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The EMI sale: some questions

By | Published on Monday 14 November 2011


Of course the big question that remains following Friday’s news regarding EMI is whether or not either deal will be blocked or dramatically altered by European regulators.

But, if not, many other questions remain. Despite being months, arguably years, in the making, the split of the EMI company and distribution of its assets to the world’s biggest music firms is no easy task, and many issues must be addressed, which is why EMI CEO Roger Faxon said on Friday it could be next Spring before any actual changes happen at EMI towers. Plus, what does all this mean for the wider record industry, and little old Warner Music?

Among the questions floating around this morning are:

1. Will Universal really want to operate five mainstream music divisions in the UK (its existing Mercury, Island and Polydor, and EMI’s Parlophone and Virgin), or will some of these divisions and rosters merge in early 2012?

2. EMI Music Publishing will be managed by Sony/ATV, but won’t be fully merged with the Sony business, because they will only have a 38% stake in the publishing catalogues, which were bought by a Sony-led consortium. How will that work exactly? Will any Sony/EMI teams or offices actually merge, especially in more marginal territories?

3. Who, if anyone, will use the EMI name moving forward? Will EMI become a label division of the Universal Music Group? And if so, what of the Parlophone and Virgin Records brands? Will EMI Music Publishing continue to be known as such? Or will the EMI name eventually be phased out?

4. Will the Virgin Records name automatically transfer? When Richard Branson’s Virgin Group sells a business carrying its brand, it often retains the right to prevent use of its name if said business is subsequently sold to a competitor of Virgin. Vivendi competes with Virgin in the mobile space in France.

5. How will Universal Music cope with the fact that while it is suing Grooveshark for copyright infringement, EMI is the one major that licensed the controversial streaming service?

6. Who has been left as guarantor of those HMV store leases that EMI was still responsible for from the days it owned the now struggling music retailer – Universal, the Sony/ATV consortium or Citi?

7. Will the deal affect the recently announced OpenEMI project which gave app developers access to chunks of the major’s catalogue, arguably one of the most innovative digital moves by a major in years?

8. What will happen to EMI’s music services division, arguably the most interesting bit of the EMI record company, which saw particularly strong development during the Terra Firma era?

9. What will happen to the much admired EMI Music Sound Foundation, the largest single sponsor of specialist performing arts colleges in the UK?

10. What does all this mean for poor old Warner Music, EMI’s merger suitor for ten years, and now the mini-major alongside two further expanded rivals?

11. And what does it mean for former Warner CEO Edgar Bronfman Jr, the original orchestrator of the Universal Music empire, who long dreamed of a combined EMI Warner, and whose primary role at Warner Music since its takeover by Access Industries has been to negotiate an EMI purchase? Is Edgar now looking for new projects?

12. Major label mergers always result in downsizing and roster culls – because it’s such economies of scale that make such mergers attractive to music company owners in the first place. How big will the downsizing and cull really be? Will some rosters and staff be sold off and if so who to? Will Warner as yet be able to expand through EMI’s demise? Could regulators force a particularly big offloading of assets here in Britain, maybe resulting in an independent EMI UK? Yeah, I know, that’s four questions. Basically, this story is far from over yet.

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