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Warner clears path to EMI

Scott Jagow Feb 21, 2007


SCOTT JAGOW: Every time I hear about Warner Music and EMI, I think of the boy who cried wolf. The two companies have been trying to buy each other for seven years now and still no deal. Today, Warner said it’ll likely make an all-cash offer to takeover EMI. Andrew Edgecliffe-Johnson is covering the story for the Financial Times. Andrew, OK, what’s different this time?

ANDREW EDGECLIFFE-JOHNSON: What’s different this time is that Warner has essentially bought the support of a group which was the music industry’s greatest critic, and that is a group called Impala in Europe which represents the independent music producers and record labels. And they were the people who blocked a previous deal in the sector. They managed to persuade the European authorities to review the creation of Sony BMG. So it gives Warner a real advantage over the position it’s been in, in previous negotiations with EMI.

JAGOW: Why is Impala backing this now?

EDGECLIFFE-JOHNSON: Well in return, Warner has agreed to fund a platform for the independent music labels and help negotiate the tricky business of digital rights licensing. And they’re also agreeing that if and when they manage to buy EMI, they will spin off certain assets. Now that could be entire record labels. So Warner has agreed to certain commitments which would essentially strengthen the independent music sector.

JAGOW: OK but even if Warner has Impala’s support, the main issue has been fear that E.U. regulators won’t go along with this deal.

EDGECLIFFE-JOHNSON: Exactly. Now E.U. regulators were seen to have been heavily influenced by Impala’s opposition to previous deals, but its doesn’t go all the way so it’s no guarantee that E.U. regulators will just take the same position as Impala.

JAGOW: Andrew, thank you.

EDGECLIFFE-JOHNSON: Thank you very much.

JAGOW: Andrew Edgecliffe-Johnson with the Financial Times in London. For the record, EMI is a British label with Coldplay and Norah Jones among others. Warner is a U.S. label with artists like Madonna and the Red Hot Chili Peppers.

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