Outgoing Warner Music Chairman maligns Universal acquiring EMI
Edgar Bronfman Jr. speaks with AllThingsD's Peter Kafka
Speaking at the Dive Into Media conference yesterday in California, on what was his last day as Chairman of Warner Music Group, Edgar Bronfman Jr. didn’t mince any words when it came to the topic of Universal Music Group’s planned acquisition of the EMI recorded music division. “It does strike me as hubris particularly for Universal to think it’s going to be easy to buy EMI, and frankly to think they can buy EMI at all,” said Bronfman, also saying that the merger would create a “super-major” that would not only control the future of recorded music, but “the future of all digital media.” He also confirmed that Warner Music would indeed be fighting the deal, as was expected with the recent news of WMG’s hiring of an anti-trust lobbyist firm. Bronfman also denied that the failure to successfully acquire EMI was the impetus for his departure as chairman, and that his biggest regret looking back was his misjudgment in the mobile space, saying that the platform “took longer to mature than I thought at the time.”
12.13.11Post EMI Auction Round Up
WMG CEO downplays EMI loss
As was expected by many observers, Edgar Bronfman Jr. announced early last week that he was going to be stepping down as chairman of Warner Music Group, presumably as part of the aftereffects of a failed EMI acquisition. Last week also saw the disclosure of WMG’s recent quarterly report, which showed sizable losses even with continuing growth in digital revenues, along with comments from new CEO Stephen Cooper that the major was not willing to pay a price “that would not have provided an adequate return on our investment,” in addressing the failed attempt to purchase EMI’s recorded music business. Cooper also denied that Warner-Chappell Music, among other assets, are being primed for a sale, contrary to rumors that the new owners of the Bunny are having buyers remorse. Ironically, some are now drawing comparisons between the current situation and position of WMG with that of EMI when it was purchased by Guy Hands and Terra Firma back in 2007. Assuming the regulatory process allows Universal Music Group and Sony Music to take their respective parts of EMI, Warner Music will be significantly smaller than its rivals, and facing increased pressure as both UMG and Sony stockpile executive and artist talent. Others are recalling the mid-90’s action at Warner, when “non-music” executives were brought into the company, amid ongoing changes and power struggles among top executives, though new CEO Cooper is known as a corporate ‘turn around specialist’… The other losing bidder in the EMI sale, BMG Rights Management, continues to put together its creative executive force in the U.S., while chatter persists that co-backer KKR might soon be getting out of the JV with Bertelsmann, whose new CEO Thomas Rabe will take the reins on January 1st… Meanwhile, on the winning side, Sony/ATV head Marty Bandier revealed last week that EMI’s pubco would retain its name, and that it would be controlled as a separate company owned by the investment group that Sony Corp. was a part of. Further details about the new structure haven’t been revealed, but Sony CFO Rob Wiesenthal acknowledged at a global media conference that he sees a focus on music publishing as the real future for record companies, saying the publishing business is “immunized from piracy” – though it should be noted that the company does not wholly own either of its music pubcos. Lots more action is expected, including the fate of current EMI and Sony publishing executives – Bandier and Sony/ATV co-prexy Jody Gerson are both very familiar with the company, having previously held long executive stints at EMI Music Publishing.
| Posted in Uncategorized | No Comments »
Round Up: Dr. Luke Sony Label Deal (Finally) Announced, EMI Auction Drags On & more…
Doug Morris' "new Jimmy"
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.
| Posted in Uncategorized | 1 Comment »
EMI Derby Ramps Up As It Winds Down
EMI auction nears finish line
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.
| Posted in Uncategorized | No Comments »
More Bits & Pieces: Warner Music gets new CEO, Blackberry Messenger music?, new Spotify numbers & more…
'chairman of the bored'
Today came the announcement that Edgar Bronfman Jr. will be exiting his role as CEO of Warner Music, a post he has held since 2004. He’ll remain on as chairman of the board at Warner Music Group, while Stephen Cooper will take up the reins as new CEO. Cooper’s track record, primarily as an interim CEO with a focus on turning around troubled companies, includes stints at Metro-Goldwyn-Mayer, Krispy Kreme Doughnuts and Enron, among others. It’s expected that Bronfman’s focus will transition to the current bid for EMI Group, continuing his long-desired goal of combining the two companies. If merger efforts fail, his continued involvement at Warners is questionable… Research In Motion is reportedly working on a new music service that will utilize the popular BlackBerry Messenger service, with some major labels supposedly already onboard, though it’s unclear exactly which ones. The service as it’s being described, though not by RIM, would be far from robust, but it’s being characterized as possible positive note for the struggling smartphone maker… A legal fray that has the Village People’s original lead-singer attempting to regain copyright control over his share of a number of works including “Y.M.C.A.” may prove to be telling in the coming battle over “termination rights,” that will pit many big-name artists against labels – a storyline that hit the mainstream media this week… Music and imagery from The Beatles are featured in a new anti-piracy video as a part of the UK-based Why Music Matters campaign. There’s a bit of irony here, as pointed out by Peter Kafka on AllThingsD, in that the Fab-Four’s music is still only (legally) accessible digitally in one place, that being iTunes, where it was first made exclusively available 10 months ago. With a plethora of other new digital music services out there, one can wonder how long it will be before the group’s music will be more widely available… Elsewhere, Music Ally has obtained a report that provides insight into Spotify’s subscriber numbers, particularly for the period following new restrictions on free accounts that were in acted earlier this year. Get the details HERE, but essentially with the changes, the number of free user accounts dropped by over 1.5 million, while the paying user base increased by roughly 1/3 of that amount. The conversion of users from free to paying isn’t insignificant, and that’s good news for Spotify, who has to pay royatlies regardless of whether a user pays for the service or not, but losing over 1 million potential listeners is not exactly good news for artists… And a group music publishers who joined a class-action lawsuit against YouTube-owner Google in 2007, came to a settlement this week, a resolution that in part will see pubcos given the opportunity to enter into a licensing agreement to receive royalties for musical works included in videos on the site. According to at least one person familiar with the situation, artists should expect to start receiving accounting for YouTube royalties from publishers right around the time they start receiving it from the record labels.
| Posted in Uncategorized | No Comments »
EMI Derby: Who Has the Inside Track… Pt. 1
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.
| Posted in Uncategorized | 2 Comments »
Bits & Pieces: Spotify Closing Final Deals for U.S. + New Funding, NMPA Wants Piece of the Cloud & more…
There have been many past reports of Spotify launching in the U.S. “soon,” but is it really happening this time? After recent news that the service signed on Universal Music Group, the company’s European general manager told an audience in London this week that the “remaining deals” (Warner Music Group) are being signed right now. While there still hasn’t been any official or unofficial reports that a WMG is in the bag, those comments as well as a confirmed new funding round of $100 million from DST, Kleiner Perkins and Accel, lead many to believe a launch is really happening, and soon. Whether or not the timing lends credence to previous rumors of the labels stalling Spotify in order to let Apple to get their new iTunes Match service out of the gate, the landscape is now slightly altered after Amazon, Google and Apple have all unleashed new services… President and CEO of the National Music Publishers Association, David Israelite, is urging members to create a more streamlined solution for digital music companies to license rights, so as to not miss out on new opportunities. That might come in the form of new agencies which act in the interest of all publishers for sync and mechanical rights – the process of tracking down various writers, composers and publishers that have interests in a tracks, has proved to be time consuming and frustrating to new music services seeking rights… Elsewhere, I.R.S. Records is being relaunched as a frontline label by EMI Music in partnership with Crush Management… After an initial pop for Pandora when shares first started trading earlier this week, the price settled back down, and continues to fall… And congrats to Jon Pikus, who has been named the Creative Director for Imagem Music in the U.S., Pikus comes to Imagem after previous A&R positions at MySpace Records, Columbia Records and Interscope…
| Posted in Uncategorized | No Comments »
Industry Round Up: More UMG and Sony Changes Emerge, Bands in the Mix & more…
L.A. Reid to take reins at Epic
With much of the industry attention recently on the new ownership of Warner Music Group and the upcoming auction of EMI by Citigroup, the other two major label groups are back in focus in coming weeks with what will be a series of changes coming to fruition under the new leadership at Universal Music Group and Sony Music. The move for L.A. Reid to Sony that was highly rumored after his departure from Island Def Jam, is becoming all but official with multiple reports that he will run a restructured Epic label group that will now include Jive. The move will also see Reid once again working under Doug Morris, who comes in as new Sony boss on July 1st. Observers are wondering who else will take up new roles under Morris, including who will oversee RCA, after former label boss Barry Weiss took Reid’s place atop the IDJ and Motown/Republic labels earlier this year. Did someone say musical chairs? Expect more new executive announcements at both Sony and UMG over the coming weeks including returning A&R veterans, along with additional new labels being launched under each umbrella… Already signed to the new Epic Records is YouTube “sensation” Karmin, who have racked up millions of views for their cover song videos… Elsewhere, another girl-guy duo garnering industry attention is San Diego act Little Hurricane, whose live shows and recent support from 91X have both labels and managers in pursuit… Others names on lips and in the mix include Childish Gambino, Band of Skulls, Pains of Being Pure at Heart, Electric Guest and Capitol Cities… Meanwhile, Ben Lee and Butch Walker join the Dangerbird Records roster and Barsuk Records has signed New York City’s Yellow Ostrich.
| Posted in Uncategorized | 1 Comment »
More 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.
| Posted in Uncategorized | No Comments »
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.
| Posted in Uncategorized | No Comments »
| Posted in Uncategorized | No Comments »