EMI‘s proposal to acquire Warner Music for a little more than $4 billion has been rejected.
The offer is a slight premium over Warner’s current market value, which Bloomberg points out “is $4.05 billion based on yesterday’s closing price, 61 percent more than the initial public offering value in May 2005” but then adds that anti-trust concerns derailed previous mergers.
This strikes us as a bit funny, since it appears that despite their current size, the record companies are powerless to negotiate with Apple’s iTunes. Indeed, as a piece by Charles Duhigg‘s notes in today’s L.A. Times,
“The labels say they want to charge more, but they’ve never proven that they’re offering consumers any new value in exchange for the higher cost.”
With that in mind, getting bigger might be the only choice the labels have to gain leverage as music distribution becomes entirely digital.