The European Commission will today green light the bid led by Sony to buy the EMI music publishing business, a takeover which will give Sony/ATV control of the EMI song catalogues, making for the biggest music publishing business in the world.
As previously reported, the Sony-led consortium offered EC competition regulators a number of concessions during the initial stage of the European investigation into the proposed deal, which some say will give Sony/ATV/EMI way too much dominance in the publishing sector, digital licensing and the collecting society system. And seemingly those concessions were enough to overcome opposition and concerns across Europe.
According to the Financial Times, the biggest concern for EC regulators was the dominance Sony/ATV/EMI would have over the Anglo-American catalogue in the UK market. The proposed sale of the Virgin-branded songs catalogue, plus the Famous UK catalogue and some key songs by prominent Anglo-American artists, was designed to specifically deal with those concerns. Seemingly some extra US-owned rights were also thrown in to further placate officials.
Although the Sony/ATV deal still needs approval in the US, and is also being investigated in Australia and Brazil, having secured approval in Europe with just a one-stage investigation is a considerable achievement, not least because it’s European regulators who are often hardest to please.
Some did speculate early on that Sony/ATV would have an easier time getting approval for their EMI purchase than Universal, which wants to buy the EMI record companies, mainly because of the ownership structure of both the existing Sony publishing business, and EMI Music Publishing post-acquisition.
The entertainment conglom does not own Sony/ATV outright – the Michael Jackson estate owns the other half – meaning the Sony recording and publishing businesses have never been as closely aligned as at the other major music firms. Meanwhile Sony and the Jackson estate will each be only minority shareholders in EMI Publishing, meaning the new acquisition will remain an autonomous entity, albeit controlled and managed by Sony/ATV day to day. This slightly complicated structure seemingly enabled Sony to persuade EC regulators to be less tough than they were with Universal in 2006 when it bought the original BMG publishing company.
Some wondered if those in the EC who are interested in the collecting society system might question Sony/ATV/EMI’s dominance in that space, though seemingly the fact so many publishing rights are licensed through the blanket licensing process went in Sony’s favour, it convincing regulators that a 31% market share would not give the publishing powerhouse too unfair an advantage in digital licensing negotiations. The company also added – as Universal has in its bid – that the big digital players, and especially Apple, are so dominant in that space that they, to an extent, dictate pricing.
Needless to say, pan-European indie label trade body IMPALA – which reckons both EMI deals, that together will make the two most dominant players in music even more dominant, are bad – expressed disappointment at last night’s reports that an EC all clear for the Sony transaction was incoming. Its Executive Chair Helen Smith told reporters: “It sounds like the worst possible result for European writers and publishers, as well as anyone who needs to rely on fair terms to access music”.
Assuming EC approval for the Sony/ATV deal is an indication this acquisition is going ahead, staffers at the EMI publishing house might be brushing up their CVs this weekend. As previously reported, a confidential report for investors leaked earlier this week revealed plans to cut over half the 515 jobs at EMI Music Publishing over two years, as Sony/ATV takes over various aspects of licensing and rights administration for the EMI catalogues, charging a fee to its new sister company for doing so. Such economies of scale could result in savings of $70 million a year.
After those revelations, taken from a report written in January, appeared in the New York Times on Tuesday, the boss of Sony/ATV, Marty Bandier, yesterday sent an email to EMI publishing staffers in a bid to allay fears and panic, though, in confirming job cuts and remaining vague about when and how many, I’m not sure how much allaying the memo actually achieved.
Pointing out that plans for the integration of Sony/ATV and his former employer EMI Music Publishing were changing daily, and couldn’t be confirmed anyway until the acquisition has approval from all quarters, he called the claims in the New York Times “premature”. However, he said job cuts would be likely at both companies (so, that’s panic assured over at Sony/ATV too now), but that “the best and brightest employees” needn’t worry because their jobs would definitely be safe. So that’s alright then.
The email, published by Billboard, says: “Over the last several months, we have been working with many units of your company to develop a strategic integration plan. This plan changes daily, as we continue to analyse the vast amount of information and meet with the department and regional heads at EMI Music Publishing. Since various governmental agencies around the world are still reviewing the proposed transaction, it was, to us, premature and inappropriate to share our thinking publicly. It is unfortunate that the New York Times received this information while we are still developing this integration plan”.
He continued: “While we do not have a completed integration plan to date, I will share with you some of our thoughts as to that process. If the transaction is approved by all the necessary agencies around the world, our current plan is to reduce the total number of employees of the two companies. The exact numbers or percentages are not final. Since our companies remain separate, we continue to learn more about the existing structure of EMI Music Publishing, which is quite different than when I was there, and evaluate the information we receive. Without a doubt, it is our intention to retain the best and brightest employees at both companies. I will keep you apprised as all of these various events move forward”.
So there you go. Brussels should confirm its approval for Sony’s EMI deal later today. As previously reported, Universal’s bid is being considered via a fuller three month investigation, so a ruling in Europe won’t be made until August.
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