UNITED KINGDOM/ VARIOUS: EMI GROUP SHARES FALL AFTER ENTERTAINMENT GROUP TIME WARNER CHOOSES ANOTHER RIVAL TO NEGOTIATE DEAL TO BUY WARNER MUSIC
Record ID:
337895
UNITED KINGDOM/ VARIOUS: EMI GROUP SHARES FALL AFTER ENTERTAINMENT GROUP TIME WARNER CHOOSES ANOTHER RIVAL TO NEGOTIATE DEAL TO BUY WARNER MUSIC
- Title: UNITED KINGDOM/ VARIOUS: EMI GROUP SHARES FALL AFTER ENTERTAINMENT GROUP TIME WARNER CHOOSES ANOTHER RIVAL TO NEGOTIATE DEAL TO BUY WARNER MUSIC
- Date: 21st November 2003
- Summary: (EU) LONDON, UNITED KINGDOM (FILE) (REUTERS - ACCESS ALL) 1. WIDE OF EXTERIOR OF EMI GROUP OFFICE 0.06 2. CLOSE OF SIGN READING EMI GROUP 0.13 3. GV OF SIGN IN WINDOW OF EMI HIT PARADE 0.13 (EU) GRAPHICS (NOVEMBER 21, 2003) (REUTERS - ACCESS ALL) 4. GRAPHICAL CHART OF EMI SHARE PRICE DROPPING 0.20 (EU) UNIDENTIFIED LOCATION, USA (REUTERS - ACCESS ALL) 5. VARIOUS OUTSIDE TIME WARNER OFFICE (2 SHOTS) 0.29 (EU) LONDON, UNITED KINGDOM (NOVEMBER 21, 2003) (REUTERS - ACCESS ALL) 6. SCU (SOUNDBITE) (English) NICK EDWARDS, REUTERS MARKETS ANALYST, SAYING: "That would be a risk for Time Warner, of course, if it climbs into bed with EMI in this deal - regulatory issues. We've certainly seen that in other areas. That said, of course, there is a sense now that the regulators realise that the music business is in pretty dire straits, and of course, they will be then consequently more easy in terms of interpreting what is and what is not anti-competitive in terms of a merger." 0.52 (EU) PARIS, FRANCE (FILE) (REUTERS - ACCESS ALL) 7. SLV EDGAR BRONFMAN JR. SURROUNDED BY JOURNALISTS 1.00 (EU) LONDON, UNITED KINGDOM (NOVEMBER 21, 2003) (REUTERS - ACCESS ALL) 8. SCU (SOUNDBITE) (English) NICK EDWARDS, REUTERS MARKETS ANALYST, SAYING: "There could be a sense that doing a deal is so important for the future of the music streamlining business, they've got to do that and come back with a revised bid, particularly because of course the industry is facing declining sales over the course of the next two years and really won't be in the position to begin to think that things are going to improve until 2005." 1.19 (EU) LONDON, UNITED KINGDOM (FILE) (REUTERS - ACCESS ALL) 9. WIDE OF INTERIOR OF HMV MUSIC STORE 1.29 10. SCU MAN WEARING HEADPHONES LISTENING TO MUSIC 1.35 11. WIDE OF WOMEN LOOKING THROUGH CDs 1.40 12. SLV RACK OF CDS ON DISPLAY 1.51 13. CLOSE OF OASIS AND BEATLES CDS FOR SALE (2 SHOTS) 1.58 (EU) INTERNET (FILE) (REUTERS - ACCESS ALL) 14. VARIOUS INTERNET MUSIC SITES (5 SHOTS) 2.20 Initials Script is copyright Reuters Limited. All rights reserved
- Embargoed: 6th December 2003 12:00
- Keywords:
- Location: LONDON, UNITED KINGDOM; UNIDENTIFIED LOCATION, USA; PARIS, FRANCE
- City:
- Country: United Kingdom
- Reuters ID: LVA9R29UHMQFUYCK8VAN7975E94V
- Story Text: EMI Group took a mauling on the stock market as it
faced another failed merger attempt after media giant Time
Warner picked a rival suitor as its preferred bidder for
its music unit.
Shares in EMI, home to the Rolling Stones, Radiohead
and Coldplay, fell as much as 11 percent before being
partly rescued by hopes that the music company had not
reached the end of the road and still had a number of
options to play with.
People familiar with the situation said on Thursday
(November 20) Time Warner's board had decided to give a
consortium including former Seagram Co. Chief Executive
Edgar Bronfman Jr. until the end of the weekend to
negotiate a final deal to buy Warner Music.
If the Bronfman camp fails to seal a deal by Sunday,
Time Warner could return to the negotiating table with EMI,
analysts said. Even if Bronfman does a deal, EMI could
eventually become a target for Bronfman or fire up talks
with another rival.
EMI shares were trading 5.6 percent down at 160-1/4
pence at 1205 GMT on Friday (November 21), after falling by
as much as 10.9 percent, adding to a sharp decline on
Thursday on concerns over its bid.
EMI, the world's third biggest music company, said on
Thursday it believed it had put forward a "full and fair
offer" for Warner, which ranks as world number four and
counts Madonna, Led Zeppelin and REM among its artists.
The music company offered around 1 billion U.S. dollars
in cash and a 20-25 percent equity stake to Time Warner for
its recorded music unit, according to sources familiar with
the situation.
By joining forces with Warner Music, EMI had hoped to
reel in around 300 million U.S. dollars of cost savings,
analysts said. However, its bid came with a big helping of
regulatory risk after seeing two previous mergers scuppered
by anti-trust regulators.
So far the five big record labels have only been
talking about merging with one another. But with number two
Sony and number five BMG already working to combine their
music industries, another tie-up between number three and
four would face tough anti-trust scrutiny. A tie-up with
outsiders, like Bronfman, in contrast would give Time
Warner much less of a headache from the hand of regulatory
authorities.
"That would be a risk for Time Warner, of course. If it
climbs into bed with EMI in this deal - regulatory issues.
We've certainly seen that in other areas," said Nick
Edwards, Reuters markets analyst. "That said, of course,
there is a sense now that the regulators realise that the
music business is in pretty dire straits, and of course,
they will be then consequently more easy in terms of
interpreting what is and what is not anti-competitive in
terms of a merger," he added.
Most of the big five music companies have been
exploring mergers in an attempt to cut costs after three
years of declines as the $32 billion music industry reels
from rampant piracy and competition from rival
entertainment such as video games.
"There could be a sense that doing a deal is so
important for the future of the music streamlining
business, they've got to do that and come back with a
revised bid, particularly because, of course, the industry
is facing declining sales over the course of the next two
years and really won't be in the position to begin to think
that things are gong to improve until 2005," said Edwards.
The Bronfman camp had offered around 2.55 billion U.S.
dollars for both Time Warner's recorded music and its music
publishing unit, giving the U.S. media giant a clean exit
as it seeks to cut its 24 billion U.S. dollars debt,
sources familiar with the situation said.
Sources say the Bronfman camp has also offered Time
Warner a 20 percent stake in Warner Music. The New York
Post reported the Bronfman camp had also improved its bid
to 2.8 billion U.S. dollars.
While Time Warner has been in talks with EMI for two
months, the Bronfman camp has had less time to sift through
the figures and had attached a number of conditions to its
offer. Some analysts said it would be tough to secure a
final deal by Sunday.
If it does do a deal, the Bronfman camp, which is
backed by private equity houses, may seek to dismantle
Warner Music, potentially creating an opportunity for EMI,
analysts said.
Alternatively, the Bronfman camp may seek to build the
business and capitalise on cost savings by bidding for EMI.
Sources said on Thursday the Bronfman camp had offered
Time Warner an additional 19.9 percent in Warner Music if
they later merged the business with another record company.
Analysts said EMI may also seek to lure a rival such as
Bertelsmann Music Group (BMG) back to the negotiating
table. BMG is currently pursuing a deal with Sony Music but
industry players questioned how fragile those talks were.
BMG and Sony Music rustled together a deal earlier this
month after EMI announced it was in talks with Warner Music.
There are many reasons for the consolidation in the
music industry. Free file-sharing on the Internet which
makes spending money in music stores unnecessary is one of
them. Moreover, there is competition from other
entertainment such as DVDs and video games.
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