Taking a page from News Corp’s book, French conglomerate Vivendi is moving closer to splitting itself into two separate companies. Canal Plus and Universal Music Group owner Vivendi says it is launching a study …
SEATTLE, Jan. 26, 2012 /PRNewswire/ — Rhapsody announced its European expansion today through the acquisition of Napster International, the first subscription (flat-rate) music service in Europe. Rhapsody will own and operate the Napster service in Germany and the United Kingdom.
“The acquisition of Napster and its subscriber base in the UK and Germany gives us an ideal entry to the European market,” said Jon Irwin, president, Rhapsody. “Through the benefit of scale, the strength of our editorial programming and strategic partnerships, we can now bring the Napster service to even more consumers on a variety of platforms.”
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.
Music industry executives tell me that they’d be stunned if Universal Music can turn American Idol’s new winner Scotty McCreery into a big enough star to set him up for a long-term career. The teenager is seen as a likable country music performer who could have a few hits if he’s paired with catchy tunes and a shrewd producer. But they say that he didn’t display the charisma, vocal dexterity or strong point of view that singers typically need in order to endure or broaden their appeal to the pop market. McCreery’s limitations will become more obvious as he tries to compete with compelling country music hitmakers including Taylor Swift, Sugarland, Jason Aldean, Miranda Lambert, Kenny Chesney, Brad Paisley, Keith Urban — and Idol’s Season 4 winner Carrie Underwood. True, the weekly appearances on television’s most popular show have made McCreery a household name. But so were previous winners Lee DeWyze, Kris Allen and Taylor Hicks, who have yet to set the music world on its ear. That may have had something to do with the fact that up to now Idol winners were at the mercy of Sony Music’s Clive Davis whose commercial instincts haven’t kept up with the times. McCreery and other Idol finalists who land recording deals will work with a hipper group led by Jimmy Iovine, chairman of Universal’s Interscope-Geffen-A&M.
Vivendi announced today that the current CEO of UMG will add chairman to his title at the world’s biggest music company, which has operations in 77 countries. He will remain on Vivendi’s board of directors and was added to the board at the French conglomerate’s vidgame publisher Activision Blizzard, which is based in Santa …