Even Before WMG Deal Is Official, Buyers Are Expecting Warner-Chappell To Be Spun Off
June 9, 2011 at 3:50 AM (PT)
While the ink isn't officially dry on the MAY 6th deal (NET NEWS 5/6) bringing WARNER MUSIC GROUP and ACCESS INDUSTRIES, the U.S.-based industrial group, into a definitive merger agreement under which ACCESS INDUSTRIES will acquire WMG in an all-cash transaction valued at $3.3 billion. The purchase includes WMG’s entire recorded music and music publishing businesses -- there are already people looking to buy WARNER's publishing division from new owner LEN BLAVATNIK.
THE NEW YORK POST reports, "Executives from KKR-backed BMG RIGHTS have gathered in MANHATTAN this week to discuss how they might win valuable pieces of WARNER's publishing arm, WARNER/CHAPPELL, should regulatory agencies force the new owner to dispose of the business. Music insiders said the pressure is on BMG to bulk up its music publishing business or disband it for lack of size. VIVENDI's UNIVERSAL MUSIC GROUP and SONY/ATV would also be interested parties should WARNER/CHAPPELL come on the market again."
Industry insiders feel LEN BLAVATNIK is open to spinning off WARNER/CHAPPELL, in order to use the capital to buy EMI. ALL ACCESS first reported in MAY (NET NEWS 5/12) that BLAVATNIK has such an inside track on scoring EMI, many doubt an auction of the label will officially get under way.
BLAVATNIK might also have to divest the publishing company in order to gain regulatory approval for a WARNER merger with EMI.
"According to a source," writes THE POST, "CITIGROUP could fetch between $3.3 billion and $4 billion for EMI because of its size globally. EMI's previous owner, GUY HANDS' private-equity firm TERRA FIRMA, paid $4.7 billion for EMI back in 2007."