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Sony and BMG to co-bid for Parlophone

By | Published on Monday 7 January 2013


Sony Music will put in a joint bid for the Parlophone Label Group with BMG, according to the latest reports. The two companies are one of around twelve parties still thought to be bidding for the core EMI business Universal Music is being forced to sell by European regulators as part of the deal struck to secure approval of the Universal/EMI label merger last year.

Sony, of course, merged its recorded music business with the original BMG record company to create SonyBMG in 2004, buying BMG owner Bertelsmann out of the venture four years later, after which the German media firm created the new BMG company. However, this latest alliance between the two music firms will be temporary. Each partner is interested in different aspects of what has been named the Parlophone Label Group since Universal’s EMI purchase, so plan to bid together to secure a better price overall, but if successful would then split the company into two, and take half each.

Specifics of the new alliance are not known, and neither Sony nor BMG have as yet commented on the partnership. Just before Christmas, BMG secured ownership of the Mute catalogue owned by EMI, also sold off as part of Universal’s regulator agreement.

Although BMG has always been an obvious bidder for most of the EMI assets for sale from the start, the Bertelsmann company has always said it is not interested in owning a conventional record company, and Parlophone’s frontline operations are pretty conventional. Therefore, it may well be that Sony Music, now led in the UK by former EMI A&R boss Nick Gatfield, wants the frontline labels while BMG hopes to secure more EMI back catalogue master recordings.

Arguably selling Sony Music even just some of the EMI units for sale would not be in the spirit of the European regulator deal, it being the other mega-major music company, and its sister business Sony/ATV having secured control of the EMI music publishing business. Though Sony would likely argue that allowing it to expand through a Parlophone acquisition would actually be a very effective way to counter the market dominance secured by Universal through its EMI purchase.

Other bidders for Parlophone include the Simon Fuller-led consortium, also backed by Island Records founder Chris Blackwell and RIT Capital Partners, as well as Warner Music and investment company MacAndrews & Forbes. All bids are expected to be in within the next two weeks.