I have written loads about how music label consolidation has changed the face of the industry over the last decade. We have dropped from having a half-dozen large labels with many second-tier players and indies and other smaller labels, to having four majors … and that is about it.
There have been reports about financial problems at two companies – EMI and Warner – potentially causing issues and shifting the power balance to an even smaller set of players. Last week we found out that Warner Music Group was being sold – but also that the outcome wouldn’t shift the balance of power as some had feared.
Here are some details from:
Access Industries, a holding company founded by oil baron Len Blavatnik, won the auction to buy Warner Music Group Corp. for $3.3 billion in cash, the companies announced Friday morning.
Blavatnik edged out more than a dozen other suitors including Sony Music Group, supermarket magnate Ron Burkle, Platinum Equity, Live Nation Entertainment and investment firm Kohlberg Kravis & Roberts, whose unsolicited offer late last year kicked off the auction process. KKR’s partner in the bidding was German music company Bertelsmann.
More importantly, Blavatnik’s offer had an edge over Sony and Bertelsmann in that it would not run into antitrust hurdles by combining with another music company in a market that is already concentrated in the hands of four companies—Universal Music Group, Sony, EMI and Warner.
But wait … maybe it isn’t quite over yet? According to a new article at:
If you thought the buyout process surrounding Warner Music Group was complicated, try the post-buyout process. After the $3.3 billion acquisition by Russian tycoon Len Blavatnik was confirmed, a few more developments have surfaced. The parties are still awaiting closure on customary merger formalities, but ahead of the weekend, Bloomberg leaked a possible counter-offer by losing bidders Tom and Alec Gores.
But wait, there’s more. We’re also catching wind of some shareholder dissatisfaction, and potential action against Warner Music Group. The ringleader is Dallas-based Kendall Law Group, which is questioning whether WMG “breached their fiduciary duties” by not properly shopping this thing around. Blavatnik is a Warner board member and apparently a pal of Edgar Bronfman, Jr., raising questions of whether the biggest bid was ultimately secured.
Interesting stuff. There is also talk that if EMI gets chopped up and sold as anticipated later this year that Blavatnik might jump into that fray and try to consolidate power in the music industry.
We shall see what happens over the coming months, but ultimately I am concerned because to my eyes all efforts at consolidation have only served to like the pockets of billionaire owners at the expense of artists and consumers alike.