Universal gets EMI, keeps the Beatles, but at a 'painful' price
The world's biggest music company Universal Music has been give the green light to take over EMI. The European Commission has approved a reduced version of Universal's original $1.9 billion plan.
EMI: Famous logo
However, the Wall Street Journal said that for Universal and its parent company, the French conglomerate Vivendi, the EMI ruling was " a painful victory."
To get approval, Universal agreed to dispose of about a third of the assets of EMI, including most of Parlophone, and other smaller labels.
As a result, EMI will no longer release records by some of its biggest acts, including Coldplay, Pink Floyd, Kylie Minogue and David Guetta.
But Universal will not have to sell recording rights for the Beatles or Robbie Williams, one of EMI’s biggest acts in Britain.
Universal has also accepted market controls that will govern how it handles contracts with digital music services.
The European Commission said the asset sales allayed its concerns about the combined group’s market power, and that it paid particular attention to the merger’s effect on the digital music market.
“Competition in the music business is crucial to preserve choice, cultural diversity and innovation,” said Joaquín Almunia, the European Union’s competition commissioner.
“In this investigation, we have paid close attention to digital innovation, which is changing the way that people listen to music.
" 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.”
The total value of the assets to be sold was unclear, said the Wall Street Journal. They are said to generate about $450 million in annual revenue in Europe, but the global rights could add considerably more.
Even with such large concessions, opponents of the deal complained that it would allow Universal to grow even bigger.
Martin Mills, chairman of the Beggars Group,whose acts include Adele and Vampire Weekend, told the WSJ," “It’s good to see that the commission has seen this deal as such a threat to the market that it has demanded and received truly swingeing commitments on divestments.
“However, that should not conceal that fact that Universal’s arrogance has paid off for them, that they have destroyed a significant competitor, and that even with these divestments their ability to dominate and control the market has reached even more unacceptable levels.”
Universal said in a statement that it was “delighted to have received regulatory clearance” .
The deal has been cleared in Australia, Canada, Japan and New Zealand, In the U.S. , the Federal Trade Commission is still looking but approval is expected shortly.
There were worries that the deal would have allowed Universal to impose harsher licensing terms on digital platforms such as Spotify and Apple.
Universal originally agreed to buy EMI from Citigroup last November. Citi had seized EMI early in 2011 after the label’s previous owner, the private equity firm Terra Firma, defaulted on a $5.4 billion loan.