A source close to the situation told Billboard.biz the contents of the divestment package submitted today by Universal Music Group for its proposed acquisition of EMI's recorded-music division to the European Commission. If accepted, it will put a bounty of properties on the market.
The contents of the package - all of which are only for Europe -- include: Parlophone minus the Beatles, Chrysalis minus Robbie Williams, Ensign, Mute, Sanctuary (UK only); EMI Classics, two jazz labels, Jazzland (Norway) and MPS (Germany). EMI European businesses including France, Belgium, Czech Republic, Norway, Poland, Portugal and Sweden; Universal Music's small Greek operation; Also, Universal promises not to bid to renew its European licenses for the Disney, Hollywood, Ministry of Sound and Restos du Coeur labels.
The company is also divesting European rights to the Pink Floyd and David Guetta catalogs, and EMI's share of the "Now That's What I Call Music" franchise.
Among the enormous number of catalogs on offer, Parlophone's roster on offer includes Coldplay, Radiohead, Gorillaz, Blur, Kylie Minogue; Mute's catalog includes Depeche Mode and 30-plus years of releases.
Now, the Commission will turn around and market-test that package with UMG's competitors and other interested parties to get their take on whether the UMG proposals goes far enough to address concerns that UMG's market share will give it the power to be the industry's gatekeeper.
At presstime, it was unclear if the EU would begin market testing it today because sources said they hadn't yet heard from the Commission, but several hours still remain in the work day in Europe. If the EU waits until Monday to provide the package of proposals, competitors likely will be given five days to respond.
The announcement of the submission of the package came just hours after news broke that BMG Rights Management was in talks with UMG to acquire the Parlophone catalog.
While it's not a well-known brand in the U.S., in Europe Parlophone is EMI's main label face to the consumer, so putting it up for sale is almost akin to selling of a crown jewel. The label launched in England in the 1920s and future Beatles producer George Martin became its label manager in the mid-1950s, signing the Beatles to the label in 1962, and it has remained a British institution ever since. In addition to its own formidable artist roster, it issues releases by artists like Lady Antebellum, the Beastie Boys and Norah Jones for EMI's American labels.
It is also selling Chrysalis in Europe, which means that the catalogs of acts like Jethro Tull, Sinead O'Connor, the Waterboys, World Party and Procol Harum will be divested. The status of Billy Idol's catalog is unclear: When he was in punk-era group Generation X, that band was signed to the U.K. label, but when the band broke up in 1981, Idol came to New York and hooked up with manager Bill Aucoin and may have been signed to the American label as a solo artist.
Regardless, whoever buys these assets will own the catalog in Europe and continue to license them to Universal for the rest of the world. Likewise, American artist that are currently put out by Parlophone will continued to be licensed to that label, so whoever buys the legendary label is likely to continue its licensed releases.
Of course, the Beatles are not part of the Parlophone discussion. Although the Beatles' deal may not provide the label with the best margin--the band gets at least a 50% royalty on digital and while it may not get that amount for physical product, the band's royalty rate is substantially larger than those paid to other superstar artists, sources have told Billboard--but it provides plenty of market share and will add to the stature of whichever label sells the band to the market. Besides, just having ownership of the master recordings of the most popular group of all time -- even after the copyright expires and the recordings come into the public domain -- is a treasure beyond measure.
As for selling the Pink Floyd catalog, undoubtedly the band itself would be interested in buying back the catalog and probably could afford to. But savvy suitors for EMI assets would be shrewed if they aligned with Pink Floyd and offer to pay for the masters in a joint-ownership arrangement. It wouldn't be good business sense to outbid the band because generally they will need Pink Floyd's cooperation when repackaging its assets and outbidding the band would be a good way to alienate them.
Billboard.biz will have more on the situation as it develops. See Ed Christman's Universal/EMI Deal Looks Likely to Be Approved, But at What Cost to UMG? for an overview of the deal's many movements over the past few weeks.