BMG Covets EMI Group's Back Catalog More Than Its Publishing
-- BMG Rights Management is interested in EMI Group's recorded music back catalog rather than its publishing division, BMG Rights CEO Hartwig Masuch told MusicWeek.
"Integrating EMI's publishing would be tough, but if you look at the recorded side, it is a different story. We are increasingly moving into representing master catalogues and EMI is the iconic catalogue. We are more confident these days; it is no secret we are more interested in rights to masters than publishing."
That scenario runs counter to common expectations. BMG has grown by snapping up publishing assets -- in 2010 it acquired Cherry Lane, Stage Three and Evergreen Copyrights -- and is typically thought to be interested in EMI's music publishing division. Warner Music Group has been seen as a leading candidate to acquire EMI's recorded music division in the event that Terra Firma or Citigroup break-up and sell the company. In either case, there would be few bidders for EMI's assets and even fewer who would be able to extract as much value from a purchase as Warner and BMG Rights Management.
Founded in 2009, BMG Rights Management is a joint venture between Bertelsmann AG and private equity firm Kohlberg Kravis Roberts. It has the money to buy large companies and the size to reap operational synergies from integrating those companies. Bertelsmann and KKR each invested 200 million Euros to create BMG Rights Management and can invest more by using debt.
Some Non-Retail Music Stocks Are Having A Strong 2010 Finish
-- Music stocks have been hard hit in 2010, but some are having a strong finish to the year. Warner Music Group closed at $5.62 on Friday, its highest close since November 16 and up 40% since dropping to $4.02 on July 19. Shares of Live Nation closed at $11.70 on Friday. The stock is up 33% since dropping to $8.83 on July 19.
Retail is a different story. Trans World closed at $1.70 on Friday. That was down 37% since its 52-week high of $2.70 reached on April 27. Trans World has a market cap of just $53.4 million while its inventory is $270 million and accounts payable is $115 million. Put another way, the market values Trans World's future cash flows in the area of the value of the company's assets in a distressed liquidation.
Book retailers are also having troubles. Shares of Borders closed at $1.22 on Friday, down 11% in the fourth quarter and down 63% from their 52-week high of $3.29. The company has a market cap of just $87.9 million and assets of $1.36 billion. Barnes & Noble closed at $14.30 on Friday and is down over 11% in the fourth quarter. Investors of Borders and Barnes & Noble are trying to work out a merger of the two struggling book retailers. Books-A-Million closed at $5.55, near its 52-week low of $5.27 and 34% under its 52-week high of $8.43.
UMG Nashville Chairman Luke Lewis: "County Music Is Slower to Change Than the Rest of the Business'
-- In a lengthy Q&A, Luke Lewis, chairman of Universal Music Group Nashville, explained to The Tennessean the particular challenges faced by country labels. Here's one excerpt:
"Here's the dilemma: We're still - and I'll speak generally for the labels in this town - we're still sending more than 50 percent of our music out in a physical form. That's shifting every year, but it's shifted much more radically in the pop world. Country music is still incredibly dependent upon Walmart, BestBuy and Target's commitment to music. And they're seeing declining sales and have to decide if they want to devote the same space to music."
Indeed, country music fans have been slow to adopt digital music. For the most part, they still prefer to buy CDs in one of a handful of mass merchants. Through December 12, just 15% of country albums sales in 2010 was in the digital format, according to Nielsen SoundScan. That's below the digital share achieved by every genre other than gospel (14%) and Latin (7%). In contrast, alternative (39%), rock (32%), rap (25%), classical (24%) and R&B (20%) have higher digital shares.
Lewis also talked about artist development in the country world:
"The process of developing an artist hasn't fundamentally changed. All of us are constantly on the lookout for new talent. It's competitive. You're looking at people that are pretty raw and haven't made records before. And they have to be capable of having hits. Some of that has to do with the country music business, which is slower to change than the rest of the business. We still have a radio format that drives our sales. We have two video broadcast outlets, CMT and GAC. The most priceless thing we've got is that consumers and fans have incredible loyalty."
Vivendi SA CEO Says Company Is Trying to Better Integrate Its Content, Platforms and Interactive Networks.
-- Jean-Bernard Lévy, CEO of Universal Music Group parent Vivendi SA, tells the Wall Street Journal the company is trying to get its collection of companies to work better together. That would make sense for a company that owns UMG and Activision Blizzard as well as telecoms and cable television operators. However, Vivendi often resembles a holding company rather than a truly integrated collection of companies. One paragraph offers an example relating to UMG and the company's Brazilian telecom:
"Music and films are increasingly accessed over the Internet, so one of the most promising areas for partnerships, Mr. Lévy says, is between Vivendi-owned Universal Music Group, its pay-TV unit Canal Plus and the company's telecom businesses. In Brazil, for example, Vivendi's telecom operator GVT has worked with Canal Plus and Universal Music to set up a pay-TV platform and a music service for its broadband Internet subscribers."