After the main course, the leftovers.
Such is the state of dealmaking in the music industry, after the breakup of EMI that gave the historic British company’s record labels to the Universal Music Group for $1.9 billion and its huge music publishing division to a consortium led by Sony for $2.2 billion. Music’s corporate landscape was shifted as a result, with the number of major labels shrinking to three from four, and the creation of the world’s largest song catalog controlled by Sony’s publishing arm, Sony/ATV.
Over the last few months, though, there has been aggressive competition for smaller chunks unloaded by Sony and Universal on the orders of European regulators. Last week, the Warner Music Group paid $765 million for the biggest of these side dishes, the Parlophone Label Group, with recordings by Coldplay, Pink Floyd, Radiohead and many others. It must still be approved by regulators, but is not expected to face significant opposition.
One of the bidders that lost out on Parlophone was BMG Rights Management, a five-year-old joint venture between Bertelsmann and Kohlberg Kravis Roberts. But BMG has been successful in several other EMI-related sales. Early Friday it announced it was buying Sanctuary Records from Universal, which includes classic albums by the Kinks and Black Sabbath.
The Sanctuary sale is estimated at about $60 million, and it follows two other BMG acquisitions late last year: the Mute Records catalog (Depeche Mode, Moby), formerly a part of EMI, and a collection of publishing assets from EMI and Sony/ATV. Those two deals were reportedly worth a little more than $100 million.
Warner, now the smallest major, gained some needed bulk in Parlophone. BMG’s various deals will help the company flesh out its business model, gaining a foothold in recordings after an intense focus on publishing assets that have led it to quickly build a catalog of more than one million songs.
The cupboard is not completely empty, though. Universal is still selling EMI’s share of the long-running compilation series “Now That’s What I Call Music!” as well as Universal’s Co-Op Music label. Those are expected to be small deals, but along with the Parlophone deal, they will help to substantially reduce the effective price that Universal will have paid for two-thirds of EMI.
Ben Sisario writes about the music industry. Follow @sisario on Twitter.
Article source: http://mediadecoder.blogs.nytimes.com/2013/02/15/music-companies-fight-over-the-scraps-of-emi/?partner=rss&emc=rss