Exclusive: Martin Bandier Names New Sony/ATV-EMI Executive Team
Exclusive: Martin Bandier Names New Sony/ATV-EMI Executive Team

Despite vigorous protests from independent label groups, the Warner Music Group and digerati organizations, the Sony Corporation of America-led consortium's acquisition of EMI Music Publishing sailed through the European regulatory process, gaining approval with only minor concessions.

A month ago, Sony/ATV offered to sell publishing assets worth $20 million in royalties in an attempt to get the EU to approve the transaction without having to face second-stage scrutiny. Sony's gambit worked and today EU approved its $2.2 billion acquisition of EMI Music. Sources say that the U.S. Federal Trade Commission will also soon approve the transaction.

According to the EU, their approval decision is conditional upon the divestiture of the worldwide publishing rights to four catalogues and the musical works of 12 contemporary authors and four catalogs.

The assets to be divested are Virgin Music Publishing UK, Virgin Europe, Virgin US, and Famous Music UK, and works by leading authors such as Gary Barlow, Ozzy Osbourne, Robbie Williams, Ben Harper, Lenny Kravitz, Placebo and the Kooks.

The reason why it is making the buyers divest some assets is because "post transaction, the merged entity would have fully or partially owned publishing rights in more than half of chart hits in the UK and Ireland. Such market power would have likely affected customers' ability to license music not only in these countries but also at multi-territorial and pan-European levels."

But after those assets are divested, "the transaction would not significantly impede effective competition in the EEA or any substantial part of it, the Commission concluded.

IMPALA Issues Statement on EMI Sale

In a statement, the Sony-led consortium said it "welcomes the European Commission¹s conditional phase I approval," but noted that it still had to face the regulatory review processes in other regions of the world still.

"Having spent over 17 years of my professional life helping to build EMI Music Publishing, today is not only an important milestone on the path to final approval, but a very special day for me, personally," said Sony/ATV Music Publishing chairman and CEO Martin Bandier said in a statement. "But more than that, everyone at Sony/ATV joins me in recognizing the unparalleled talent and incredible assets of EMI Music Publishing and the great opportunities that lie ahead."

As has been previously reported, Sony/ATV would serve as the administrator for the EMI publishing assets, which would be maintained in a separate company since it has a different ownership structure than Sony/ATV. ¨The latter company is a joint venture between Sony Corp. of America and the Michael Jackson estate and Sony/ATV itself would have a 38% stake in EMI Music Publishing if the regulatory agency approval of the acquisition is given. The other investors participating in the proposed purchase of EMI Music Publishing are: Mubadala Development Company PJSC; Jynwel Capital Limited; the Blackstone Group's GSO Capital Partners LP; and David Geffen.

Meanwhile, the Universal Music Group's proposed $1.9 billion deal to buy EMI's recorded music operation has entered into the second phase in Europe and a decision on that deal is not expected until August at the earliest.

Late Tuesday, the New York Times reported that if the EMI acquisition is approved, Sony will cut 326 positions over two years, according to a document distributed to investors by UBS, the underwriter that plans to sell $1.15 billion in bonds to help finance the EMI Music Publishing acquisition. That document states that the plan is to achieve $106 million in cost savings over two years, $71 million in the first year and $35 million in the second year.

Sony Plans To Cut 326 EMI Music Publishing Jobs Over Two Years

According to the document cited in the article, the EMI work force would be reduced by 152 people within the first year of ownership and 174 would be let go after serving on a transitional basis. That would leave 189 EMI staffers with jobs.

Sony/ATV Chairman/CEO Martin Bandier sent a memo to his staff on Wednesday saying the report was premature.

In that memo, Bandier said that "our current plan is to reduce the total number of employees of the two companies," referring to EMI Music Publishing and Sony/ATV. "The exact numbers or percentages are not final. Since our companies remain separate, we continue to learn more about the existing structure of EMI Music Publishing, which is quite different than when I was there, and evaluate the information we receive. Without a doubt, it is our intention to retain the best and brightest employees at both companies."