In an Oct. 3 e-mail, Bloomberg reports, Sony CFO Kenichro Yoshida raised concerns about the music publishing business, "which has a rather complex capital and governance structure and is impacted by the market shift to streaming."
Sony/ATV is a 50/50 joint-venture between Sony Corp. and the Michael Jackson estate. In addition, those two partners also own a combined 39.8 percent -- 29.8 percentage points by Sony and almost 10 percentage points by the Jackson estate -- of EMI Music Publishing, thanks to a consortium put together by then-Sony Corp. of America CFO Rob Wiesenthal. That consortium, which also consists of Mubadala Development, Jynwel Capital Ltd., the Blackstone Group's GSO Partners and David Geffen, paid $2.2 billion in June 2012 for EMI's publishing catalog.
Sony/ATV and EMI's publishing assets include such crown jewels as the former's Beatles catalog and the latter's Motown catalog. Sony/ATV sees revenues of about $510 million on its own and another $115 for administrating EMI's catalogue, which has revenues of about $725 million itself.
Further details of the sale plan -- including possible suitors -- are unknown, the Bloomberg report noted. So it couldn't be determined if Sony was looking to sell all of its publishing assets, or its portion of the EMI Music Publishing catalog. It's also unclear if the subject of Sony selling its portion of EMI has been broached with the rest of the consortium.
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In any event, if all the publishing assets were put up for sale, knowledgeable industry sources tell Billboard its unlikely that European Union regulators would let Universal Music Group make such an acquisition. Likewise, the Warner Music Group would also face regulatory difficulties if it tried an outright acquisition of the combined publishing assets. The only reason the EU let Sony/ATV buy EMI originally is because it was as part of a consortium and it made it sell off about $100 million in publishing assets at the time.
More likely suitors for all of the publishing would include either private equity firms, or a major film studio like Disney, or Bertelsmann-owned BMG Rights Management, a growing power once again in the music business.
But for the exception that the EMI retains its own financial accounting department, the Sony/ATV and EMI staffs have been combined into one team that promotes both catalogs. As such, it seems unlikely that a private equity firm could acquire the EMI catalog without also purchasing Sony/ATV and its staff. If the sellers want to obtain an optimum price, it would need a plethora of potential suitors, so it likely would have to sell all the publishing assets. Billboard estimates a sale of both catalogs would bring in about $3 billion-$3.5 billion.
A Sony/ATV spokesman declined comment on the report. John Branco, who co-manages the Jackson estate, didn't respond to a request to comment.