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Could Universal just sell off EMI in its entirety?

By | Published on Monday 13 August 2012


So could Edgar Bronfman Jr fulfil his dream of a combined Warner/EMI after all, albeit at a point when his personal involvement with the major is nominal? Probably not, but insiders at Universal, faced with the prospect of having to commit to even more radical divestments to get the regulatory green light for their bid to buy the EMI record company, are reportedly now mentioning Plan F in conversation – that’s to say, the “fuck it, let’s sell the bastard” option.

As previously reported, the mega-major has proposed a wide-ranging assembly of divestments in Europe to reduce the dominance of a combined Universal/EMI over here, including the sell-off of both the Parlophone and Chrysalis businesses in the UK. Some of those who originally opposed Universal’s EMI deals in Europe have told European Commission regulators that they are satisfied with the proposals. But others are pushing for more, in particular the global sale of certain Anglo-American catalogues that dominate across Europe, even if they don’t originate here.

Despite originally insisting no concessions should be necessary at all, Universal management seemed to give way in quite a big way last month when European officials made it clear significant divestments would be required. But as regulators push for even more, the major seems to putting the brakes on a little, presumably partly to placate nervous shareholders in parent company Vivendi who are probably getting concerned about the deal, and partly to ensure that Universal isn’t left with too few EMI assets to form a combined music company worth having.

The Daily Mail quotes one senior Universal exec as saying: “If the Commission rips the heart out of this deal then we would lose money on it. But we are not going to do a deal that does not make sense. Universal was not the highest bidder for EMI. We were the only ones prepared to take on the regulatory risk. Some of those other bidders are talking to us about buying assets. We would have no problem selling EMI [in its entirety], but we’re not at that stage yet”.

So, Plan F isn’t in active consideration just yet, but Universal bosses would like the EC to know it exists. Of course some Euro-twonks might question whether Universal and its boss man Lucian Grainge would really go for that option. It would be a humiliating climb down, and could cost Universal handsomely given its commitments to current EMI owners Citigroup, and despite the Mail’s insider’s claims that there were higher bidders for the music firm out there.

Though for current EMI staffers, if an aborted Universal deal was replaced with a Warner merger, that would probably be a good thing. An EMI/Warner integration would result in job losses, but not the turmoil currently incoming, especially at EMI UK, where the one time Great British record company is being lined up for demolition.

But EMI’s London HQ shouldn’t get too excited. Talk of Plan F is almost certainly a bluff, at the moment at least. Whether knowledge that the plan is now on the table will have any impact on the regulators within the Commission, remains to be seen.