Friday 8 February 2013, 12:58 | By

Parlophone to become part of Warner after final big deal in EMI saga announced

Business News Deals EMI Sale Timeline Labels & Publishers Top Stories

Parlophone

Universal Music yesterday announced it was selling the Parlophone Label Group to Warner Music, bringing to an end the long-drawn out demise of EMI, the former British major music company.

The Parlophone Label Group was the name given to the European EMI assets that Universal was forced to sell off to secure regulator approval from the European Commission for its purchase of the EMI record company. Alongside the UK-based Parlophone division, the strand of EMI separated for sale also included the Chrysalis and Ensign sound recordings catalogue and EMI units in Belgium, Czech Republic, Denmark, France, Norway, Portugal, Spain, Slovakia and Sweden. While Universal has been busy absorbing the rest of EMI after getting approval for its acquisition last September, the Parlophone Label Group has been kept separate, led by David Kassler.

Various parties came forward interested in buying some or all of PLG, including other music companies and music entrepreneurs backed by private equity. BMG was a favourite bidder for a time, even though in the original bidding for EMI at large it had unsuccessfully competed for the firm’s music publishing business. But with interests in both song and master recording copyrights, BMG let it be known it would consider bidding for the Parlophone Group, though it always seemed more likely to be interested in the PLG catalogues that the front-line label business. And in December it was announced BMG had secured ownership of the recordings catalogue of the original Mute label.

Warner was Universal’s main competitor in the bidding for the EMI record company in its entirety. After losing out to its bigger rival in 2011, Warner execs said Universal had overpaid for EMI Music, and then spent much of 2012 trying to persuade regulators in the US and Europe to block the mega-major’s audacious EMI takeover. There were, therefore, some tensions between the top guard at Universal and Warner, and some wondered whether that would have any impact when the latter let it be known it was bidding for PLG.

But for Universal, selling to Warner – despite it being a key rival and a recent enemy in political circles – was an attractive proposition. Warner was interested in most of PLG, saving Universal from having to divide the company up for sale, and offering better prospects for the nearly 900 former EMI staffers sitting within the Parlophone company. Selling to Warner would also satisfy European regulators who had insisted that an existing player in music should get the EMI assets (to avoid an equity type coming in and asset stripping).

It would also likely placate the artist manager and indie label communities. The managers because, if they represented PLG artists, the prospect of working with Warner execs is more attractive than having to form new business partnerships with City types new to the record business. The indies because, while the deal will see a major label grow in size yet again (something the indies generally don’t like), it will mean that Warner – now very much the mini-major – will be able to better compete with the two big boys, Sony and Universal, thus reducing the impact of the duopoly in music rights which the independents particularly fear. And, indeed, the indies’ official reps welcomed the news of the PLG deal yesterday.

The sale to Warners will have to be approved by European regulators, so will take a few months to complete, and it remains to be seen quite how the new owner integrates the PLG business into its existing European operations. So, the EMI sale story isn’t completely at its climax just yet, but we do seem to be in the final chapter.

For quotes from Universal and Warner execs on the deal click here.

For responses from pan-European indie labels body IMPALA and indie-label-representing digital rights agency Merlin click here.

And for Beggars chief Martin Mills welcoming the deal click here.

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