happen to all of that remains to be seen, but it seems certain that much of the work done by current CEO Roger Faxon will be sadly lost.
Meanwhile we’ll have to get used to referring to the major labels as ‘the big three’. It’s not that long ago that we were saying ‘the big five’. And some of us can remember ‘the big six’. Times are definitely changing.
This is taken from my CMU Editor’s Letter for 11 Nov 2011, read it in full here