Nick Gatfield, Former EMI Exec, Calls Working Under Guy Hands' Regime 'Uncomfortable'
Nick Gatfield, Former EMI Exec, Calls Working Under Guy Hands' Regime 'Uncomfortable'

While Citigroup and the Sony-led investment group are still working on the final wording for the purchase agreement so it can be signed, sources say that that Sony/ATV Music Publishing will manage the EMI publishing assets, but its own copyrights and the acquired ones won't be commingled in the new company created to acquire EMI Music Publishing.

Instead, the new company will own the assets and Sony will be an investor in it along with David Geffen, first reported by Sky News early today and others, the names of which will be revealed when the press release announcing the deal comes out later. However, Sony/ATV will provide management services for the new company, a source says, which likely means that it will work the assets alongside its own, but keep the financial numeration for the exploitations of rights separately.

EMI's Deals WIth Universal, Sony Face Inevitable -- But Different -- Regulatory Scrutiny

Proceeding on the assumption that Sony will close the deal late today, Sony/ATV will now manage assets that combined will have annual revenues of revenues of about $1.26 billion, if the deal clears regulatory approval and/or Sony or the new company don't have to divest any assets to appease the regulatory agencies. That's based on the $761 million in publishing revenues reported by EMI in its last publicly released annual report; and Billboard's estimate that Sony/ATV has revenues of about $500 milllion (Sony does not break out publishing revenue it its financial reports).

IMPALA Says It Expects EMI-Universal Deal to Be 'Blocked Outright'

With Sony/ATV managing publishing rights that yield annual revenues of about 1.26 billion, it would make the company the largest manager of publishing rights in the world. That means that Universal Music Publishing, with revenues of about $898 million, would fall from the top spot and rank second-largest, with Warner Chappell's publishing revenue at about $556 million, followed by BMG Rights Management with, Billboard estimates, annual revenues of about $330 million.

Read: EMI CEO Roger Faxon's Memo to Staff About Universal Sale

Meanwhile, if Universal's acquisition of EMI recorded music closes, it would grow UMG's revenue to about $7.7 million, which comes from the $6.04 million it reported for its most recent fiscal year ended Dec. 31, 2010, and the most recent financial data reported by EMI, which was for the year ending March 31, 2010.

By contrast, Sony Corp.'s two music operations, Sony Music Entertainment and Sony Music Entertainment (Japan), which are run separately, have combined revenues of about $6.06 billion. With its investment in the EMI publishing assets, it will be managing music assets with combined annual revenues of about $6.8 billion, based on Sony data from the fiscal year ended, March 31, 2011. Far back at less than half the size of the UMG and Sony, the Warner Music Group has revenues of nearly $3 billion, for its fiscal year ended Sept. 30, 2010.

Of UMG's total, the recorded music division will now have revenues of about $6.53 billion and EBIDTA of about $1.22 billion, which can be improved by elimination of overhead redundancies between the two operations. It remains unclear what revenue Sony Music Entertainment's recorded-music operation would have because those numbers are not broken out, but the Warner Music Group's recorded music operation has revenue of about $2.46 billion.