Universal, Sony/ATV to buy EMI for $4.1 billion

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LOS ANGELES (AP) - EMI Group Ltd., the iconic British music company that is home to The Beatles, Coldplay and Katy Perry, is being split and sold for $4.1 billion.

The deals will open EMI’s buyers, Universal Music and Sony/ATV, to regulatory scrutiny as they increase their dominance of the music industry.

Universal Music Group said Friday that it will pay 1.2 billion pounds ($1.9 billion) for the recording division, joining Universal artists including Lady Gaga and Eminem with EMI superstars such as David Guetta and Lady Antebellum.

A consortium led by Sony/ATV announced a separate deal Friday to pay $2.2 billion for EMI’s publishing division. That business is in charge of songwriting copyrights for such artists as Rihanna and Norah Jones.

Sony/ATV, a joint venture between Sony Corp. and the Michael Jackson estate, said it is a 38 percent partner in the consortium. Other parties include Mubadala Development Co., Jynwel Capital Ltd., the Blackstone Group and David Geffen.

The two-part sale, if approved by regulators, would further increase Universal Music’s dominance in recorded music and springboard Sony/ATV into the top spot as a music publisher, according to Impala, an association of European independent music companies that is against the deal.

The purchases would give Universal Music and Sony/ATV undue negotiating power over artists and distributors of music, even over the world’s biggest music store, Apple Inc.’s iTunes, Impala said.

Both deals are expected to be carefully reviewed in Europe, the U.S., Japan and Australia. Even if regulators approve, they could force the sale of key assets or attach other terms.

Helen Smith, Impala’s executive chairwoman, noted that when Universal Music bought music publisher BMG in 2007, it had to sell some assets to get smaller.

“When you have players which are dominant, even if they take over small players in market share, that can have a serious impact on competition,” she said.

Jean-Bernard Levy, CEO of Universal Music parent company Vivendi SA, told analysts on a conference call that he was “very confident” the deal would be approved in as little as 10 months.

In the United States, Universal is the top music producer with a 30 percent market share compared with EMI’s 9 percent, according to Nielsen SoundScan. With a combined share of 39 percent, they would tower over Sony at 29 percent and Warner Music at 19 percent.

On the publishing side, Sony/ATV will add EMI’s 1.3 million song copyrights to its roster of 750,000 songs that include hits from The Beatles, Bob Dylan and Taylor Swift.

The deal leaves Citigroup, EMI’s current owner, with liability for its underfunded pension plan, according to two other people familiar with the talks. One put the liability at $600 million, the other said it was about $260 million.

Neither person was authorized to speak publicly and spoke on condition of anonymity.

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