Asset sale proposals widen as Universal fights for EMI
By CMU Editorial | Published on Thursday 19 July 2012
I think it’s fair to say that Universal Music is upping the ante big time in a bid to ensure its plan to buy the EMI record company wins approval from European regulators, after EC officials indicated that the initial concessions offered by the mega-major to sweeten the deal were not sufficiently wide-reaching.
As previously reported, the major had already committed to sell EMI’s classical and jazz labels to overcome regulator concerns about the size and dominance of a combined Universal/EMI, and had said it would also sell some or all of the Virgin Records division (it increasingly looks like “all”).
Now, according to the Financial Times, in a letter to the European indie label community, Universal chief Lucian Grainge has indicated that he might also sell the Mute catalogue that is still in EMI’s control, the Sanctuary catalogue that sits within the existing Universal empire and, perhaps most significantly, the Chrysalis UK recordings catalogue and its Ensign imprint (though not including the Chrysalis-controlled Robbie Williams repertoire). The aim, insiders say, is to ensure that Universal, post its EMI acquisition, wouldn’t control any more than 40% of any recorded music market in the EU.
Grainge has also reportedly responded to the previously reported open letter from Patrick Zelnik, the boss of French independent Naïve and Co-President of indie labels trade body IMPALA, who has come out in support of Universal’s EMI bid, mainly because he hopes the Virgin label will go on the market, and he and his old friend Richard Branson can bid for it. In his letter in the FT, Zelnik said Universal should commit to sell any assets divested as part of its EMI takeover to indie music companies, and Grainge has seemingly now offered such a “first right” commitment to the indies if his big acquisition goes through.
As previously reported, the indie label community is split over whether to continue fighting the Universal/EMI merger or not – though IMPALA officially remains opposed to the deal, and Merlin, which represents a stack of indies in the digital domain, has said its board remains unanimous in its viewpoint that a combined Universal/EMI would be bad news.
Though the FT says that Kenny Gates of indie group [PIAS] welcomed Grainge’s proposals yesterday, indicating his company might bid for any assets sold, and Gates’ colleague Michel Lambot is another IMPALA co-President. Meanwhile it’s thought Mute boss Daniel Miller, who bought his record company out of its EMI alliance in 2010, would be very tempted to support any arrangement that would enable him to buy back the Mute trademarks and catalogue that are still owned by the major from the days of their business partnership.
Other indie label bosses, though, are sure to remain opposed to the Universal/EMI deal in its entirety, which will likely cause tensions within the indie community (and possibly even more so than the last time the indie sector found itself divided over a possible major label merger, when then Warner chief Edgar Bronfman Jr tried to negotiate an alliance to get indie label support for his ultimately unsuccessful bid to buy EMI before Terra Firma swooped five years ago).
Talk of widespread asset selling of this kind is also likely to cause anxieties back at EMI HQ, where label staff still face an uncertain future, while watching the jobs cull going on downstairs at EMI Music Publishing, acquired by Sony/ATV last month. The merger with Universal was always likely to result in some downsizing, though the buyer indicated it wouldn’t be as drastic as after past major label mergers. But if big chunks of the company are being sold to third parties, there’s likely to be quite a bit of confusion, for a time, as to what that means for EMI employees.
None of which is much fun for the peoples of EMI Towers who, and God knows how, continue to sign artists and release records amidst all the dramas over in Brussels and Washington. Though the continued twists and turns will ensure that, when I get round to writing it, ‘EMI The Opera’ has an exciting final act. And with a guest star cameo by Sandie Shaw no less…