EC approves Sony/ATV’s EMI deal
By CMU Editorial | Published on Friday 20 April 2012
As expected, yesterday the European Commission gave the all-clear, the big okay, the do-it-man-do-it-now to Sony/ATV’s bold plan to buy EMI Music Publishing.
As much previously reported, Sony is leading a consortium of investors in its bid to buy the EMI publishing firm, including its Sony/ATV partner the Michael Jackson estate, plus various equity funds and David Geffen. Although the EMI songs company will remain an autonomous entity, it will be controlled by Sony/ATV day to day, which will likely take over the administration of the former British major music company’s publishing catalogues, leaving a streamlined EMI team to handle A&R and songwriter relations.
The combined Sony/ATV/EMI will have a 30%+ market share, and will be by far the biggest operator in the songs market. Many, including competitor Warner Music and European indie labels trade body IMPALA, reckon such dominance should not be allowed, but Sony has successfully convinced EC competition regulators that those concerns are not justified, partly by committing to sell off a chunk of EMI’s UK-based catalogues, the biggest concern being regards the combined publisher’s dominance in the UK and Ireland markets.
Confirming the deal had been approved in Europe, the EC’s Competition Commissioner Joaquín Almunia said yesterday: “[The consortium] offered to divest valuable and attractive catalogues containing bestselling titles as well as works of successful and promising authors. I am therefore satisfied that the competitive dynamics in the online music publishing business will be maintained so as to ensure consumer choice and cultural diversity”.
Meanwhile the boss of Sony/ATV, Marty Bandier a former EMI Music Publishing chief who is relishing regaining control of his old catalogues, told reporters: “Having spent over seventeen years of my professional life helping to build EMI Music Publishing, today is not only an important milestone on the path to final approval, but a very special day for me, personally”.
Needless to say, the deal’s critics were not impressed with the relatively speedy EC decision. IMPALA’s Executive Chair Helen Smith told CMU: “We need to study the full decision in detail, but this is bad news for Europe’s publishers and writers, as well as for collecting societies and any label or online service which needs to be able to rely on fair terms to use music. In the wake of Martin Bandier’s confirmation this morning of expected job losses at both EMI and Sony, we are particularly concerned for all Sony and EMI’s employees and writers. We remain convinced that the impact of this merger on the livelihood of authors has been underestimated, while the ability of the remedies to secure future competition has been overestimated”.
Meanwhile Michel Lambot, co-founder of the PIAS Entertainment Group and Co-President of IMPALA, added: “This decision goes clearly against the official position of the EU to put knowledge and internet at the heart of its development”.
The Sony deal is still to be approved in the US, of course, though usually spanners are thrown into the works in big mergers like this by the Europeans not the Americans, so EC approval is significant.
Meanwhile, as also previously reported, Universal Music’s bid to buy the EMI record companies is still being considered in both the US and EU, the latter having put that particular proposal to a full three month investigation rather than reaching a speedy decision like in the case of Sony.
While criticising yesterday’s announcement from the EC, IMPALA noted that key to the Commission’s decision in the Sony case was the fact the entertainment giant does not own Sony/ATV outright, and will have an even smaller stake in EMI Music Publishing. The indie labels body added that it believed the argument that big rights owners are constrained in setting online pricing by the big download firms like iTunes had been rejected, which is important, because the same argument has been used by Universal in its application to competition regulators.
With Universal Music owning both its recordings and publishing businesses outright, and they being owned by one parent company in Vivendi, IMPALA will be hoping the EC giving approval to the Sony deal does not set a precedent that will be employed in the Universal acquisition. Continued Smith: “We understand the Commission has treated the [Sony] case as unique, concluding on the basis of its analysis of Sony’s power and the specificities of its corporate structure and rejecting other arguments such as the power of online players, which will send a strong message regarding the Universal/EMI case, now even more crucial”.