Saturday, 28 July 2012 03:14
NEW YORK/BRUSSELS: Vivendi SA's Universal Music Group has offered to sell the bulk of EMI Music's most valuable record label, Parlophone, to try to get EU clearance for its planned $1.9 billion buyout of EMI, three sources familiar with the matter said on Friday.
Putting Parlophone forward is a much bigger concession than previously mooted to appease the European Commission, which has warned Universal its plan to buy EMI's recorded music business would hurt competition in a signal of a possible veto.
One of EMI's most prized assets, Parlophone has stars such as Coldplay and marquee acts such as Queen. It also has The Beatles, but one source said Universal wanted to keep its rights to one of the biggest selling bands of all time.
Universal, the world's largest recorded music company, submitted its proposals to the EU antitrust watchdog on Friday.
"We look forward to working further with the Commission and are confident of receiving clearance," a statement said.
EU competition policy spokesman Antoine Colombani confirmed the regulator had received the proposal. Neither New York-based Universal nor the Commission gave details of the proposed concessions.
One of the sources said the package consisted of Parlophone but excluding The Beatles, the Chrysalis label without Robbie Williams, EMI Classics, EMI France, EMI Norway, EMI Sweden, EMI Poland, EMI Czech Republic, Jazzland in Norway, German jazz label MPS Records, and the Mute and Sanctuary brands.
Universal would retain Virgin and EMI labels in Britain and other EU countries not mentioned in the list.
Interested buyers include Virgin Records founder Richard Branson, Patrick Zelnick who is the co-head of independent labels lobbying group Impala and Sony Music, the source said.
The Commission will decide by Sept. 27, after feedback from rivals and consumers, whether to accept the proposal and clear the deal. A person familiar with the matter said regulators want comments by early next week.
DANGERS OF SELLING PRIZED LABEL
That Universal is considering selling Parlophone could raise new questions about a deal that has run into firmer-than-expected regulatory resistance. It comes as Universal's parent, Vivendi, is considering whether to sell media assets that could include the music giant.
BMG, the music publishing joint venture between German media giant Bertelsmann and private equity group KKR, has met Universal and expressed interest in Parlophone, said one of the sources, who declined to be identified because the discussions are confidential.
But a third source said Universal had not offered to sell Parlophone to BMG even though it was one of the interested buyers.
BMG and Bertelsmann declined to comment. News of the Parlophone talks was first reported in the Financial Times.
Universal had earlier planned to sell three much smaller music labels belonging to EMI -- Virgin, Chrysalis and EMI Classics -- but buckled under pressure from the EU regulator, which wants the combined company's market share below 40 percent.
A combined Universal-EMI would include a vast library of current top-selling and legendary names including Jay-Z, Kanye West, U2, Katy Perry and Pink Floyd.
The US Federal Trade Commission is also examining the deal.
Copyright Reuters, 2012