As was expected by many observers, Read more…
Universal Music Group and Sony Music continue to dominate the music biz storylines this year with the unpredictable conclusion of the EMI auction, Read more…
In a New York Times feature on Doug Morris yesterday, included among the expected platitudes from the new CEO of Sony Music, like describing his plan for the company as simply “to help create the pre-eminent record company in the world,” was the clever and first official disclosure of a new label deal with producer Dr. Luke, which will see the expansion of his current imprint with Sony, Kemosabe Records. The news, which we exclusively revealed back over the summer (with the New York Post picking up the item shortly after), comes with similar overtones as we initially reported, which is Morris is attempting to recreate his successful investment and development of Interscope Records with Jimmy Iovine at Universal Music Group. The new deal, which has been in negotiation for many months, will put the label on equivalent footing as Epic, Columbia and RCA, and also includes exclusivity at Sony for Dr. Luke’s producer services for five years – a component that smacks of Sony’s soon-to-lapse agreement with Rick Rubin, whose production work outside of their label system has been noted by many as part of the arrangements overall failure. Also central to the Kemosabe deal is the purchase of a significant stake in Dr. Luke’s publishing by Sony/ATV, a move that will give the pubco an interest in what has been Luke’s highly-successful songwriting operation, which includes a stable of of up-and-coming pop composers with numerous chart-topping credits. Observers are drawing similarities to previous high-dollar publishing investments in hitmakers at their pinnacle, like Kara Dioguardi‘s Arthouse Entertainment deal… Meanwhile, Citigroup‘s auction of EMI is dragging on longer than the bank would like, with plenty of spin and speculation surrounding the action for the recorded music division. Last week saw the twist of Warner Music Group owner Len Blavatnik, pulling his bid from the table after Citi wanted him to increase the offer, though many see it simply as a negotiating tactic from the Access Industries owner. In turn, Universal Music Group, who previously was thought to be out of the running, is being touted as potentially back in, with the New York Post reporting the two sides are scheduled to meet today, though UMG’s last offer fell below Blavatnik’s. On the EMI Music Publishing side, the deal is still seen as BMG Rights Management‘s for the taking… Elsewhere, in related news, David Bowie is reportedly on the verge of leaving EMI, which would end a 15-year relationship that gave the label rights to a large part of his catalog of classic albums. Discussions are said to be taking place with both Universal and Sony… And South African hip-hop enigma Die Antwoord are leaving Interscope Records, seemingly as abruptly as they were signed to the label in early 2010. The group, who has a publishing deal with Sony/ATV, will soon be releasing their second album via their own new label ZEF RECORDZ.
Numerous recent reports have Citigroup closing a deal (or two) for the sale of EMI by the end of this week, including a New York Post piece today claiming that a fight for the recorded music arm is down to billionaires Len Blavatnik, whose Access Industries now owns Warner Music Group, and MacAndrews & Forbes Worldwide chairman Rob Perelman. On the publishing side, KKR and Bertelsmann-backed BMG Rights Management is being called the clear frontrunner, though Sony still isn’t being completely counted out. New Bertelsmann CEO Thomas Rabe who is said to be making the rounds in New York this week, is very familiar with EMI, previously serving as Bertelsmann CFO since 2006 until his recent promotion, where he kicked the tires on the music group prior to Terra Firma‘s acquisition of the company in 2007 and then again at EMI Music Publishing in 2009, in discussions that likely included Citi as well… As we mentioned back at the outset of summer, Warner Music and BMG all along have been the favorites to end up with EMI’s recorded music and publishing arms, though many other suitors entered the bidding fray as expected as well. Among the many questions we are hearing with regard to the likely new owners of EMI, is the fate of current executives on both sides following a deal – including EMI Group CEO Roger Faxon, WMG’s Edgar Bronfman Jr., Capitol & Virgin NA label prexy Dan McCarroll, EMI Music Publishing’s Big Jon Platt, BMG’s Hartwig Masuch and Laurent Hubert and many others… Stay tuned.
There has been much movement in the music publishing world over the last few weeks, including the move for Taeko Saito from working at producer management operation AAM, into the A&R department at SONGS Music Publishing. Also new to SONGS is Josh Feingold, who comes to the boutique pubco from SESAC‘s Los Angeles office… Meanwhile, after unloading much of the creative staff absorbed in the takeover of Chrysalis, who truth be told were more than exemplary in their talent-spotting, development and artist relations skills, BMG Rights Management has added Jon Sidel on the west coast and Kate Hyman out east to their creative department. And of course Bertlesmann announced a change at the top, with Thomas Rabe succeeding as the new CEO… In related news, former Bug Music CEO John Rudolph left the company following BMG’s recent purchase of the publishing outfit, while elsewhere, former Chrysalis North American president Kenny MacPherson and A&R VP Jamie Cerreta are rumored to be eyeing the void left in the independent music pubco sector after all the recent acquisitions – be on the lookout for more moves from the veteran publishers… Last week came the announcement that Evan Lamberg is to take the helm at Universal Music Publishing Group in North America. Insiders share that Lamberg was gunning hard for the position, though he probably wasn’t the first choice, as it was no secret that the top Universal brass took their time after numerous meetings with other suitors… And on the digital side, J Scavo ankles his global marketing position at the seemingly more stable Disney Music Group for the revolving door position that is digital at Warner Bros. Records. The digital executive bailed for the rival label, a hop-skip and a jump across the river in Burbank, after barely 18 months working for the Mouse. It was Scavo, previously the GM at MySpace Records and a vocal champion for non-traditional label models, who with his decision to suddenly resign to work at Disney, provided the spark for News Corp. to initiate moves to lay off the label’s staff and shutter it as an ongoing operation. Robbie Snow has been named the new Head of Global Marketing for Disney’s music operations under Hollywood Records… And Brett Greenberg has joined Crush Management as VP of radio promotions.
Following reports last week that Spectrum Equity and Crossroads Media, owners of Bug Music, were accepting second round bids for the publishing company, came the news yesterday that KKR-backed BMG Rights Management has snapped up the independent pubco, for a price that is being rumored at $300 million. The acquisition, which is expected to be closed by October, will essentially double the catalog size of the KKR and Bertelsmann joint venture. Bug Music CEO John Rudolph is also reportedly suing the owners of the pubco, over a 2% equity stake in the company which he was promised… Of course, BMG RM is also currently bidding in the EMI auction, with its sights set on the publishing arm. An article in This Is Money over the weekend stated that bidders in the EMI auction are frustrated by Citigroup‘s slow-pace in the process, and believe it is in an effort to give private equity parties enough time to raise cash to remain as contenders given the troubled financial markets… Good news for those vying for EMI, as well as many other record companies, is the decision by the European Union to extend the copyright term on sound recordings from 50 to 70 years. Many point to the mass of popular recordings from the 1960′s by numerous British artists including the Beatles, the Rolling Stones and many others that would begin to come up on term within only a few years, as being a primary reason behind the ruling. While the announcement was made as being a major boon to artists, in protecting works, others see the move as furthering what has been a negative situation for the many older artists and performers in the new digital age. The storyline also parallels that of the current copyright termination issue going on in the U.S., though there is no such reversion clause in the European law.
Another potential wrinkle appeared in the current auction of EMI this week, with the reappearance of Guy Hands, who is taking legal action to recover documents explaining the basis for Citigroup‘s takeover of the music company in February of this year. According to initial reports, Citi tapped PricewaterhouseCoopers to handle administration of the takeover process, and Terra Firma is now taking action against both parties after previous unsuccessful attempts to acquire a satisfactory explanation. After Hand’s courtroom defeat at the end of 2010, it was believed that the EMI takeover would not come until closer to summer of this year, given the debt-payment schedule, however the bank took action in February, after rumors in January that they were already shopping for buyers. So far Citi’s response to the initial sentiment that this new twist could cause a serious problem for their auction of the music group, was to indemnify all bidders currently pursuing EMI, according to the Financial Times. Some insiders are wondering if this isn’t just more posturing from Hands in an attempt to strike a blow against his former lender, particularly after recent widespread speculation that EMI could fetch a much higher price than originally believed. Considering the scuttlebutt earlier this year was that the abrupt takeover came as a result of threats from his own investors, one in particular, the answer might be yes… This latest development surrounding the EMI auction, comes after talk that the looming copyright termination battle royale, is also effecting the bidding process, though most observers share that neither issue will likely have crippling outcomes… Meanwhile, continuing his rounds with the press as artist-spokesman for the copyright termination topic, Don Henley speaks to Rolling Stone about the copyright law, options that artists have and how the record companies are not going to take it lying down… And according to the New York Post, independent music pubco Bug Music is taking second-round bids from interested parties, including KKR-backed BMG Rights Management, Ole Music and Imagen among others…
The first round bids for EMI are in, with multiple reports pointing to more than 10 offers received for either the whole or individual recorded music and publishing arms of EMI Group, from interested parties including Sony, Universal, Warner Music, BMG Rights Management and a host of private equity groups. At least one analysis this week claimed that Citigroup could possibly fetch more than $4 billion for the company based on a similar multiple used in the recent Warner acquisition. An article in FT.com yesterday claims that the current tendered bids range from $3 – $4b, and that between four and six of the submitted offers were for the entire music group. Citi is expected to respond to the opening bidders this week… While less humorous than last summer’s Kings of Leon bird droppings incident, the band’s cancelation of the remainder of their current U.S. tour dates following an abrupt termination of a set in Dallas last week, may prove much more damaging. Rollingstone.com takes a look at other recent tour cancelations with somewhat dubious explanations, and according to reports, the KOL cancellation may cost policy holder, Loyds of London, as much as $15 million in payouts to promoters and others affected… The much talked about Turntable.fm has secured a $7.5 million financing round led by Union Square Ventures, which has some wondering if the startup will next seek licensing agreements with the record labels and music publishers. Lady Gaga and Kanye West are also reportedly among those who contributed to the funding… And The Shins are following fellow former Sub Pop label mates Band of Horse, in moving from the venerable indie to a new imprint-label deal with Columbia Records for their next release.
The New York Post reported this week that KKR and Bertelsmann-backed BMG Rights Management, as expected, submitted their bid for EMI last Friday, while the other favorite Warner Music is believed to be submitting this week ahead of a July 28 deadline. The Post also reported that new Warner owner, Access Industries, is preparing for cutbacks in the WMG workforce up to 5%, primarily outside of the U.S. – reductions that are believed to be directly related to a possible EMI acquisition. Others are noting the dramatic uphill climb the new Warner Music owners face in an industry that reported growth of just 1.6% this year, the first time in 7 years, with album sales still in decline. Is a successful EMI merger the only way for Len Blavatnik to avoid ending up as the next Guy Hands?… Meanwhile, as first reported by The Wrap, Universal Music is preparing to install Universal Music Publishing Group executive Ethiopia Habtemariam as head of Motown, as the label transitions into the Island Def Jam Group. At least one veteran IDJ A&R executive is said to be heading back to Universal in the new Motown/IDJ group after previously departing under CEO L.A. Reid, who is now chairman of Epic Records.
The owners of Bug Music are once again shopping for a buyer according to a report by Bloomberg this morning, with a target price of between $330 and $400 million for the publishing company. Acquired by a group of investors led by Spectrum Equity in 2006, the pubco was on the block as recently as last year, and while a sale was never completed, presumably due to lack of a high enough bid, insiders share that BMG Rights Management came close to completing a deal. It’s likely that they’ll be among bidders again this time, along with the 30 interested companies, according to the report, including Sony/ATV, which signed NDA’s to receive an offering book for Bug… Of course a higher profile auction is Citigroup‘s unloading of EMI, which has an early August deadline for first round bids now expected, according to reports today. Warner Music has been the front-runner in early EMI sale talks, along with the KKR/Bertelsmann-backed BMG (read our pt.1 and pt.2 posts on that scenario), though a New York Post piece yesterday has Warner’s debt impeding a successful acquisition, and in speaking with the Financial Times over the weekend, Bertelsmann CEO Hartmut Ostrowski cautioned his company wouldn’t get involved in a bidding war for EMI and is only interested in offering a reasonable price. Those in the know still expect both companies to be on the shortlist over the coming weeks… In related news, it was announced today that Access Industries officially completed their acquisition of WMG… And elsewhere, charter sponsors for the U.S. unveiling of Spotify, including Chrysler, Coke, and News Corp’s The Daily, reportedly paid $1 million each to be included in the launch, with their branding prominently displayed in the service, and each getting 10,000 membership codes to giveaway as well.
The sale of EMI Music Publishing to BMG Rights Management would be by far the largest investment for the Bertelsmann and KKR-backed venture, and would more than triple the current catalog of over 300,000 copyrights. It’s a catalog the JV has amassed in less than two years, through a series of acquisitions that include Cherry Lane Music, Adage IV, Stage Three Music, Evergreen Copyrights and Chrysalis Music, along with a handful of other international catalogs and pubcos. The speed in which BMG RM has climbed to the spot of fifth largest publisher in the world is striking, but only part of the story when looking at their catalog purchases. What’s more interesting to some insiders are the subplots and what they could signal for the future. Let’s step back and take a closer look… One of the most impressive and significant music publishing constructions in recent decades was that of Dreamworks Music Publishing, a catalog that was assembled under the guidance of veteran publisher Chuck Kaye. It included works from artists such as The Byrds, John Denver, Jimmy Eat World and Lifehouse among others, along with hit titles like “Disco Inferno” and “Take Me Home, Country Roads”. The catalog journeyed from one home to another throughout the 2000′s following the sale of the Dreamworks recorded music division to Universal Music in 2003. The catalog was first sold for $50 million to Dimensional Music Publishing in 2004, a newly created arm of JDS Capitol Management (who also owns eMusic and The Orchard), in a deal which is seen as seminal in the recent trend of venture capital investments in music publishing assets. However, Dimensional publishing’s run was short-lived, selling its assets less than three years later to First State Media Group, a new fund whose publishing entity operated as S1 Songs. Then again in under three years time, in early 2010 - after its own stint on the block almost being bought by then EMI owner Terra Firma – Chrysalis Music acquired First State Media and S1 Songs for $16.5 million, in a deal that included the Wind-Up catalog and of course the original 25,000 Dreamworks copyrights. And in November of last year, less than one year later, Chrysalis announced it was being bought by BMG RM, adding another 100,000 works to the JV’s catalog, in a deal valued at $169 million… So with a major addition like EMI’s publishing assets, what would the future hold? Particularly taking into account the consolidation happening within the ranks of the companies they’ve already acquired. On track to double their revenues by 2015, will the trend continue, with EMI (which has undergone significant cost-cutting of its own recently) as the final piece in a KKR and Bertelsmann plan to build the world’s largest publishing company and flip it? The common belief in many circles is that the industry is headed to a new era of the ‘Big Three’, and as such, none of the majors left will be able to afford leaving such valuable publishing assets outside of their control. It’s going to get interesting… Tune in tomorrow as we break a new big publishing deal currently in play.
Industry insiders have shared with us recently that they are putting Len Blavatnik‘s Access Industries as the front-runner in the auction of EMI by Citigroup, which is expected to start in the coming weeks – and there’s plenty of good reason to bet that way. It’s been reported that Citi executives have already engaged in talks with the new Warner Music Group owner about a potential acquisition, Edgar Bronfman Jr. has long desired to merge Warner and EMI, and Citigroup chairman Dick Parsons ran Time Warner during a previous bid to merge the two companies. However, those in the know share that Warner isn’t the only suitor with ties to both Citi and EMI. More on that below… Many of the deep-pocketed bidders from the Warner Music auction are expected to enter the EMI derby, for either the recorded music unit, publishing or both, with regulatory issues as the most obvious concern for parties like Universal Music, Sony Music and now Access-owned WMG – all of them would have to shed assets in order to complete a deal. Meanwhile, private equity players would have an easier time making an acquisition, but the Terra Firma debacle may prove too cautionary for some who are interested… With all that, it’s BMG Rights Management that is on the tongues of insiders as one of the most well-positioned contenders, particularly with regard to EMI Music Publishing. The Bertelsmann and KKR-backed joint venture was deep in talks with Terra Firma to buy the publishing unit back in 2009, which would have relieved some of the debt that ultimately forced Guy Hands to turn the company over to Citigroup, and prior to that, KKR was in the running to acquire the entire EMI Music Group, before it ended up in the hands of Terra Firma… With relationships in place, and knowledge of the company before, during and after the Guy Hands era, it’s not hard to envision EMI publishing assets ending up in the already prodigious BMG Rights Management catalog, which would put the JV in position to rival Universal Music Publishing Group for the top spot in market share. This just five years after Bertelsmann sold BMG Music Publishing to Universal. But the story wouldn’t end there… Stay tuned.
EMI officially announced on Monday that it will undergo a strategic review process, along with Citigroup, to explore options that include selling the company. The list of potential bidders has been discussed for sometime, with the recent sale of Warner Music only intensifying speculation. The Los Angeles Times reported that Universal Music is planning to make a bid, while other names frequently bandied about include Access Industries (for a WMG merger), BMG Rights Management and other investment players who were in on the Warner bidding. Observers are wondering how much Citi will get for the company – as the WSJ points out, Warner was sold for eight times its 2010 earnings, with some now thinking EMI could fetch as much as 2.5 billion pounds… As Sony Music prepares for the entrance of Doug Morris next month, Rick Rubin has been talking publicly for the first time in awhile, toasting the success of Adele‘s 21 and making it clear he’s always been a ‘creative’ guy and the “voice of reason and positive creativity” – leaving the ‘business’ side of things to the “people at the label.” Where and how the Columbia Records co-chairman will fit into the new Sony regime is unclear, though his comments seem to come at an opportune time… CEO of Hip-Hop Since 1978 management firm, Gee Roberson, has been named chairman of Geffen Records, he will report to Jimmy Iovine… Elsewhere, the social streaming-music site Turntable.fm is attracting a lot of new users and getting increased attention, though some are wondering if that will also mean scrutiny from content owners, as they do not have licenses from any labels. The company maintains that it falls under the protection of the DMCA, similar to how online radio service Pandora operates without licenses… And Best Buy is reportedly preparing to launch a new service called Music Cloud in the U.S., which as the name implies will be a cloud-music service – the company already operates a similar service in the UK called My Music Anywhere; agreements with all the major labels are said to be in place.
As Citigroup readies EMI for auction, as soon as this month according to reports, KKR-backed BMG Rights Management is already kicking the tires on Warner/Chappell Music according to the New York Post. While a number of suitors are expected to submit bids for all or part of EMI when the music group is taken to auction, if Len Blavatnik‘s Access Industries comes out on top again, most expect that regulatory obstacles would see Warner Music‘s pubco being sold, though some observers have Citi more likely to favor other interested parties due to fear of such regulatory scrutiny… A Digital Music News story this week revealed that digital music retailer eMusic has had little to no subscriber growth since 2007, even with the addition of catalogs from major labels. The service however, can point to an increase in revenue from its current subscribers, who are opting for higher-paying levels of membership. Also apparently on the horizon for eMusic is a cloud-based service – with CEO Adam Klein telling Billboard that they hope to launch it by the fourth quarter of this year… How many more companies will join those already in the cloud like Apple, Amazon and Google? Apparently Hewlett Packard is in the early stage of discussions with content owners, including major labels, for a service similar to iCloud, offering music, movies and TV shows… Meanwhile, MediaMemo reported today that Universal Music Group has signed on with Spotify in America, and while a deal with Warner Music Group is yet to be reached, sources have the two sides close to a deal as well… Elsewhere, Irving Azoff and Liberty Media boss John Malone are said to be considering taking Live Nation private, in an effort to restructure the company… And while News Corp.‘s prospect of completely unloading MySpace don’t look good, according to a new report, the frontrunner among those in talks for a strategic partnership that would leave News Corp. with partial ownership, is an investment group which includes Activision Chairman and CEO Bobby Kotick.
An official auction of EMI by owner Citigroup has yet to begin, but a piece in the NY Post hints that the bidding might be over before it starts. Citing unnamed sources, the story indicates that recent Warner Music Group winner Len Blavatnik has already been holding meetings with Citi about a possible EMI deal, which would see it combined with Warners, adding that they see Blavatnik’s Access Industries as the suitor with the deepest pockets. Though there are plenty of other well-funded potential bidders who would likely make a run, including KKR-backed BMG Rights Management, the Gores brothers whose bid for WMG failed, and a number of other private-equity players… Meanwhile, Edgar Bronfman Jr. took the stand in the trial to determine damages owed to record companies by Lime Wire yesterday, in an attempt to add credence to the claim of industry “devastation” caused by Mark Gorton‘s P2P service. Appearing as the ‘face’ of an industry that has suffered at the hands of Lime Wire, Gorton’s attorney’s were quick to paint Bronfman’s as one that has not suffered much by the industry downturn – pointing to layoffs under his watch, while his salaries and bonuses have totaled in the millions for the past five years. They also read from a transcript of a 2007 speech from Bronfman, which included the line, “By standing still or moving at a glacial pace, we inadvertently went to war with consumers by denying them what they wanted and could otherwise find, and as a result, of course, consumers won.” More coverage on CNET… And the general concesus of those who have been invited to the private beta of Google‘s new Music Beta, seems to be that while the features are neat, it could be so much better. What can they do to make it better? Secure agreements with the major record companies of course. The main points of contention between Google and the labels that are being reported, include disagreements over money (upfront advances to labels), piracy (labels trying to use a deal to leverage changes in the search engine’s results relating to piracy sites), and a lack of vision on Google’s part for what they wanted the service to be, combined with the fear by labels of upsetting the Apple cart, by getting in bed with a competitor. For all the talk of needing someone to step up and create a meaningful iTunes competitor, it looks as though Steve Jobs will have the upper hand with labels once again… And in related gossip, there have been rumors of a Lady Gaga tie-in with the public launch of Google Music, including a claim on Fast Company that the singer was recently shooting a commercial for Google in New York, for a promotion that would coincide with the release of her new album later this month. Such predictions might seem highly dubious, considering Universal Music is said to have been one of the main holdouts on a Google deal, however her manager is no stranger to Silicon Valley and gaming company Zynga just announced a major partnership with Gaga this week.
The final round in the Warner Music auction closed yesterday, with two primary bidders said to be vying for the company, one being Len Blavatnik’s Access Industries and the other, a coalition of brothers Tom and Alec Gores, whose respective company’s are Platinum Equity and Gores Group – both suitors reportedly tendered bids around $3billion for the entirety of WMG. Attention has begun to drift to the looming sale of EMI by owner Citigroup, and the belief de-jour is that whomever ends up nabbing Warner Music, will also be aggressive in securing EMI as well. The result would likely be a cut and paste job between the various components of the two music groups. In another twist, The Telegraph reported yesterday that KKR-backed BMG Rights Management and Universal Music Group may be teaming up in an attempt to acquire either or both EMI and Warners, having put together a plan to carve up catalogues in an effort to avoid regulatory hurdles… Elsewhere, according to FMQB, Q Prime is expanding its promotion team, with an emphasis on bolstering the undertakings of its premier management operation, with a roster including Cage the Elephant, The Black Keys, Silversun Pickups, Snow Patrol, Muse and many others. Q Prime’s Mom + Pop Records, who has releases from Sleigh Bells, Metric, Freelance Whales among others, should also benefit from the increased staff. The additions include Trina Schaefer (formerly of Island Def Jam), Erin Gellert (formerly of Epic Records), Devin Rosevear, Chris Frank (formerly of Universal Motown) and Michael Fang (formerly of Red)… Meanwhile, the news of a nearly 25 million additional user accounts being compromised in the recent PlayStation Network breach (77 million were initially reported) smacks of the Sony BMG rootkit blunder (and ensuing lawsuits), and it can’t be good news for Sony Corp. CEO Howard Stringer, whose term has recently begun to be put in question more frequently… And for an interesting read about some of what labels are said to be demanding from cloud music, or locker, services (efforts from Amazon, Apple, Google and Spotify being the most widely discussed), check out the guest post from MP3.com and MP3Tunes founder Michael Robertson on TechCrunch.
[UPDATE - Bloomberg first reported yesterday that a last minute joint-offer for Warners was submitted by Sony/ATV Music Publishing and Ronald Perelman and Guggenheim Partners LLC. A winning bidder is expected to be announced on Friday.]
Outside of the explosive announcement from Amazon this week that left a music-cloud hanging over the industry, other developments include the news of KKR-backed BMG Rights Management being back in the bidding action for Warner Music Group, after recent reports of the JV being on the outs in the sale. CEO Hartwig Masuch denied such rumors, saying “I can state that we are in the second round of bidding and are on very friendly terms with the main shareholders,” while executives at BMG RM’s other backer Bertelsmann claimed this week that the company is “ready to invest into the right business, at right price, and at the right time,” with the right business apparently being publishing, as Warner/Chappell and EMI Publishing are key in their sights. More reporting can be found at The Guardian, The Telegraph and Music Week… As News Corp. continues to look for a way to unload struggling MySpace, word that the parent company is in talks with online video hub Vevo began to surface. The accuracy of such claims continues to be debated, while a piece in the WSJ yesterday points out that the complex ownership anatomy of both companies might make a deal difficult. For now it seems an unlikely scenario… And a new partnership that links Universal Republic Records, Universal-owned Twenty First Artists and producer management firm Worlds End, forming Twenty First Republic, was announced yesterday. Primaries in the deal include Uni/Republic executives Monte and Avery Lipman, Twenty First Artists CEO Colin Lester and Sandy Roberton, CEO of Worlds End.
The big news this morning from within the big four music groups (soon to be three?), is the confirmation that outgoing Universal Music Group CEO Doug Morris will indeed take over the reigns as new chief executive at Sony Music on July 1st, as Rolf Schmidt-Holz departs at the end of this month. Sony Corp. chairman Howard Stringer will fill the role in the meantime. Morris held the role of CEO at UMG since 1995, before announcing a successor in Lucian Grainge at the beginning of last year. On the other side of the coin, RCA/Jive label chief Barry Weiss will also leave the building this week, as he takes a top spot in Grainge’s East Coast Universal label operation… Bloomberg reported this week that Warner Music Group, which recently put itself on the block with help from Goldman Sachs, has received ten offers so far including bids on its publishing division Warner/Chappell Music by Sony/ATV Music and KKR-backed BMG Rights Management, while Russian billionaire Len Blavatnik is seeking to acquire most of the company. UMG did not submit an offer, reportedly due to anti-trust concerns – though they may be interested in acquiring parts of the recorded music business… In what could be seen as a preemptive move as Spotify appears to be gearing up for a U.S. launch (including reportedly making hires), Rhapsody is offering a 60 day free trial for its streaming service… Ringtone company Thumbplay, who transitioned into the music subscription arena earlier than most current players, has been bought by Clear Channel. It appears that the new owners of the service intend to transition the service into online radio, utilizing the Thumbplay technology and talent and integrating it into Clear Channel’s current free iheartradio service… Elsewhere, Live Nation California prexy Rick Mueller is reportedly leaving and heading to rival AEG… MTV and Sony/ATV’s Extreme Music are launching Hype Production Music as the result of a new licensing partnership that will focus on emerging and independent artists… And despite continued turmoil in the digital music landscape, investors are once again starting to dump big cash in the chaotic space.
The new structure of the BMG Rights Management operation in the UK, now known as BMG Chrysalis UK, has been tipped with the placing of Alexi Cory-Smith in a role overseeing creative, marketing and business affairs, along with COO John Dobinson taking over operations. Cory-Smith was named SVP of legal and corporate development at BMG back in January, leaving her previous position at the firm Lee & Thompson, where her clients included finalists from multiple seasons of the X Factor. The new arrangement also sees the exit of longtime head of creative in the UK, Alison Donald, a highly respected A&R veteran, who those in the know share had been hotly courted by rival publishers and labels throughout her tenure. Music Week‘s report mentions that no indication has been made as to how group CEO Jeremy Lascelles will fit into the new company structure, though insiders share that Lascelles will likely be leaving the pubco as well. A&R executives Ben Bodie and Alan Pell will remain in key creative positions. Observers are wondering if the moves by BMG indicate a larger overall shift away from the new artist business, and how it fits into the KKR-backed venture’s plans moving forward. Questions also remain about how the structure of the U.S. operation will shake out. Stay tuned… In more rights management news, Songtrust, a new division of Downtown Music, has announced a new partnership with MySpace Music, which will see the company offering its music publishing management services to the large number of unsigned and DIY artists among the social network… Universal Music Publishing Group has bolstered its standing in the film & TV music publishing arena by announcing new deals with HBO, DreamWorks and James Newton Howard. The deal sees UMPG getting administration rights to current and future projects for the three heavyweight Hollywood companies… And time is running out on Sony Music CEO Rolf Schmidt Holtz‘s contract, which ends March 31st, and there’s still no word yet of a replacement. Doug Morris is widely believed to be the one Sony Corp. brass wants to takeover, but his current contract with Universal Music Group owner Vivendi runs until January of next year, with an early release rumored to be unlikely before the summer.
It’s being reported the Warner Music Group is preparing to receive offers this week from a list of up to 20 bidders, the latest entry on the list of suitors is Russian businessman Len Blavatnik, who already owns a minority stake in Warner/Chappell Music. The KKR-backed BMG Rights Management venture is expected to be among bidders for WMG’s publishing division, having apparently tapped multiple banks to advise and provide financing. Though the move could also be to prepare bidding for the Citigroup-owned EMI Music, the other major music group currently on the block. Or maybe it’s both… EMI group CEO Roger Faxon continues his media tour, with a piece this week in The Guardian where he explains the pitfalls of splitting up the company’s recording and publishing divisions. Meanwhile, former owner Guy Hands expresses disappointment over losing EMI, his highest profile investment, to Citigroup… Details coming out over the weekend have Spotify getting a large amount of new financing in the range of $100million from Digital Sky Technologies (also backers of Facebook, Groupon and others), which would give the company a new valuation of around $1billion. If it seems like all that new money will just end up going to the labels in the U.S. in order to get off the ground (Spotify now has both Sony Music And EMI onboard), MediaMemo‘s Peter Kafka says think again… And how would the new Apple content subscription service fees hinder music services like Spotify? A cryptic email from Steve Jobs this week has many questioning if Apple is changing its tune on fees applying to music services.