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Insiders say EMI likely to be split as part of sale

By | Published on Thursday 13 October 2011


It’s looking increasingly likely that EMI will be split up as part of its current sale, or so says Reuters which has spoken to people involved in Citigroup’s current attempt to offload the music firm.

As much previously reported, Citigroup put EMI up for sale earlier this year, having repossessed it from former owner Terra Firma. Between five and seven bidders are thought to have submitted final offers last week, some to buy the London-based major outright, others to acquire just its record labels or just its music publishing business.

With the number of bidders and offer prices thought to have been negatively impacted by wider economic turmoil, if Citigroup wants to sell now rather than later, and if it wants to make as much money as possible to recover its past losses as backer of Terra Firma’s 2007 EMI purchase – and it seems the bank wants both those things – then selling the music company in bits would make sense.

Also, if any of the buyers are existing music majors, them buying one half of EMI is less likely to cause lengthy regulatory issues than if Sony, Universal or Warner were to try and acquire the company outright. While there would almost certainly be some objections raised to Universal buying the EMI labels and Sony buying EMI Publishing, insiders feel both deals could be speeded through with only a few concessions to competition regulators in Europe.

Reuters reckons that Universal buying the EMI labels is now looking pretty likely, backing up a rumour that has been circulating since last weekend, though Warner is thought to have bid for the record company business too. On the publishing side, sources say it’s a battle between Sony and BMG (former partners in a way, of course, though neither Sony/ATV or the all new BMG were actually part of the SonyBMG merger), who, Reuters reckons, have put in very similar bids money-wise.

Of course EMI’s current top man Roger Faxon has been very public about his opinion the company should be kept together as one, to allow the sort of integration between the major’s recordings and publishing businesses that he’s spoken about an awful lot in the last year (though signs of that integration on the ground have been minimal). But bids for the company outright, most likely from the two Rons (one from Ronald Perelman’s MacAndrews & Forbes and another from Ron Burkle’s Yucaipa Companies), don’t seem to be in the running any more.

If EMI is split that will mean more turmoil for a company which, after three years of restructuring, downsizing and executive shifts post Terra Firma’s takeover, has finally settled down in the last twelve months to become, arguably, the most efficient of the big music business players.

As for Faxon, while he is a respected music business veteran, would there be a role for him in a divided EMI? He’d most likely follow the publishing business, that being his background. But it seems unlikely he’d want to rejoin his former EMI Music Publishing colleague Marty Bandier in a less senior role at Sony/ATV, though if a good job was offered at BMG – should it get the EMI publishing catalogues – that might be tempting, even if it was essentially a backwards step.

And what for the EMI name? Daily Mail City correspondent Alex Brummer recently bemoaned the fact that this sale would most likely result in the big British music company falling into (or, technically, given Citigroup is American, staying with) foreign hands. But if the labels go to Universal and the publishing catalogues are consumed by BMG, will the EMI brand – one of the iconic British entertainment brands – still exist? Possibly not.

It’s thought Citigroup will now make an announcement about their intent for EMI towards the end of next week.