UNITED KINGDOM/FILE: Vivendi's Universal Music Group and Sony won the auction for EMI's recorded music and music publishing operations on Friday (November 11), trumping bids by archrivals Warner Music Group and BMG Music Publishing at the 11th hour
Record ID:
451675
UNITED KINGDOM/FILE: Vivendi's Universal Music Group and Sony won the auction for EMI's recorded music and music publishing operations on Friday (November 11), trumping bids by archrivals Warner Music Group and BMG Music Publishing at the 11th hour
- Title: UNITED KINGDOM/FILE: Vivendi's Universal Music Group and Sony won the auction for EMI's recorded music and music publishing operations on Friday (November 11), trumping bids by archrivals Warner Music Group and BMG Music Publishing at the 11th hour
- Date: 12th November 2011
- Summary: LONDON, ENGLAND, UNITED KINGDOM (NOVEMBER 11, 2011) (REUTERS) VARIOUS EXTERIORS OF EMI (SOUNDBITE) (English) FORMER EMI VICE PRESIDENT OF DIGITAL DISTRIBUTION TED COHEN, SAYING "There was a lot of duplication of efforts. It's not a good thing for anybody because when this happens jobs will be lost, lives will change but as we move to a digital world which is what I've been focused on the last 20 years, it's an eventuality of economies of scale that you do it better in a leaner fashion." VARIOUS OF COLDPLAY SIGN ON EMI WINDOWS (SOUNDBITE) (English) UNIDENTIFIED MAN, SAYING: "As long as the Beatles still continue, that's all that matters, doesn't it?" VARIOUS OF BEATLES SIGN ON EMI WINDOWS (SOUNDBITE) (English) PEACEFROG RECORDS OWNER PETE HUTCHISON, SAYING: "I hope that EMI continues in the shape and form it's in now because they're a good company. We use them for our distribution. Really good people. As long as it carries on, it's a good thing." CLOSE OF SIGN OF RECORD ON EMI WINDOW (SOUNDBITE) (English) LABRADOR RECORDS OWNER JOHAN ANGERGARD, FROM SWEDEN, SAYING "Probably good I think. Well it sounds decent. I think so. Should be good." REPORTER ASKING: WHAT DO YOU THINK THIS MEANS FOR THE RECORD INDUSTRY? ANGERGARD, SAYING: "I mean it keeps getting smaller but it has been like that for a long time. Fewer and fewer players but I mean, that's the way it is, it's fine." VARIOUS EXTERIORS OF BUILDING HOUSING UNIVERSAL MUSIC GROUP CLOSE OF ABBEY ROAD SIGN WIDE OF ZEBRA CROSSING OUTSIDE OF ABBEY ROAD STUDIOS, USED ON BEATLES ALBUM COVER VARIOUS ABBEY ROAD STUDIOS
- Embargoed: 27th November 2011 12:00
- Keywords:
- Location: United Kingdom
- Country: United Kingdom
- Topics: Business,Entertainment,Industry
- Reuters ID: LVA8PO3BVVUN3C911HP24VJB1OWZ
- Story Text: Universal said it would buy EMI's recorded-music unit for 1.9 billion USD, while two people familiar with the matter said a consortium led by Sony was expected to buy the publishing operation of the British music company for 2.2 billion USD.
"We plan to acquire EMI's recorded music division on attractive terms, adhering to our principle of total financial discipline," Vivendi Chief Executive Jean-Bernard Levy said in a statement.
The division will change hands for seven times earnings before interest, tax, depreciation and amortization (EBITDA) excluding synergies, Vivendi said in a statement.
This means EMI owner Citigroup Inc will reap a better-than-expected 4.1 billion USD from the two deals. Citigroup had to write off debt to EMI when it snatched the company from Guy Hands' buyout house Terra Firma in February after the firm defaulted on a loan.
Citigroup provided 2.6 billion pounds (4.2 billion USD) of debt for the 2007 leveraged buyout of EMI by Terra Firma but had to write off most of the loans as the company struggled under its debt load in the credit crunch.
Ted Cohen, Former EMI Vice President of Digital Distribution, talked about some of the problems with the record label.
"There was a lot of duplication of efforts. It's not a good thing for anybody because when this happens jobs will be lost, lives will change but as we move to a digital world which is what I've been focused on the last 20 years, it's an eventuality of economies of scale that you do it better in a leaner fashion," Cohen told Reuters Television.
Independent record label owners on EMI said the move was good for their business and the industry.
"I hope that EMI continues in the shape and form it's in now because they're a good company. We use them for our distribution. Really good people. As long as it carries on, it's a good thing," said Pete Hutchison, owner of Peacefrog Records.
"(The record industry) keeps getting smaller but it has been like that for a long time. Fewer and fewer players but I mean, that's the way it is, it's fine," said Johan Angergard, owner of Labrador Records from Sweden.
Warner Music led the bidding on the recorded music side, while KKR-backed BMG was ahead on the song catalog side as recently as last week. But in a surprise, Warner Music walked away from the auction after failing to agree to terms for taking over EMI's pension liabilities.
Despite Warner Music dropping out, Universal raised its bid for EMI's record label division, which houses such acts as Coldplay, Kylie, Robbie Williams and Pink Floyd.
"(We will) replenish and rebuild the rosters that have lacked the level of investment that frankly a business like this should have had. EMI is not a utility company," Lucian Grainge, head of Universal, told reporters on a conference call.
On the publishing side, Sony got a last-minute assist from investment bank UBS, which agreed to provide it with more than one billion USD in financing, according to one of the sources familiar with the matter. That allowed Sony to raise its offer and trump BMG.
Citigroup declined to comment on the matter. - Copyright Holder: REUTERS
- Copyright Notice: (c) Copyright Thomson Reuters 2011. Open For Restrictions - http://about.reuters.com/fulllegal.asp
- Usage Terms/Restrictions: None