The most important music business news right now isn’t about a music company buying someone’s rights for large sums of money. It’s actually the right of a music company to do so.
In the century, Universal Music GroupThe world’s largest music rights company, has been prevented by law from buying some properties – and signing some superstars – in Europe and the UK.
It is a direct result of the restrictions on UMG due to European Commission (EC) back in 2012, when Sir Lucian Grainge-to the company buying the fourth largest record company in the world at the time, Music EMIabout $1.9 billion from Citibank.
Undeniably, in hindsight, the huge success of Universal’s acquisition of EMI: The deal gave UMG exclusive rights to catalogs of giant global artists such as The Beatles and beach boyswhose value has skyrocketed as streaming has cemented music’s premium value as a content type.
The EMI deal also saw UMG acquisitions Abbey Road Studiosplus Virgin Records and Capitol File categories and brands.
However, following the settlement of that deal, the EC launched a regulatory investigation into UMG’s acquisition of EMI. As a result, UMG became famous forced divestments Parlophone label group – basically, the Parlophone assets of EMI minus the Beatles – are sold to Warner Music Group for £487 million in 2013.
At the time, Parlophone’s catalog of recordings included things like Kate Bush, Gorillaz, David Bowie, Coldplay, Gorillaz, Duran Duran, and David Guetta. It all belongs to Warner.
Universal was also forced to divest 50% of EMI’s stake in NOW: It’s What I Call Music! synthetic brand, acquired by fierce rival UMG, Music by SonyBecause £36.1 million GBP in April 2013, according to Company filings.
The proposals don’t end there: EC continue to be forced UMG to divest a variety of local EMI operations in Europe (including EMI France, EMI Spain and EMI Sweden), plus the recorded music portfolio of labels such as Chrysalis and Sanctuary (the latter was sold to BMG Because around £40 million GBP in 2013).
However, at most depravity placed into Universal Music Group by the European competition watchdogs is this: Universal is prohibited from acquiring any assets – or re-contracting any artists – in connection with its EMI-related divestment. in a full decade.
Above September 21, 2012The European Commission officially announces that it has completed the acquisition of UMG for Music EMIbut with strict conditions.
In addition to the above compulsory divestments, EC declaredNo uncertain terms: “Universal [has] commit not to buy back assets or renew contracts with any artists who have signed with related units for a period of ten years”.
According to the EC at the time, this 10-year ban would ensure that Universal’s EMI-related divestment would “Really Lasting”.
And it was.
But guess what? Just the other week (September 21, 2022), that 10-year term … has expired.
Think about the impact of this ten-year ban – and at the same time, the close scrutiny of EC regulators on Universal – has been involved in UMG’s M&A activities since acquiring EMI.
For one thing, its rivals – in particular Music by Sony – made the most of Universal’s freeze in Europe.
Property acquired by Sony over the past ten years to increase market share in Europe, including the German market Century Media (17 million dollars in 2016), plus two well-known indie distributors: from Norway Phonofile and of Germany Finetunes. (Sony also look long at the reception From France Believebefore that company moves in a different direction and goes public in Paris.)
Warner is also busy in Europe, paying Over 100 million dollars buying Spinnin ‘Records in the Netherlands (2017), and later shoot out another 180 million dollars purchase goods and e-commerce companies EMP in Germany (2018).
“Universal [has] commit not to buy back assets or renew contracts with any artists who have signed with related units for a period of ten years”.
Notice of the European Commission, 21 October 2012
Important: The 2012 UMG/EMI ruling from the EC takes place at UK remains part of the European Union (something that won’t change until the ‘Brexit’ – i.e. the UK’s formal withdrawal from the EU – is completed in January 2020).
So, Universal has also been fairly quiet when it comes to buying properties in the UK.
In contrast, over the past decade, Sony Music has acquired important UK music companies/properties such as Sound set (£67 million GBP in 2016), by Simon Cowell Syco music content (2015afterward Year 2020), distributor Essential Music + Marketing (2016), plus the UK commodity company Probability (Year 2020).
And of course, last year Sony Music won the right to compete for acquisition KobaltHeadquartered in United Kingdom AWAL and Kobalt’s Neighborhood Rights in one The deal is worth 430 million USD.
Probably the biggest pain point for Universal Music Group However, from the EC’s 10-year ban on artists.
Keep in mind the specific list of stars that Universal lost to Warner through Parlophone Label Group’s divestment: Kate Bush, Pink Floyd, Blur, Coldplay, David Bowie, David Guetta and more.
Kate Bushas we all know, only Spotify’s biggest summer hit of 2022 in the US – a super hit charged by a Netflix synchronized in May and is owned by Noble & Brite UK Ltd. her own.
Universalunder the EC’s post-EMI restrictions, it would not be permitted to make an offer to Kate Bush to purchase the recording (or even sign a distribution agreement).
Another thought: Many have wondered why Universal Music Group was left out of the list of names pursuing the acquisition. Pink Floyd’s masters of the past six months – a list consists of things like Sony Music, Warner Music and Concord.
Again, according to the 2012 EC ruling, with Pink Floyd’s music is being distributed by Parlophone in the UK/Europe, Universal will not be legally allowed to purchase such content until its decades-long post-EMI freeze has expired.
Another relevant move: By David Guetta recording directory Has been bought back via Warner Music Group give more 100 million dollars last year. EC rules would prevent Universal from participating in the tender.
Similarly, By David Bowie old career extension record category is signed last year to Warner Music Group (as distribution and marketing partner) from 2023 onwards.
At that point, Universal wouldn’t be allowed to make that deal, at least in Europe. (Side note: Warner buying Bowie’s song catalog in a separate agreement.)
It’s also fascinating to see the deals Universal it’s him done in Europe – and specifically one.
Last year, UMG announced a “Strategic Global Alliance” with [[[[PIAS]operates one of Europe’s most successful and respected independent distribution and service companies.
This announcement is not clear about the details, although Universal is committed to providing [PIAS] with an undisclosed sponsorship package. Importantly, UMG did so without any ownership rights in [PIAS] – not even a minority stake.
Like MBW indicated at the timeUniversal is actually not legally allowed to do so:
- In 2013, Belgians were born [PIAS] buying Co-Op Music Ltd. from Universal;
- Co-operatea network of services and sponsorships for independent labels, which is specifically named by EC was one of the assets that UMG had to divest from after acquiring EMI Music in 2012.
Following the expiration of post-EMI restrictions last month, Universal now legally accessible [PIAS] with an offer to repurchase minority or majority shares, or do so by proposing to expand an existing “alliance” with the company.
When we ask [PIAS] CEO and Co-Founder, Kenny Gatesabout that possibility last summer, he say: “The future is the future. We don’t know what will happen tomorrow or the day after. But today, we are completely independent and in complete control of our destiny.”
Gates added: “[PIAS] not for sale. “
(Potentially worth noting: [PIAS]It’s a currently celebrating 40 years of independence, now totally one record company / repertoire brand. Distribution / service company for external independent label partners that previously had [PIAS] banner is last year pull into something separate [PIAS]- trademarks owned, [Integral].)
Regardless of what Universal Music Group does or doesn’t get in the months and years to come, one truth seems clear: UMG is finally free to buy in Europe – and will.
Don’t forget, we’re talking about a company that, according to its financial results, let go EUR € 264 million on portfolio acquisitions in the first half of 2022.
Finally, UMG’s M&A handcuffs have been removed, after a long ten-year wait, in one of the world’s largest commercial markets.
Don’t think it will waste much time.Worldwide music business
