Streaming sweet music to catalogue owners
Sony Corp held preliminary talks to acquire a majority stake in EMI Music Publishing, according to people with knowledge of the matter, as its Abu Dhabi-based owner seeks to cash in on the booming market for streamed music.
Mubadala Investment has begun reaching out to potential suitors for the catalogue of more than 2.1 million songs that includes hits from Beyonce and Carole King, the sources said.
The Abu Dhabi sovereign wealth fund has held talks with Sony and approached other possible buyers, including entertainment groups and potential financial bidders, they said.
Adding EMI’s extensive catalogue would solidify Sony’s position as the largest music publisher, as paid streaming services proliferate and valuations for music copyrights soar.
Sony already owns almost 40 per cent of EMI, and operates the business.
Mubadala has signalled its intent to sell its majority holding, the people said, and plans to exercise an option that would force Sony to acquire its stake or trigger a sale of the entire company.
Mubadala is seeking a valuation of at least US$4 billion (NZ$5.4b) for EMI, the people said, almost double what the Sony-led group paid for the business six years ago.
A sale would be the largest music-industry transaction since the last time EMI changed hands.
If the parties fail to reach an agreement, Sony risks losing the catalogue to one of its largest competitors. Billionaire Len Blavatnik, the owner of Warner Music Group, has expressed interest in EMI, two of the people said.
Sony and Mubadala declined to comment on the talks.
Sony’s new chief executive Kenichiro Yoshida has said he likes businesses with recurring revenue.
Music publishing has long offered owners a steady source of cash, in contrast with the more cyclical recorded music business, which is dependent on hits and retail sales, and has historically risen and fallen depending on the success of new releases in a given quarter.
The company had almost US$12 billion in cash and equivalents on its balance sheet as of December, and last month lifted its profit forecast for the fiscal year through March.
Growing paid streaming services from Spotify and Apple have boosted music industry sales for three years in a row, and enticed investors to splurge on catalogues. Labels own the recordings of songs, while publishers own the songs as originally written.
Swedish company Kobalt Music Group raised US$600m last year, and acquired Songs Music Publishing, the home of Lorde and the Weeknd.
Concord Bicycle Music agreed to purchase Imagem, owner of some 250,000 copyrights including Justin Timberlake and Phil Collins, for several hundred million dollars.
EMI is far larger than any of those companies and was one of the four major music groups, alongside Universal, Warner and Sony, until it was broken up in 2011.
Universal Music Group, the largest record label consortium, acquired EMI’s recording business while Sony bought its publishing assets.
- The Washington Post