May 18, 2024

Media Decoder Blog: Warner Music Group Buys EMI Assets for $765 Million

12:02 p.m. | Updated The Warner Music Group, the smallest of the three remaining major record companies, said on Thursday that it had reached an agreement to pay $765 million for the Parlophone Label Group, a package of divestments from the EMI label that was mandated by European regulators as part of the Universal Music Group’s $1.9 billion deal for EMI last year.

“This is a very important milestone for Warner Music, reflecting our commitment to artist development by strengthening our worldwide roster, global footprint and executive talent,” Len Blavatnik, the founder of Access Industries, Warner’s parent company, said in a statement.

The Parlophone group consists of EMI’s Parlophone, Chrysalis and other labels, along with EMI subsidiary companies across Europe, with artists including Coldplay, Pink Floyd, the Beach Boys, David Guetta and Iron Maiden. Universal will retain EMI’s Capitol and Virgin labels, including artists like the Beatles, the Beach Boys, Katy Perry and Lady Antebellum. (In a separate sale, an investor consortium led by Sony bought EMI’s music publishing assets.)

The deal is a win for Warner, which since 2000 has made several unsuccessful efforts to buy or merge with EMI. In addition to greater market share, it will allow Warner to bulk up its relatively weak international infrastructure. Since buying Warner two years ago for $3.3 billion, Mr. Blavatnik has shaken up the company’s management, bringing in the corporate turnaround expert Stephen Cooper as chief executive and Robert Wiesenthal, a former Sony executive, as its operations chief.

The deal is also a win for Universal, which came under intense pressure during the deal’s regulatory review process in Europe but ended up with a higher price than had been expected. Early estimates for the EMI’s castoffs, which represent about a third of the company’s recorded music assets, were more than $500 million. But with some smaller assets yet to be sold, Universal could reap well over $800 million, vastly reducing the price it paid to acquire the bulk of EMI.

The deal closed early Thursday after negotiations through the night, with Warner offering a significantly higher bid than any competitors, according to three people briefed on the talks who spoke on condition of anonymity because the negotiations were private. Sony Music and BMG Rights Management had made a joint bit, as did the music impresarios Simon Fuller and Chris Blackwell; the other major bidder was Ronald Perelman’s company MacAndrews Forbes.

Warner’s deal must be approved by the European Commission, but it is not expected to face the same objections from smaller music firms that had dogged Universal’s original EMI bid.

Martin Mills, the chairman of the independent Beggars Group, who had been a vocal opponent of Universal’s original deal, said in a statement that Warner’s acquisition of the Parlophone assets “is the best result for the market, given the Commission’s expressed desire to create a countervailing force to the established duopoly of Universal and Sony.”


Ben Sisario writes about the music industry. Follow @sisario on Twitter.

Article source: http://mediadecoder.blogs.nytimes.com/2013/02/07/warner-music-group-buys-emi-assets-for-765-million/?partner=rss&emc=rss

At Sony Music, a Plan to Dominate the Industry

“My plan here is very simple,” he said on a recent visit, leaning back in his sofa. “To help create the pre-eminent record company in the world.”

Mr. Morris, one of music’s reigning patriarchs, took over Sony in July, after 15 years at Universal. He is widely seen as the most capable hand to steady Sony’s music division, which has been plagued by internal quarrels since its merger with BMG in 2004. So far he has been aggressive in trying to remake the company, the home of artists like Bruce Springsteen, Beyoncé and Usher.

At 72, his age and experience summon up the inevitable charge that as part of the industry’s old guard he is ill-equipped to thrive in the digital age. Mr. Morris rejects that notion, pointing out his role in creating Vevo, the hugely successful music video site.

Yet Mr. Morris is also an embodiment of one of the unchanging realities of the music business: that despite all the changes in technology, there is still money to be made in hits, and staying successful means holding on to a bigger piece of a shrinking pie. One way he has done that is hiring strong creative executives who can spot the next stars.

“He is a master at attracting and developing executive talent,” said Jon Landau, Mr. Springsteen’s manager. “No one is better at picking the people who pick the hit artists.”

Last Friday afternoon, after months of talks, Mr. Morris signed his first major new deal, with Dr. Luke, the pop producer behind big hits by Katy Perry and Kesha. It creates a record label, Kemosabe Records, to be financed by Sony and run by Dr. Luke in Los Angeles. And, perhaps most valuably, it also gives Sony exclusive rights to Dr. Luke’s services as a producer for five years.

Already sounding like a label boss, Dr. Luke said between the signing and the Champagne last Friday: “I plan to sign only artists that I really love and really want to work with. I also believe that songs are the bloodline of a label, so I will still be instrumental in creating and acquiring them.” Dr. Luke is a 38-year-old former guitarist with the “Saturday Night Live” band whose real name is Lukasz Gottwald.

Mr. Morris, a creature of habit, called the Dr. Luke deal an attempt “to duplicate a magic trick” 21 years ago — his bankrolling of Interscope Records, which was co-founded by the producer Jimmy Iovine and has become one of the most successful labels in the business. Dr. Luke, Mr. Morris said several times in an interview, is his new Jimmy.

“He’s the best guy at the moment, as far as a writer and a producer,” he said. “He and Jimmy are very different, but it’s the same kind of level of intellect and talent.”

In turn, Dr. Luke seemed ready to adopt Mr. Morris as a mentor.

“Doug has an amazing history, creating labels, finding talent,” he said. “I felt there is a lot I could learn from him.”

Mr. Iovine, for his part, said he was still close with Mr. Morris, but noted that they were now playing for different teams. “If we played on the Lakers and he got traded to the Knicks, I would still love him,” he said. “But when we get on the game floor, we still compete.”

Kemosabe will become Sony’s fourth label division, with Dr. Luke reporting directly to Mr. Morris. The label is expected to become operational in January, and Dr. Luke will have free rein to hire staff members and sign artists. One trade-off: because he can now produce only Sony artists, Dr. Luke will not be able to work with Ms. Perry, who records for EMI.

Mr. Morris started his career in the 1960s as a songwriter (he co-wrote the Chiffons’ “Sweet Talkin’ Guy”) and held top positions at Atlantic Records and the Warner Music Group before Edgar M. Bronfman Jr. hired him in 1995 to run the collection of labels that would become the Universal Music Group.

Article source: http://feeds.nytimes.com/click.phdo?i=6a1575506926a672307ec2bb3b5af23a