14 Music Week 05.10.12
BUSINESSANALYSIS UNIVERSAL-EMI EDITORIAL
Universal absorbs EMI –but the DNA is incomplete
THERE IS NO ESCAPING THE FACT Universal has had to make some extremely painful sacrifices to convince EC regulators it should be EMI’s new owner. How significant those sacrifices are domestically in pure
commercial terms is set out very clearly in our analysis opposite with Universal having had to agree to let go assets and artists that provided around 44% of album sales in EMI’s UK homeland in the 18 months up to the end of June 2012. For every Beatle it has gained, it must say hello goodbye to
other UK artists and labels that are at the very heart of what this historic music company is all about. By contrast, in the likes of the US, Japan and Germany EMI stays virtually intact. Although nothing will ever rival the Fab Four for their artistic
and financial contribution to this British institution, EMI without the likes of Cliff, Pink Floyd and Kate Bush would have been a very different company. Now those three acts – with a combined EMI residency of 136 years – will end up somewhere else with others set to join them. All that is before we even get on to Parlophone whose famous pound sign logo is not only an iconic part of Beatles records but represents the very best of British creative music talent from those classic George Martin-produced comedy recordings to current superstars such as Coldplay. With all that in mind, it is hard to conclude for the UK at
least that what Universal has bought is to all intents and purposes EMI. There are too many assets that make up the company’s DNA missing to make it truly feel like that, although in pure revenue terms the vast majority of it will belong to Vivendi. The French company’s loss in terms of these divestments will be somebody else’s gain, a perhaps once-in-a-lifetime opportunity to get hold of some of the greatest labels and artists in (mainly) British music history. Even before this deal had
“Universal will hardly be lacking in big EMI names past and present... [but] there are too many assets that make up the company’s DNA missing to make it truly feel that what Universal has bought is to all intents and purposes EMI”
been struck, Universal had already set off on a path of acquiring, one by one, some of EMI’s most iconic acts, including Paul McCartney, Queen and Robbie Williams. The Rolling Stones, whose catalogue was previously split between Universal and EMI, are also now exclusively at Universal. Add to that list The Beatles, Beach Boys, Frank Sinatra’s
glory recording years at Capitol and modern stars such as Katy Perry and Emeli Sandé and Universal will hardly be lacking in big EMI names past and present. But no Parlophone, Pink Floyd, Kate Bush or Coldplay and
another EC stipulation that it cannot compete for any of the divested assets for at least 10 years means it is never very likely to ever possess the full set.
Paul Williams, Head of Business Analysis Do you have views on this column? Feel free to comment by emailing
paul.williams@intentmedia.co.uk
www.musicweek.com
PAYING THE
In tying up the deal to acquire EMI and satisfy EC regulators, of its new prize’s assets. Music Week reveals the commercial
Say hello, wave goodbye: David Guetta says thank you and goodnight to EMI/Universal but Robbie Williams and The Beatles will remain with the label after deal completion
ACQUISITIONS BY PAUL WILLIAMS
N
ew EMI owner Universal will have to sacrifice artists, labels and brands that made up more than 40% of EMI’s UK
album sales over the past 18 months, according to Music Week research. That is the price its chairman and CEO Lucian
Grainge and his colleagues will have to pay to satisfy EC regulators as part of winning approval of their $1.9bn (£1.2bn) takeover of the rival major. In an exclusive study we spell out in detail just
what kind of impact a lengthy list of divestments it has been ordered to undertake will have on the operations of EMI’s UK heartland, but also examine the sales contribution of the assets Universal will keep. On the plus side it will control The Beatles,
whose UK album sales this century are an impressive 8.2 million, the historic Capitol Records whose wares include catalogue from the likes of the Beach Boys and Frank Sinatra plus in Katy Perry one of the world’s biggest-selling contemporary acts and Virgin Records whose own deep and still popular catalogue runs alongside a current roster featuring 2012’s top new UK star Emeli Sandé. But these gains are counter-balanced by a heap
of assets it will have to release to rivals and represent much of what EMI stands for. The list most obviously includes the rosters and catalogues of Parlophone, but importantly not the Fab Four as a group or individuals, Mute, Chrysalis without Robbie Williams, individual big catalogue artists such as David Bowie, Cliff Richard and Kate Bush
and the major’s share in the incredibly successful Now! That’s What I Call Music franchise. All these will need to be divested on a worldwide basis, although for the purposes of our analysis exercise we have just concentrated on the UK. Our study looks at UK albums and singles sales
between the beginning of 2011 and mid-year 2012, according to the Official Charts Company. The artists and assets behind around 44% of EMI’s album sales domestically in this period will have to be divested, while acts and labels delivering about 30% of UK singles sales must go. The impact of the global divestments forced
upon Universal will most clearly be felt in Europe and particularly in EMI’s home market of the UK. By comparison to this big impact on its UK businesss the EMI assets for sale on a global business equate to a more modest 30% of revenues and 10% of the combined revenues with Universal. In the US, for example, only one of the acts – Coldplay – behind EMI’s Top 10 albums in 2011 will be released with the rest made up of Katy Perry and largely Nashville acts such as Lady Antebellum, Keith Urban and Luke Bryan, all of whom will be staying. In the UK clearly the biggest loss Universal must
endure is Coldplay’s label home of Parlophone. In the period in question the label accounted for more than 3 million UK albums sold and was responsible for three of the major’s 10 biggest artist albums. This was out of 20.4 million albums sold in total by EMI and led by Coldplay’s Mylo Xyloto, which shifted 1.2 million copies up to the end of June 2012, and also took in Tinie Tempah’s Disc-overy and Eliza Doolittle’s self-titled debut.
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