UMG And EU Regulators Meet To Discuss EMI Deal Concessions
August 10, 2012
Universal Music Group's competitors have reportedly told European Union regulators that the concessions offered in the UMG-EMI deal do not go far enough and further divestments will be necessary. According to Bloomberg's sources, third parties who were privy to UMG's concessions told the EU regulators that they do not go far enough when it comes to reducing UMG's potential power over the music marketplace in Europe. UMG had offered to sell off 60 percent of EMI's European assets.
"If Universal Music has to give up the global rights for everything it would push the deal toward unprofitability," Simon Dyson, an analyst at Informa Media & Telecoms told Bloomberg. "Universal has invested a lot of money into this deal and if it doesn’t go through, then they have to sell EMI, and companies won’t offer them anything near what they paid for it."
According to Bloomberg, Universal Music was informed on Thursday that a majority of the third parties found the label's concessions insufficient. UMG and the European regulators are expected to continue meeting to further refine the concession plan.
If Universal Music also sells global rights, the value of EMI's disposals may be as much as 300 million Euros ($370 million), said one source, adding that UMG has budgeted in case it must divest EMI's global rights.
The merger's opponents are not expected to budge. "I remain steadfast in my view that the best outcome for consumers is for this merger to be blocked," Independent label group Merlin CEO Charles Caldas said in an e-mail. "If the merger goes through, even with the kinds of concessions suggested in the press, we think it will result in fewer choices and higher prices. Universal has plenty enough market power as it is. They should not have more."