Universal Music will be amongst the bidders for EMI, according to the LA Times, who cite a ‘person close to the label’ as their source. The biggest music major is interested in acquiring the British music company – labels especially, publishing catalogues possibly – despite the regulatory hurdles such a deal would almost certainly result in.
The Times says that Universal held off from making a full on bid for Warner Music, despite showing initial interest, because it was felt a Universal Warner merger would never have got past competition regulators. However, the paper’s source says, legal beagles have advised that a Universal EMI merger might be possible because the British company has a smaller market share than Warner in some key territories, especially the US. I’m not sure I concur with that analysis, though stranger things have happened.
But anyway, in reality it seems unlikely Citigroup – who this week announced a ‘strategic review’ of EMI in preparation for a sale later this year – would sell to Universal, for at least three reasons.
First, if Universal do just want the labels as some reckon, Citigroup have already indicated they don’t want to split up EMI for sale.
Second, even if Universal were right to be optimistic of regulator approval for a full on merger, the regulatory process would delay things, which won’t be an attractive proposition to Citigroup.
Unless Universal was offering more money. But that seems unlikely because, and here’s reason three, rival bidders from the investment and private equity domain will likely have more cash at their disposal.
But what does seem certain, is that all of EMI’s big music business rivals, so Universal, Sony, Warner, and you should probably include BMG in that, do have some interest in buying the British music firm, even if that interest doesn’t ultimately result in actual serious bids.
Many still reckon a bid by Warner’s new owners, Len Blavatnik’s Access Industries, to create a combined EMI Warner – which once created would probably still be slightly smaller than both Universal Music and Sony Music – is now the most likely outcome.