It’s a big day in music publishing with the closing of the $2.2B cash and debt deal by a consortium led by Sony/ATV — Sony’s partnership with Michael Jackson’s estate — for one of the industry’s crown jewels: EMI Music Publishing. The pact gives Sony/ATV about 1.3M additional titles to administer including pop classics “My Girl,” “Bohemian Rhapsody,” “Every Breath You Take,” “You’ve Got A Friend,” “New York, New York,” “Over The Rainbow” and “Have Yourself A Merry Little Christmas.” Sony/ATV, which already had about 750,000 titles — including The Beatles’ catalog — paid $320M in cash for 40% of the property. Others backing the EMI publishing acquisition include David Geffen, Mubadala Development Company PJSC, Jynwel Capital, and the Blackstone Group’s GSO Capital Partners. ”Music publishing, along with the rest of our entertainment companies, has been a bright spot in our business portfolio, and we expect that trend to continue with this important acquisition,” Sony CEO Kazuo Hirai says. The Sony/ATV-led group bought the EMI collection from Citigroup. The bank took control of EMI last year after its previous owner, Guy Hands’ leveraged buyout firm Terra Firma, was unable to make payments on the debt he took on to buy the music company in 2007 at the height of the private equity bubble. The FTC approved the Sony/ATV deal last week but has yet to rule on Citigroup’s agreement to sell EMI’s music production operation to Vivendi’s Universal Music for $1.9B.
Universal Music has already announced that it will pay $1.9B for the recorded music operation. We’re told Sony’s teed up to disclose that it landed EMI’s music publishing business for $2.2B. The deals end a drawn-out process to decide the fate of a company whose hitmakers include The Beatles and Katy Perry. But the companies may face tough questioning from European antitrust officials, and possibly U.S. ones as well. Impala, which represents independent European music companies, said this week that deals with Universal and Sony — two of the industry’s largest companies — ”would be the worst possible outcome of the EMI negotiations — for music, those who make it and those who want to access it.” Citigroup has made it clear to bidders that it expects to be paid no matter what; buyers would have to assume all the financial risks for any deal that’s blocked.
If the transactions go through, then it could mean big problems for Warner Music, which industrialist Len Blavatnik bought for $3.3B early this year. “Warner’s really small now” compared to Universal and Sony, says one long-time industry exec. “They’re the third port of call for every artist, and won’t have the same leverage with Walmart for shelf space.” The publishing deal with Sony also raises questions for BMG, which has been on an acquisition tear with financial support from private-equity firm Kohlberg Kravis & Roberts. BMG has wanted to build scale, and a deal with EMI — the No. 1 music publisher — would have capped that effort. Some industry players wonder whether KKR now will look to sell its interest in BMG.
Imax says in an SEC filing that COO Gary Moss will leave at the end of this month and not be replaced. Imax created the COO job, reporting to CEO Rich Gelfond, in 2009 when Moss joined. He had been a consultant and an executive at a concert promotion subsidiary of Live Nation and at EMI Group Canada. An Imax insider says that the company believes it doesn’t need a COO anymore. Over the last six months the large screen theater firm has bulked up its management ranks — for example adding a new chief marketing officer, SVP for human resources, head of strategy, head of business development, and CEO for Imax China. Moss was not listed as one of Imax’s five highest paid employees in its latest proxy statement.
Google has agreed to pay royalties to songwriters repped by the National Music Publishers Assocation when their songs appear in videos on YouTube. The deal, which covers roughly 3,000 mainly indie songwriters, resolves a copyright lawsuit brought by the organization in 2007 and sets up the two sides to share ad revenues generated by videos on YouTube. “We are pleased to have resolved NMPA’s litigation claims and to work with YouTube in providing a new licensing opportunity for songwriters and publishers,” NMPA president and CEO David Israelite said on the group’s website. “This is a positive conclusion for all parties and one that recognizes and compensates the work of songwriters and publishers going forward.” The largest music publishers — EMI Music Group, Universal Music Group, Warner Music Group and Sony Music Entertainment — have their own licensing contracts with YouTube and are not part of this agreement.