четверг, 13 сентября 2012 г.

Warner Music, EMI in Merger/Acquisition Talks. - The Online Reporter

Britain's EMI has sent up a trial balloon about acquiring some or all of AOL Time Warner-owned Warner Music Group. EMI, which is about $1.6 billion in debt, has seen its market value decline to about $1.4 billion. It's the smallest of the five major labels. AOL Time Warner, under pressure to pay down its own $26 billion debt, is known to be shopping its publishing division and its Atlanta sports teams as well as the music business. It also plans to sell off shares in its Time Warner Cable business. Warner Music Group is valued at about $4 billion.

In 2000 European regulators blocked merger deals between Warner Music and EMI and between Bertelsmann Music Group and EMI. What's different now is the deterioration of the music industry except for Universal Music Group, which has continued to grow. Additionally, European courts have rendered verdicts in merger cases that seem to undermine European regulators preventing mergers and acquisitions.

A combined EMI-WMG would control about 22% of the world music market, trailing only UMG in market share.

Wall Street and industry analysts have been predicting the industry consolidating to four, maybe three, surviving companies.

'If they can optimize near-term profits with scale and look to the long-term and digital distribution, they may be able to improve,' said Raymond James analyst Phil Leigh.

There's Gold in Them Thar' Hills EMI and Warner Music Group each own about one million copyrights. That one asset could increase enormously in value once the labels decide to make their entire catalogs available for sale on the net at reasonable prices. The market for older tracks that are easily and affordably available on the net will mushroom as the Baby Boomers pay off their kids' college costs and the house and look to spend money-restoring memories of their youth. The other big value of older libraries is selling the rights to use songs in commercials, TV programs and movies, which has become quite a lucrative business. The music companies may find that there's 'gold in them thar' hills' once they decide to mine it.