Sony complete EMI Music deal

August 2012

Music publishing


The Sony Corp. of America led investor consortium has now completed its acquisition of EMI Music Publishing, just hours after the Federal Trade Commission issued a statement saying it closed its antitrust investigation of the $2.2 billion deal, which meant it received regulatory approval.

The Sony-led consortium paid $2.2 billion to Citigroup on Friday, and took collective ownership of EMI Music Publishing, meaning the once British-owned major music company has now been officially split into two. The US bank will keep hold of the other half for the time being while Universal’s bid to acquire EMI’s recorded music division continues to be investigated by regulators in America and Europe.

The European Commission gave the Sony consortium transaction its approval, subject to a number of remedies, back in April. Those remedies mean that, as Sony takes ownership of EMI Publishing, the Virgin and Famous UK song catalogues are now up for sale. BMG, which bid against the Sony consortium for EMI outright, is now expected to lead the bidding for these not insignificant former EMI publishing portfolios.

Although many refer to a “combined Sony/ATV and EMI”, the two publishing companies will technically remain separate entities, because of the structure of the buying party. Sony, which owns 50% of Sony/ATV, will actually be a relatively small shareholder in EMI Publishing overall.  The consortium’s other investors, which includes Mubadala Development Company PJSC, Jynwel Capital Limited, the Blackstone Group’s GSO Capital Partners LP and David Geffen, will hold their stakes via another JV holding group. The EMI publishing company will have its own board made up of reps of each investor organisation. That said, it is expected that Sony will be in day to day control of EMI Music Publishing as well as Sony/ATV, giving them control of over two million song copyrights. It’s thought, partly on the basis of a document leaked earlier this year, that EMI Publishing will continue to have its own A&R divisions, and will continue to sign and work with songwriters directly, though rights administration will be outsourced to Sony/ATV.

It also seems that the Chairman at Universal’s parent company Vivendi, has come out in support of the UMG – EMI deal for the UK major’s recorded music division.  Reports says that Jean-René Fourtou has indicated to European officials that his company is now willing to offer concessions to tackle various concerns expressed by EU regulators about the deal, while insisting that the Paris-based conglom is better placed than anyone to protect some of Europe’s most prized musical catalogues and this was reiterated by UMG boss Lucian Grainge  who confirmed to the Financial Times that his company will offer to sell some assets in order to win European Commission approval for its bid to buy the EMI record company, and Grainge confirmed that Universal would offer to offload assets in those territories where critics say the major would be far too dominant if it is allowed to acquire EMI Music. But the move kickstarted a big debate (and some argument) amongst independent labels about who might be able to buy what – with the Virgin label clearly up for grabs – and even rumours that Parlaphone might be sold!

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