One of Britain’s most famous record companies, EMI, has been bought in two deals with Sony and Vivendi’s Universal Music. The company will now be split into two divisions. Universal bought EMI’s recorded music group for $1.9 billion on Friday, while a group headed by Sony picked up EMI’s music publishing division for $2.2 billion. The combined value of the deals was $4.1 billion.
EMI was previously owned by Citigroup. It is home to acts such as Coldplay, Katy Perry, and, crucially, The Beatles.
The New York Times says EMI’s breakup “completes the biggest shift in music’s corporate structure in almost a decade.” The deal reduces the number of major record companies from four to three, the Times says. It also allows Sony and Universal, already the biggest forces in music, to become even bigger. Warner Music, which was also a contender in the four-month bidding war for EMI, dropped out of the bidding last week.
The deals are subject to regulatory approval, however. If approved they would increase Universal's recorded music market share to 36 percent globally, Reuters reports. In the U.S., the world's largest music market, the combined company would control 38 percent of the market. In some European territories, such as France, Universal's market share would be over 50 percent.
The Guardian quotes Simon Dyson, editor of industry newsletter Music & Copyright. He says that he would "be very surprised" if regulators cleared the deal "without a lot of sell-offs." Dyson adds that the overall market share level for the Universal-EMI combination was perilously close to "the magic number for an outright no." Sony's deal for EMI's music publishing catalogue carries far fewer regulatory risks because Sony is a relatively small player, The Guardian notes.
The New York Times reports that Universal plans to sell around €500 million ($680 million) worth of assets to combat competition concerns.