Universal To Sell 3 Publishing Catalogs

In the wake of Universal Music Group announcing its intention to purchase EMI from Citibank comes word that it's about to sell 3 of its music publishing catalogs to help finance the acquisition. These include a classical, Christian and German catalog with the intention of raising around $200 million.

Already there appears to be as many as 12 bidders for the catalogs, a sign that while nothing else may be worth big money in the music business, publishing still is. These catalogs are deemed to be non-essential the Universal business, but they can still fetch a substantial price.

The interesting thing about the sale is that it probably won't help Universal where it really needs it - in Europe. The EU is looking hard at the anti-trust implications of the EMI acquisition, and a catalog sale from the other side of the pond probably would have strategically done them a little more good than in the US.

The decision on whether to let the purchase of EMI publishing by Universal should get a ruling in the next month or so, while a decision on the record label sale will be in August. To make matters worse, the California State Attorney General has also opened up an inquiry into the sale.

Here's the reality. In this climate, the purchase of EMI can only be accomplished by another major label these days because no other major corporation would touch it, so the antitrust issue will always be there. Since Universal is already the largest label, that takes the matter to another level. In the meantime, EMI sits there floundering away with little leadership or direction until the sale is consummated. I feel sorry for the poor artists still signed with them.

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The Big 4 Become The Big 3...Maybe

Citibank finally found a buyer for EMI and it wasn't Warner Bros, like everyone expected. The venerable company was sold to two companies, in fact - Universal Music and Sony Music. Universal bought the recorded music assets (basically the record company) for $1.9 billion, while Sony purchased the much more lucrative publishing assets for $2.2 billion.

But before the ink is dry on the agreements there's trouble brewing for this deal. European regulators (who are much more aggressive than their American counterparts) have already signaled that they will do whatever they can to block the deal, believing that Universal is already too big and adding another huge piece of the music industry will be just way too much of a monopoly.

The interesting part of the deal is that Sony didn't supply all the money and instead used a network of partners that include an Abu Dhabi investment fund, Blackstone, Guggenheim Partners, UBS Investment Bank and several others. Sony will manage the business under its Sony ATV publishing business, which already owns or administers the publishing rights to 750,000 songs, including The Beatles catalog. What they would gain from EMI is a catalog that contains 1.4 million titles including standards like "Over the Rainbow," and Singing in the Rain."

So let's say that the deal does eventually go through. What are the potential ramifications for the musician and consumer? Like with all purchases of this type, there is some good along with some bad, so here are a few things just off the top of my head.

• Universal becomes far bigger than the next biggest major, which is Sony. They'll be able to dictate to the rest of the business because of their sheer size, for better or worse.

• A new digital music company will find it easier to get licenses because there will be one fewer major to deal with.

• Artists will have one less label to go to if they wish to be on a major.

• What's going to happen to the legendary Abbey Road studios and Capitol building and studios? Will they be sold or run differently? I don't know about you, but this scares me the most.

• How much is it going to sting the UK business community that their only major record label (EMI) was purchased by a French company (Vivendi, which owns Universal)?

While many will decry this sale, there are those artists that applaud it. Mick Jagger, whose dislike of former EMI owner Guy Hands is well-known, said that he "particularly welcomed" the new owners.
"This is a very positive development and I particularly welcome the fact that EMI will once again be owned by people who really do have music in their blood," he said in a Guardian article.

Now the rest of us can just sit back and wait to see if the deal actually happens.

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You should follow me on Twitter for daily news and updates on production and the music business.

Check out my Big Picture blog for discussion on common music, engineering and production tips and tricks.

Help support this blog. Any purchases made through our Amazon links help support this website with no cost to you.