WSJ: EMI Preparing To Outsource Its Music
March 22, 2010 at 4:00 AM (PT)
EMI, owned by private equity firm TERRA FIRMA, has held preliminary talks to license its music in NORTH AMERICA to rival record labels, reports THE WALL STREET JOURNAL, writing it's "a move that comes as private-equity owners seek to avoid debt default that could soon put the troubled music company in the hands of lender CITIGROUP INC."
The JOURNAL's sources say the talks are at a very preliminary stage. There's also questions for the financial sector whether this arrangement would help TERRA FIRMA accomplish its aim: to stave off a default on its debt to CITIGROUP.
TERRA FIRMA needs to come up with £120 million to avoid a default or risk losing control of EMI to its lender, CITIGROUP, which is owed more than £3 billion.
THE JOURNAL notes that "reaching a deal on such a transaction could take months and require regulatory approvals -- too late for the pressing debt-repayment timetable TERRA FIRMA faces. A deal could trigger an antitrust inquiry, but probably wouldn't require one to get the deal done, since it wouldn't amount to a merger or acquisition, a person familiar with U.S. antitrust law said."
Whether CITIGROUP would agree to such a move is also questionalble.
It is also not clear what effect a licensing deal would have on the relationship between EMI and its artists.