U.K. Songwriters Warn Against Sony Becoming 'Major Superpower' With EMI Music Publishing Acquisition
Sony will become a "major superpower" in the music industry, dominating licensing markets and limiting creator choice if its planned acquisition of EMI Music Publishing goes ahead, warns The British Academy of Songwriters, Composers and Authors (BASCA).
Sony Corporation signed a deal in May to acquire a 60 percent share in EMI Music Publishing from a consortium led by the Mubadala Investment Company, but the transaction still needs to be approved by European regulators before it can be implemented. The past year has also seen Sony complete the acquisition of the nearly 10 percent share of EMI owned by the Michael Jackson Estate, effectively given it sole ownership of EMI, valued at $4.75 billion.
The Japan-based company officially notified the European Commission (EC) about the planned merger on September 21, giving the regulator 25 days to make its initial assessment. At that point the EC can either grant approval or begin an in-depth phase two investigation. If there are competition concerns, Sony can offer remedies thereby extending the phase one deadline by 10 working days.
Recent history suggests that regulators will thoroughly investigate any concerns that the company is looking to significantly grow its already considerable market share.
When Sony acquired a minority 30 percent stake in EMI in 2012, the EC ruled that the merger would give Sony too much control and required it to make significant divestments, including selling the Rosetta catalog to BMG for around $90 million.
2012 also saw the European Commission force Universal to sell a large number of assets, including Parlophone Records, when clearing its purchase of EMI. When Warner Music Group bought Parlophone Label Group the following year, Warner agreed to divest over $200 million in recorded music assets to the independent community as part of the conditions of the deal.
Opposing Sony's latest deal, which will nearly double its publishing catalog to just over 4.2 million compositions, Independent Music Companies Association (IMPALA) has already lodged its concerns with the European Commission.
Now BASCA, whose members Sir Paul McCartney, Kate Bush, Sir Elton John and Coldplay's Chris Martin, is warning against the deal securing Sony a "potential hegemony of the global music market." Instead, it is seeking for the Sony transaction to be blocked in favor of EMI being run as a standalone business, or else combined with smaller music companies.
"At a time when the EU is looking to restore a balanced, diverse and competitive online marketplace for music, to allow the concentration of market leverage in this way seems antithetical to that purpose," said BASCA chair Crispin Hunt in a statement.
"If we are to heed the economic lessons of ‘too big to fail', it seems incautious to concede near absolute control of the music market to one player," Hunt continued, adding, "Setting up the music ecosystem so that it once again runs on competition as opposed to oligopoly is the key to a flourishing market, both online and off."