- The Washington Times - Monday, November 24, 2003

LOS ANGELES (AP) — A partnership led by former Universal Music chief Edgar Bronfman Jr. has agreed to buy Warner Music Group for $2.6 billion cash, creating one of the world’s largest independent music companies.

The announcement yesterday came just hours after London-based EMI Group PLC said it had withdrawn its offer to purchase Warner Music, a unit of the giant media conglomerate Time Warner Inc.

Under terms of the Bronfman group’s deal, Time Warner would retain an option to buy back a minority stake in the company, which is home to such artists as Madonna, R.E.M and the Red Hot Chili Peppers.

The purchase, which includes Time Warner’s Warner/Chappell Music publishing business, would create one of the world’s largest independent music companies and involve some of the industry’s best-known music labels, such as Warner Bros., Atlantic and Elektra Records.

“Warner Music Group is one of the world’s greatest recorded music and music publishing companies, and we have great faith in its potential for growth as an independent company and in the long-term opportunities of this industry,” Mr. Bronfman said. “We have brought together a highly sophisticated and well-financed group of investors to support the business.”

Mr. Bronfman was slated to take the top spot at the new company, which will retain the name Warner Music. Current Chairman Roger Ames also would stay on, Mr. Bronfman said.

Buying Warner Music gives Mr. Bronfman another chance to build on his success with Universal Music, which grew into the biggest record company in the world under his guidance. Mr. Bronfman sold the company, a unit of his family’s liquor business, Seagram Co., to Vivendi in 2000. Mr. Bronfman tried to buy back Vivendi this year, but lost out to NBC.

Until the Bronfman group’s offer emerged last week, it had appeared that EMI, the world’s third-largest music company, was the front-runner to buy Warner Music.

But Time Warner’s board concluded the Bronfman deal would have a better chance of winning approval from antitrust regulators, particularly in light of a merger agreement struck earlier this month between Sony Corp. and BMG, a unit of the German media conglomerate Bertelsmann, according to a music industry source who asked to remain anonymous.

The Bronfman purchase was expected to close within two months.

EMI, whose artists include Robbie Williams, Kylie Minogue and Radiohead, failed in attempts to merge with BMG and Warner Music the past three years.

The company said it was maintaining its goal of driving shareholder value.

“We have concluded that it is no longer possible to reach an agreement on terms which would be acceptable to both parties and in the interests of EMI’s shareholders,” Eric Nicoli, EMI chairman, said.

The company last week announced its interim profit sank in the first half of its fiscal year. EMI said its profit dropped to $10 million for the six months ended Sept. 30.

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