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Universal’s EMI deal to get congressional hearing next week
By CMU Editorial | Published on Friday 15 June 2012
While next week’s congressional hearing on Universal’s proposed purchase of the EMI record company is actually something of a side show to the main regulatory investigations into the deal in both the US and Europe, it will likely be the most public airing of the arguments for and against the acquisition.
And with five music industry veterans – Lucian Grainge, Roger Faxon, Irving Azoff, Edgar Bronfman Jr and Martin Mills – all expected to speak, it should make for very interesting viewing.
As previously reported, American lobby groups Public Knowledge and the Consumer Federation Of America originally called on the Senate judiciary committee’s antitrust panel to give time to considering the proposed Universal/EMI deal, and it emerged last month that such a hearing was being planned. According to Reuters, the congressional session will now take place next Thursday, 21 Jun.
Needless to say, Universal boss Grainge and EMI chief Faxon will speak in favour of the deal, as will Azoff, whose company Live Nation formed a joint venture with Universal Music last year. Edgar Bronfman Jr will speak for his former employer Warner Music, the major he once controlled as CEO and significant shareholder, and where he still sits on the board. Warner is opposing the deal, and Bronfman has been the most vocal critic to date from the Warner camp. Beggars Group boss Mills will likely speak for the wider indie label community, most of which also opposes a combined Universal EMI.
Gigi Sohn, president of the aforementioned Public Knowledge, will also speak against the deal. Both Public Knowledge and the CFA yesterday published a report expanding on their past opposition to the acquisition, explaining why they think an expanded Universal Music “will have a strong incentive and increased ability to exercise market power, particularly in undermining, delaying or distorting new digital distribution business models, in a market that has been a tiht oligopoly for over a decade”. Public Knowledge also launched a petition against the deal yesterday.
Universal, however, says that the new Public Knowledge/CFA report, while more lengthy, says little more than public letters opposing the proposed deal that both bodies have previously published. According to the New York Times, a spokesman for the major said yesterday: “This is the same song sung to a different melody. There’s nothing new here as CFA’s analysis continues to vastly overstate market concentration. Indie labels are a vibrant and growing force accounting for nearly 30% of the market. The music industry is intensely competitive and barriers to entry have evaporated in today’s digital environment”.
While next week’s hearing in the US Congress should be interesting, in reality it’s ongoing negotiations with the Federal Trade Commission in America and the European Commission that really matter to Universal. European regulators, at least, are expected to demand concessions from the major to secure approval for the EMI deal.
As also previously reported, the concurrent efforts by a Sony-led consortium to buy the EMI publishing company have already resulted in EC approval, with the US investigation into that deal still ongoing.
