The first major hurdle in merging two of four major label players has been overcome! The European Union has announced that its regulators have officially given the green light to the coming-together of two heavyweights, Universal and EMI, with some required changes to the new company’s structure as caveats. In order to move forward, Universal will need to sell off approximately 30% of EMI’s holdings to attempt to even the playing field for competitors. This Billboard article has the full list of divestments Universal is planning on shedding as part of the merger, but with the expected buyers to be the other major players in the label game, it’s hard to see how this request on the part of the EU commission is helping the overall landscape of the music business… at all.
IMPALA, the trade group representing independent labels in Europe, has continually called for the Universal-EMI deal to be struck down, citing their concerns about the resulting power that Universal could potentially yield in the marketplace, compromising distribution networks and manipulating pricing. Universal, in an attempt to soften EU officials on the issue of the merger, proposed that the divested assets should be reserved for sale to independent entities, to spread the wealth around, but just as with the prior sale of EMI’s publishing rights to Sony, the likely recipients of the discarded assets are the other major and semi-major labels, with Warner, Sony, and BMG leading the pack. If BMG picks up the assets, estimated at just under $500 million, it would effectively take the place of EMI as the fourth major label. Out with the old and in with the new!
The EU decision, which most expected to result in approval, sets the stage for US regulators to make the same call on the merger. Here’s a handy timeline of the entire deal. Bottom line: you can shuffle a deck of cards any way you want, but it’ll still be comprised of 52 cards at the end of the day.
[Photo: Alex Wong]