In its quest to remain the world’s largest music company, Universal Music Group’s (UMG) $1.9 billion acquisition of rival British company EMI was approved by European regulators, yet pares down the original ambitious terms of the deal. With both companies known as part of the “big four” record labels along with Sony BMG and Warner Music Group, UMG’s purchase of EMI was proposed back in November 2011, but was subject to a competition investigation, reports the BBC.
The European Commission’s approval came with some strict terms in place, mostly to stave off industry fears that competitors would be squeezed out by the powerful union. London-based EMI, home to artists such as Pink Floyd, the Beatles and home to 50 Cent’s G-Unit label, had been financially troubled with American financial giant Citigroup taking over the company in early 2011. Citigroup announced that it would be selling its music arm to UMG, while selling its publishing holdings to Sony/ATV Music Publishing for $2.2. billion.
It isn’t a seamless coup for UMG as the Commission demanded that the company must sell off EMI’s more valued assets such as the flagship label Parlophone. Also, several vanity labels for both companies must be sold such as EMI’s Chrysalis and UMG’s Sanctuary imprints. “The very significant commitments proposed by Universal will ensure that competition in the music industry is preserved and that European consumers continue to enjoy all its benefits,” EU competition commissioner Joaquin Almunia offered in a statement regarding the deal.
The terms are certainly complex but what is clear is that EMI can no longer release music from its biggest acts such as Coldplay, Kylie Minogue and David Guetta. UMG dodged a potential money bullet after the commission allowed to company to keep rights to the Beatles catalogue along with English superstar Robbie Williams’ recordings. Although America’s Federal Trade Commission has yet to approve the deal, it’s likely to do so in the next few days.
What this bodes for the likes of current Hip-Hop focused labels under UMG like Island Def Jam, Cash Money Records, and Interscope-Geffen-A&M is yet unknown but the stakes are definitely raised.
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Photo: AP
