EMI sells music unit to Universal for £1.2bn

 
Sign outside EMI's London headquarters EMI is currently owned by US bank Citigroup, after it was seized from Terra Firma

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UK music firm EMI has said it will sell its recorded music unit for £1.2bn ($1.9bn) to Universal Music.

Reports have suggested that the other half of EMI's business - the lucrative music publishing unit - will go to a Sony-led consortium for more than $2bn.

EMI, with a history dating back to 1897, is home to artists including Coldplay, the Beatles and Pink Floyd.

Citigroup seized ownership of EMI in February after previous owner Terra Firma failed a solvency test.

"I particularly welcome the fact that EMI will once again be owned by people who really do have music in their blood," said Rolling Stones singer Sir Mick Jagger.

The manager of Coldplay also welcomed Universal.

"They have assembled the most talented group of executives in the industry today and their success speaks for itself," Dave Holmes said.

Universal Music is a unit of Vivendi, the French media company.

Troubled history

EMI's labels include Blue Note, Capitol, Parlophone and Virgin Records.

Labels included under the Universal umbrella are Def Jam, Motown, Decca, Island Records, Interscope Records and Polydor Records.

"For me, as an Englishman, EMI was the pre-eminent music company that I grew up with," said Universal Music chairman and chief executive Lucian Grainge. "Its artists and their music provided the soundtrack to my teenage years."

He added: "Universal Music Group is committed to both preserving EMI's cultural heritage and artistic diversity and also investing in its artists and people to grow the company's assets for the future."

In June, EMI said it would launch a strategic review into the future of the business, which it said could result in a sale, share flotation, or a restructuring of its finances.

Private equity firm Terra Firma, led by Guy Hands, bought EMI for £4.2bn in 2007 just before the credit crunch sent the global financial markets into turmoil.

It subsequently admitted that it had overpaid for EMI, and struggled to meet payments on the £2.6bn it had borrowed from Citigroup to fund the deal.

Last year, Terra Firma took Citigroup to court in the US, accusing the bank of tricking it into paying an inflated price for EMI. It lost the case, with a jury ruling in favour of Citigroup.

 

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  • rate this
    +3

    Comment number 27.

    21. Robin Smurthwaite
    "@19 -Give away all recorded music for free? Why? There would be no incentive for a composer, lyricist or songwriter. Why should they give away their work for no reward? Do you do your job for free?"

    Funny, I always thought the reward was supposed to be that people listened to your work. Not everything is about money, and nor should it be.

  • rate this
    +3

    Comment number 26.

    Fortunately in these days of the internet, people who like proper music (not the bland manufactured X Factor style pap) can always find the type of bands they like, however obscure

    Real talent will normally rise to the top (always has), only now there is no need for the rich suits to get involved - RIP, fat cats

  • rate this
    -3

    Comment number 25.

    Bearing in mind that Europe and the Euro is heading for meltdown and major recession looms, is any of this important? Performers have been massively overpaid for years, nobody will be in a position to subsidise their hobbies soon, you wont be able to afford to eat!

  • rate this
    +1

    Comment number 24.

    So many people upset about this. But how many of these people download music illegally. You can't keep stealing from your favourite shop and expect it to be there when they close down due to lack of profit (because eh.. hmm.. You Stole From Them!)..

  • rate this
    +4

    Comment number 23.

    In the long run, it doesn't really matter.
    For people who truly love music, the internet is the place to turn to, leaving the dinosaurs to crank out pap for the masses.
    There are numerous excellent musicians following the DIY route, to whom vast riches are not important, for them, the music matters and via the internet, it's a finger to the old guard - "we can do this without you, OUR way"

  • rate this
    +3

    Comment number 22.

    Disgusting, makes me want to grab a tent and pitch it outside St Pauls. Is there no one who will stop this anti-competitive culture?

  • rate this
    +5

    Comment number 21.

    @19 -Give away all recorded music for free? Why? There would be no incentive for a composer, lyricist or songwriter. Why should they give away their work for no reward? Do you do your job for free?

    Live work is very profitable for well-established bands, but how many new bands would earn enough money from pub gigs to survive and break through into the big time?

  • rate this
    +2

    Comment number 20.

    There are companies I remember all my life, though all have changed. Some forever not for better all have gone and none remain..

  • rate this
    -9

    Comment number 19.

    Good time to be rid of an old dying industry. The future will not accept paying silly sums for recordings that should be free downloads. Pay for live actual work, give away all files as adverts to attract people to live.

  • rate this
    -11

    Comment number 18.

    "Music Business RIP"? True artists taking over? With their electric guitars and fuzz tone boxes? Got news for you folks. Rock and Roll is not art. The people who produce that hideous noise are not artists. But these are the sort of people, the ones who wouldn't know Colin Davis from Spencer Davis' brother, and know the Beethoven Fifth Symphony as about a 40 second piece of music.who now run EMI.

  • rate this
    +1

    Comment number 17.

    In France Universal are trying to take away rights that musicians have, like receiving a tiny share of profits for having performed on a recording. I realize that this is a real privilege since very few countries have anything like it, but it also seems perfectly fair (to me anyway); after all, the interpretation often has a lot to do with the success of the music. Another predatory company.

  • rate this
    +1

    Comment number 16.

    Want better artists and record companies?

    Then stop using illegal (free) download sites and pay for what you download or buy.

    EMI, like all record companies and artists, has been hit hard but the unwillingness of many to pay for the music they listen to. People used to complain about £15 for a CD, now they complain about 80p to download a track - no wonder the record industry is in trouble.

  • rate this
    -2

    Comment number 15.

    I hear there are some bouzoukis going cheap too.

  • rate this
    +3

    Comment number 14.

    At this rate of decline of "the big four" in a few years there'll be only one major record company. It's about time a new business model was introduced to the music industry that was about talent rather than marketing.

  • rate this
    +1

    Comment number 13.

    @ 2 and 3. All my early Beatles vinyl is on Parlophone, and EMI label.

  • rate this
    +10

    Comment number 12.

    Music "Business" RIP. It is surely now going to be about talented artists that can self-promote their own material and carrying out live gigs. Forget the X facter wannerbies, there is real talent out there

  • rate this
    +2

    Comment number 11.

    Vivendi (who own Universal) started life as a sewage company.
    Now they run the largest record company company in the world.
    Most appropriate.

  • rate this
    -8

    Comment number 10.

    "...stupid fools who stand in line / Like / E.M.I"

    It took a while (34 years) but the Sex Pistols weren't wrong then and EMI is not a loss now. If only someone could put Coldplay and Pink Floyd out to grass as well it would be a grand day...

  • rate this
    -1

    Comment number 9.

    @ fmd123 So what would have been your viable alternative? Why did you not approach Citibank with your ideas? I assume you had some and are not just complaining?

  • rate this
    +10

    Comment number 8.

    The industry is turning towards having an oligopoly and very soon a monopoly. This can't be good. A powerful record label will exploit artists and try to wiggle out of their taxes. Competition should be encouraged. This deal is not helping.

 

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