EU Green Lights Universal Music’s Acquisition of BMG Music Publishing
European Union (EU) regulators green lighted Universal Music Group’s acquisition of BMG Music Publishing for about $2.09 billion. The deal establishes Universal as the world’s largest music publishing company. Combining the world’s No. 3 and No. 4 music publishing catalogs will give Universal the publishing rights to artists as diverse as Mariah Carey, U2, 50 Cent, Elton John and Leonard Bernstein. With a 22 percent market share, it will scrape ahead of current market leader EMI Group PLC. EU approval was the last hurdle for the deal, which Universal said would close shortly. It is separate from the merger of the Sony-BMG music units more than two years ago that the EU is now re-examining.
Bringing Universal and BMG under one roof “will create a publishing business that is even better suited to serve our songwriters, composers and business partners in this challenging marketplace,” according to Universal’s President, Zach Horowitz. The combined entities will trade under the Universal name and will be led by Los-Angeles based David Renzer, the current chairman and CEO. Universal will keep the American hit list of Rondor, which controls the rights to pop classics by the Beach Boys, Michael Jackson and Aretha Franklin but must sell the British arm that owns songs by many bands such as ’80s chart toppers Dire Straits. The EU warned, however, that its “serious doubts” about the deal’s effect on online music were soothed only by the companies’ plan to sell the rights to some hits from the ’80s and ’90s by artists such as Justin Timberlake, Iron Maiden and R. Kelly.
The European Commission said it had identified antitrust problems in the way the acquisition was originally structured because Universal would have controlled the rights to more than half of the chart hits in some countries, forcing all online and mobile music services to do business with them. It claims publishers are increasingly pulling online rights away from traditional national collecting societies, which pick up royalties and distribute them to copyright holders, and transferring them to newer European-wide groups, and this shifts the balance of power over pricing in favor of the publishers.
The selloffs go beyond what the Commission wanted because it was more viable to divest complete copyrights, including performance and print rights. But independent record label group Impala sounded a note of warning, saying it could still take court action to reverse EU approval. Impala, which recently struck a deal with Warner to eliminate its concerns ahead of a possible bid for EMI, said it still had to judge if Universal and BMG’s selloffs went far enough to keep competition alive.