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Warner Music plotting EMI recordings bid, sources say
By CMU Editorial | Published on Monday 15 November 2010
Given EMI boss Roger Faxon’s memo to staff last week, in which he denied the music major had any intention of splitting up its businesses for sale, or to sell out in part or in full to a rival music firm, and in which he claimed such rumours were just the result of very lazy journalists speculating wildly, I feel almost bad reporting on this.
But an Observer journalist, possibly lazy, possibly speculating, this weekend claimed that EMI rival Warner Music is very seriously considering a bid which – if accepted by EMI owners Terra Firma – would see the music firm both split up and, in part, sold to a rival. They cite Wall Street sources as saying that Warner could make Terra Firma a $750 million offer for EMI’s recorded music business within weeks.
Of course, as previously reported, Terra Firma sources insist that the equity group’s top man, Guy Hands, is in no mood to sell EMI, despite it being a drain on both his company’s cash supply and its credibility. But The Observer reckons Citigroup – the bank to which EMI owes three billion, and which Hands unsuccessfully sued – is now putting pressure on Terra Firma to offload recordings to Warner in a bid to reduce EMI’s debts.
The implication is that the US bank might consider restructuring EMI’s loan if the overall debt could be reduced through a sale of its record labels to Warner, leaving just the more attractive publishing business under the EMI banner. Terra Firma has been desperate for Citigroup to restructure EMI’s loan for ages, and the bank’s refusal to do so was a key factor in the equity group’s decision to sue it over its role in the original EMI takeover.
As also previously reported, in his “don’t believe the media” memo last week, Faxon argued it would be impossible to split up EMI’s recording and publishing divisions for sale because of his strategy to integrate the company’s until now autonomous businesses. But from what we can see, said strategy is yet to have any real affect on the day-to-day operations of EMI, making such a split very achievable now if not in two years time.
As we say, the word from Camp Hands backs up Faxon’s memo, that no sale is imminent. But what if Warner Music was to make a reasonable bid, and Citigroup was willing to restructure EMI’s loan as part of such a deal, saving Hands from the bother of having to inject another 100 million into EMI next summer? Well, that would certainly make 2011 a lot easier for Team Terra Firma. Admittedly that’s two big ifs, but both seem plausible enough that this rumour isn’t going to go away any time soon, however many denials are issued.
For legal reasons we must stress we are not saying all Observer journalists are lazy. No, it was Rodge who said that.
For legal reasons we must stress we are not saying that Roger Faxon says that all Observer journalists are lazy. Full of shit, yes, but not lazy.
For legal reasons we must stress… yeah, you see where this is going.
