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The New Deal: EMI Sold to Universal Music and Sony

The New Deal: EMI Sold to Universal Music and Sony

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By: Spacelab Research Staff
November 13, 2011

EMI has been sold to both Universal Music and Sony, in a deal that updates the recorded music business and publishing business with a whole new paradigm. Vivendi owns Universal Music Group, so this puts Vivendi in an ultra-strong position since it now covers 38% of all recorded music sales globally. EMI has over 1 million copyrighted songs.

Universal Music Group will buy the recording part of EMI for $1.9 billion, while EMI Group Ltd. is being bought by for $2.2 billion by a group effort of Sony Corp and the Michael Jackson Trust. This puts the Sony consortium in charge of EMI's copyright division. Citigroup sold EMI after because Terra Firma defaulted on a £3.4 billion debt in February.

So this flips the recorded music upside down, essentially, creating a new power structure with Sony and Universal Music gaining momentum while Warner Music Group and Bertelsmann AG sit on the sidelines. Sony is only a player in a group that involves David Geffen and the Michael Jackson estate, but puts Sony on a firm footing at a time when it's been shaken by events of continuous hacks on its Qriocity network earlier this year.

"The outcome of the auction is a surprise on many levels. Neither Universal nor Sony had been seen as likely winners in the months of frenzied speculation since Citigroup officially put EMI, home to acts including the Beatles and Katy Perry, up for sale in June. Rather, a partnership between private-equity firm KKR and Germany media group Bertelsmann AG was long reported to be the front runner for EMI Music Publishing, while Warner Music Group was expected to consolidate the recorded arm," reads a report from the Wall Street Journal.

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