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Sony and Universal possibly bidding for EMI USA licence
By CMU Editorial | Published on Wednesday 31 March 2010
There has been much chatter in the last 48 hours about EMI’s previously reported plans to sell a five year licence on its whole catalogue for the North America market in a bid to raise half a billion pounds, at least £100 million now, in an attempt to help the major meet its loan commitments to Citigroup come May.
Initially the gossipers said that Sony Music had expressed the most interest in the licence arrangement, but then the Wall Street Journal yesterday cited sources that said they’d walked away from the deal, but then Hits Daily Double cited sources who said they hadn’t.
Then yesterday afternoon people started saying that it was Universal Music who were most likely to do the licensing deal, despite them last week saying they weren’t actively considering any EMI deals (though that might have been in reference to rumours they were interested in buying some of their rival, rather than in reference to the licensing proposal).
There remains some confusion as to whether Citigroup would have to OK any such licensing deal. Though many reckon that if their approval is required, according the loan agreements between the bank and the major and its owners Terra Firma, the bankers are quite likely to block the arrangement. Not least because it possibly hinders a future sale of the EMI recordings catalogue, most likely to Warner Music, who don’t seem to be in the frame for the licensing arrangement.
It is also still unclear whether any of EMI’s artist agreements would block their inclusion in such a licensing arrangement. If key artists couldn’t be part of the licensing deal, it might seriously impact on the attractiveness of the proposal.
As previously reported, although the big £120 million loan repayment deadline that could instigate a sale of EMI isn’t until May, the major must demonstrate to its bank this week that it is operating within the financial boundaries set by the original loan agreement, and is therefore on track to meet May’s repayment. Meeting that test in the past has often required Terra Firma to inject more cash into EMI’s recorded music business. It seems unlikely they will do that this time around.
