Bits & Pieces: EMI Exploring Options, Rick Rubin Surfaces & More…
the dude abides
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.
06.10.11More Bits & Pieces: BMG sizing up Warner/Chappell deal, Spotify inks Universal Music for U.S., eMusic & HP have sights set on the Cloud & more…
BMG eyeing WMG's pubco
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.
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Bits & Pieces: EMI Auction Expected this Month, Universal Music taps INgrooves for NA Digital, the Latest in Signing Derbies & more…
UMG taps INgrooves for digital in North America
According to The Wrap, the auction of EMI Group by Citigroup will begin this month, as the bank has been preparing the offering that has potential bidders, which include private equity firms, billionaires and rival music groups lining up. While recent reports have Warner Music auction winner, Len Blavatnik’s Access Industries, the likely frontrunner for acquiring EMI in an attempt to merge the two, the article’s sources have Citi officials carefully watching the current shareholder lawsuits contesting the WMG sale… Universal Music Group will be replacing its current North American digital music supply chain with INgrooves‘ ONE Division, which will now be responsible for all online and mobile deliveries to retailers such as iTunes, Amazon, AT&T, Verizon and others. UMG first partnered with INgrooves back in 2008, becoming a strategic investor in the digital distribution provider helmed by CEO Robb McDaniels… UK-based fundraising platform PledgeMusic has announced it is launching in the U.S. and Randy Sabiston has been named Managing Director. A veteran of music publishing, Sabiston previously held executives positions at S1 Songs America, Warner/Chappell, Polygram/Island Music Publishing and EMI Music Publishing… Meanwhile, after Sony Music recently landed bidding-derby act Odd Future, signing them to a high seven-figure imprint label deal with Sony/RED, Columbia Records has signed Kreayshawn (who also has OFWGKTA associations). A&R player Mark Williams inked the Oakland-based artist, who has been the subject of a label derby as well, following her song “Gucci Gucci” racking up over a million YouTube views in a matter of weeks. Speaking to MTV about all the recent attention, Kreayshawn, whose real name is Natassia Zolot, said “I’m not a person who just made a song and happened to get it popping off of one song. I think there’s a lot of songs that are going to sound even better and are a different genre,” adding, “Honestly, do you really [think] somebody would sign someone off of one song? Being like, ‘Oh, we’re just gonna take a gamble?’” Incidentally, new debut releases on Columbia from Foster the People, Cults and The Vaccines are out now…
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More Bits & Pieces: Blavatnik’s Inside Track at EMI, Bronfman Testifies in Lime Wire Trial & more…
Bidding over before it starts?
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.
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Warner Music Group Acquired by Access Industries
Blavatnik's Access buys WMG
This morning it was announced that Warner Music Group is being acquired by Access Industries and owner Len Blavatnik (who previously had a 2% ownership stake in the company), with an offer of $8.25 that values the company at $3.3 billion. Blavatnik beat out a handful of rival bidders, with the most competition coming from Platinum Equity/Gores Group (read this post on the New York Times DealBook blog for a look at how Warners’ investors made out on the deal)… No sooner than the news broke, did attention turn to Citigroup’s upcoming EMI auction, which many are speculating will include a heavy play by Blavatnik in an effort to combine the two music groups. It’s believed that with Access taking over WMG, current CEO Edgar Bronfman Jr. will remain safely installed in the company, and will play a key role in any attempt to buy EMI – speculation of a Warner/Chappell Publishing sale in order to help finance such an acquisition, and remove one of many probably regulatory hurdles, continues. However on the heels of WMG’s announcement, the Independent Music Companies Association (IMPALA) has already made comments warning that any attempt to combine EMI with Warners would be met with investigative scrutiny by the European Commission – IMPALA previously challenged the Sony and Bertelsmann merger in 2006… Stay tuned.
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Bits & Pieces: Warner Closes Final Round – Will the Victor Go the EMI Spoils Too?, Radio Staff Grows at Q Prime & more…
Destined to be combined?
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.]
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More Bits & Pieces: Warner Music to Sell as Whole, Spotify Cutting Free Access & more…
Following the reports this week that Citigroup would pursue a sale of EMI as a one unit, comes a piece in the Wall Street Journal yesterday claiming that Warner Music will too only consider offers for the whole company. This would seem to limit the field to three current contenders who have bid on the entire music group; Ron Burkle-owned Yucaipa Companies, Russian billionaire Leonard Blavatnik and Platinum Equity… Spotify is now taking measures to limit the amount of free music that subscribers can access, a story first tipped on CNET yesterday, with a blog post today from CEO Daniel Ek confirming and outlining what those changes will be. The change is an obvious move to push users toward a paid subscription tier, and likely also part of clearing the way toward a launch in the U.S., where labels have been much more concerned about the start ups freemium model… And Reuters is reporting that Amazon.com representatives are scheduled to sit down with label executives today, to discuss the company’s recent launch of the new Cloud Drive service.
Bits & Pieces: WMG Bidding Closes, Citi Keeping EMI United, Dangerbird Downsizes & more…
WMG reviews latest bids; Citi prepares EMI
As the second round of bidding closed on the Warner Music Group auction (the company is said to be reviewing offers this week), a new player emerged in Oaktree Capital Management and publishing company Primary Wave, who reportedly put in a combined bid for WMG’s publishing unit Warner Chappell Music. A total of 10 buyers are believed to have submitted offers that are being reviewed…. The latest development in Citigroup’s looming sale of EMI, comes from reports yesterday that the bank will be seeking to unload the entire music group as a single unit, rather than sell off the recorded music and publishing divisions as was widely believed. Group CEO Roger Faxon has long maintained that the two divisions would remain together, and last week also saw the announcement that record and publishing synchronization and licensing staffs would be combined. Some sources have cited a complex fusion of assets within the two divisions as a reason for Citi to sell the divisions together, while others contend that the reports are diversionary, and that it is still likely that the two will be split in the end, even if they are acquired as a whole… Amazon launched its cloud drive features just over two weeks ago, and according to comments from the company, so far it’s been a big success – though no numbers have been disclosed. The labels, who were apparently left in the dark about the launch, have yet to take any legal action or even publicly decry the brazen move… And has Google taken a cue from Amazon? Reports of Google acquiring Pushlife this week, a mobile content streaming service, were followed by rumors that the company may forgo the elements of its service that would require licenses from the labels, in favor of a pure locker system like Amazon… Elsewhere, Sirius XM has settled with Merlin members and other indie labels to the tune of $3.6 million in what concludes a class action against the satellite radio company that dates back to 2006. Many major labels and publishers previously settled with Sirius XM back in 2007-2008… And Dangerbird Records has reduced its staff of thirteen by five, according to a report from Pop & Hiss. Label head Jeff Castelaz said of the cuts, “While this was a difficult decision, it is necessary for Dangerbird to effectively service our artist roster to the best of our abilities,” adding “Our core staff remains intact, while we will transition some key employees to act as consultants to the company, where they will continue to represent the artist-driven, independent ethos of Dangerbird.” Just over two months ago former major label executive Piero Giramonti was named president of the Silver Lake based operation. Some of the label’s recent signings have included Liam Gallagher’s new project Beady Eye, The Limousines and The Fling…
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More EMI & WMG: Hands Won’t Give Up & Warner Racing to the Block
In his first public appearance since the turnover of EMI Music to Citigroup, Terra Firma’s Guy Hands said he is considering buying EMI, according to a report in Bloomberg, but that it is a “question of price,” adding, “They are going to auction it, and we will see if they can get more for it than we offered.” Addressing the split of EMI’s two divisions, Hands declared, “You’ve really got to keep the two together so that you have the stability of publishing’s earnings versus the volatility of the recorded music division.” Following the bank’s takeover of the music company, much of the publicity has shifted to EMI CEO Roger Faxon, and his rumored stealth efforts to save the label, being credited with leading a behind the scenes effort without Hands’ knowledge. Others in the know share that the spin has been well orchestrated leading up to Citi taking control, to keep Faxon’s place at the table moving forward… Meanwhile, the New York Post reports that Warner Music Group is trying to beat Citigroup to the finish line, hoping to get a sale in place before EMI. Particularly in light of the presumed interest in selling off its publishing division Warner/Chappell before EMI Publishing, as it would be hard pressed to compete. Interested bidders named include Zomba founder Clive Calder, Russian investor Leonard Blavatnik, Universal Music, Sony Music, KKR and music publishing giant Imagem. While whether or not WMG backers Thomas H. Lee Partners, Bain Capital and Providence Equity Partners are looking to cash out or just unload WC is unclear, the article claims CEO Edgar Bronfman Jr. is anything but ready to get out of the music business.
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Even More EMI: Investor Forced Hands’ Early Turnover
Industry observers continue to ponder the timing of Citigroup’s takeover of EMI this week. With Guy Hands seemingly set on exploring every nook and cranny to stump up more funds to keep control of the music company, and the next debt covenant test not scheduled until March 31st, the early turnover to the bank has many perplexed. Having proved to be intent on dragging out the affair until the bitter end, with his legal action against Citi last fall and a delayed appeal of the ruling less than a month ago, what changed Hands mind? Those in the know share that a single investor with a large stake in EMI forced Terra Firma’s hand by threatening to sell his interest in the company if it wasn’t immediately turned over to the lender. Such a move would have surely created an even messier process and further lowered the value… Stay tuned.
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