All go this week in the world of major music ownership news. European competition officials yesterday gave the Universal Music Group the go ahead to takeover Bertelsmann's BMG Music Publishing, which was nice.
European regulators, as you all surely remember, had been investigating the possible competition implications of merging the BMG Music Publishing operation with Universal's music publishing division ever since Bertelsmann announced its intent to sell its publishing company to Universal last September. Although cleared by US regulators last November, European officials, fresh from having their approval of the SonyBMG merger in the recorded music sector overturned in the European courts, were more cautious about the proposed deal, and undertook more in-depth investigations into its implications.
While Universal initially said it was confident that the merger would not have any anti-competitive effects on the music industry, mainly because a merged Universal/BMG publishing would still be slightly smaller than market leader EMI Music Publishing, in the end they did agree to sell off some of the catalogues owned by BMG or themselves in a bid to allay fears that their new publishing business would be too dominant. Among the catalogues now up for sale (should you be interested, we're thinking of having an office whip round and putting in a bid for Zomba) are Rondor UK, Zomba UK, BBC Music, 19 Songs, 19 Music and the European license for the Zomba US catalogue.
Confirming the merger had been approved, but only because of those concessions, the EC said in a statement yesterday: "The proposed merger, as initially notified, raised serious doubts as regards adverse effects on competition in the market for music publishing rights for online applications. However, the Commission's investigation found that these concerns would be removed by the remedies package proposed by the parties concerning the divestiture of a number of publishing catalogues".
Needless to say, Universal Music Group CEO Doug Morris welcomed the decision, telling reporters: "This is an historic moment for us as we combine the best creative and strategic assets of these two very accomplished publishing businesses". The merged venture will operate under the Universal Music Publishing Group banner and will be led by Universal's existing publishing chief David Renzer. What that means for top execs at BMG Music Publishing I don't know, though you assume some cuts will be made somewhere in the hierarchy once the two companies' operations are properly combined.
Pan-European independents group IMPALA, who, as you all know, don't like major music companies merging all that much (unless the majors promise to fund independent digital rights agencies as part of the deal - but that's another story), welcomed the fact that Universal had been forced to sell off some of their publishing assets in order to win approval for the deal, but added that they would now investigate the merger deal in more detail before deciding whether or not to challenge it through the courts in the way they successfully challenged the approval given to the SonyBMG merger.
On the importance of the concessions, the trade body told reporters: "IMPALA maintains that the industry and Commission must work together on rebalancing the effects of concentration in a manner that addresses the full scope of the market challenges and the digital future facing the music industry. [We] have been calling on the majors and the Commission since 2000 to seize the opportunity to work together on a blueprint for mergers within the scope of market recovery. Earlier this year [we] agreed a full package of merger remedies with Warner that would apply if Warner acquires EMI". That Warner remedy package, of course, was not without controversy, and reportedly included the Warner commitment to help fund new indie digital rights agency Merlin - the remedy we were alluding to back there in that last paragraph.
Concluding, IMPALA president Patrick Zelnik told CMU: "With adequate checks and balances against concentration, the music industry can drive itself out of crisis and deliver its economic and social potential. IMPALA has led the way so far with the successful challenge of the SonyBMG merger and the negotiation of far-reaching remedies with Warner".