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And Then There Were Three: Is Warners Buying EMI?


Warner Music Group Inc. Chief Executive Officer Edgar Bronfman Jr. said regulatory hurdles shouldn’t prevent his company, the world’s third-largest record label, from purchasing rival EMI Group Ltd.

“From a regulatory standpoint further consolidation in the recorded music industry is possible,” Bronfman said today on a conference call. He cited the European Union’s approval of the merger between Sony Corp.’s music unit and BMG, and wouldn’t comment on whether Warner plans to bid for London-based EMI.

A Warner-EMI combination would “create meaningful value for both companies,” Rich Greenfield, an analyst at Pali Capital LLC in New York, said in December. “We’ll just have to see how the future plays,” Bronfman said. “I hope EMI is able to resolve its difficulties in a way that benefits the industry.”


A merger of Warner and EMI would challenge the current market share of Universal and Sony. Based on 2009 Nielsen SoundScan sales figures for the USA, Universal had 30.2% of the market, Sony 28.58%, Warner 22.8% and EMI 9.92%. Warner and EMI combined would have created a market share of 32.72% in 2009 marking the Warner / EMI combo the biggest of what would then be the Top 3.

EMI may come up with the money needed to keep the Citibank wolves away from the door but an alternative merger would make good business sense. A lot of the government regulations have already been dealt with leading up to the previous marriage. The recent Ticketmaster/Live Nation merger sets a precedent for an even bigger merger being possible.

By the end of 2010, we may just see the music industry with just three major labels.

Financial Times:

Mr. Bronfman met Guy Hands, Terra Firma’s founder, soon after the EMI deal closed, it emerged last week. However, Mr Hands’ lawsuit against Citigroup is seen as an attempt to prevent Citigroup from forcing a Warner deal.

“They are marching towards a transaction of some sorts,” said Richard Greenfield of Pali Research. Warner had been “hoarding cash” over recent quarters and could find “hundreds of millions of dollars” in savings from such a deal, he added.

The viability of such a bid would rest on how much debt Citigroup tries to allocate to EMI Music in a sale, industry observers said.