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The acquisition of Alliance Entertainment from Source Interlink Companies by Platinum and the Gores Group in Sept. 2010 marked the first time the two brothers joined forces to make a deal.

WMG AUCTION:
WHO’S IN, WHO’S OUT

Looks Like Strategic Buyers Are Out, Financial Players In
It now appears that the strategic bidders in the Warner Music auction, including BMG Rights Management and Sony, may have decided the $3 billion price tag is too high. That scenario would clear the way for the financial players, one of whom may well end up with it.

With this apparent turn of events, the big question then becomes, does Edgar Bronfman retain a seat at the table and convince the new buyer to make a play for all of EMI by selling Warner/Chappell to another player (most likely Sony or BMG) and proceed to merge EMI’s recorded music assets with those of WMG?

Such an outcome would almost certainly entail the divesture of certain EMI recorded music assets, possibly to UMG or Sony. Or would WMG’s new owner—quite possibly the Gores brothers or Ron Burkle—choose instead to break up WMG and sell off the parts at a profit?

Some now believe that the Hartwig Masuch-led BMG has modified its strategy. Rather than overpaying for Warner, they will back out of the auction and instead wait to see if any of the financial players will close a deal with WMG, and then bid for Warner/Chappell.

Or has BMG set its sights on EMI as the new target? A BMG/EMI combination would most likely see BMG keeping the pubco and selling off some of the rights to recorded music to Sony, UMG or possibly WMG, while retaining an interest in those same rights.

Thickening the plot, a story in U.K. paper The Telegraph speculates that another financial player, billionaire industrialist Len Blavatnik, whose Access Industries has put in its own bid for WMG, is also after EMI, presumably in league with his pal Bronfman, and hopes to merge it with Warner.

Meanwhile, Burkle, with an estimated worth of $3.2 billion, has irons in numerous fires involving companies with more pizzazz than the supermarket chains on which built his fortune. The L.A.-based billionaire, who’s reportedly the high bidder in the WMG auction, has joined an investment group fronted by team legend Steve Garvey pursuing the L.A. Dodgers and has also expressed interest in buying the NBA's Sacramento Kings. Interestingly, when he bought the Pittsburgh Penguins in 1999, Burkle did so in partnership with Penguins legend Mario Lemieux. Is it possible his move on Warner will involve a fixture of that company, like Bronfman? He has served as Chairman of the Board on numerous companies, including Alliance Entertainment, now controlled by Tom and Alec Gores, Golden State Foods, Dominick’s, Fred Meyer, Ralph’s and Food4Less, as well as being a member of the board of Occidental Petroleum Corporation, KB Home and Yahoo!

As for the three Gores siblings, their acquisitions of such entertainment business entities as Sam’s Paradigm Talent Agency, which acquired Monterey Peninsula Artists and Little Big Man Booking, along with Tom and Alec’s Alliance Entertainment, put them in a unique position among the bidders as financial players with at least marginally strategic holdings. The Gores’ MO involves buying “distressed companies,” and their attempt to snag a record company is certainly consistent with their pattern. All three were born in Israel and grew up in Flint, MI.

With a net worth of $1.6 billion, Alec, 57, the oldest, started the buyout firm Gores Group in 1987, which targets divisions of technology firms. Sam, 55, is the Chairman of Paradigm Talent Agency, whose clients include Laurence Fishburne, Andy Garcia, Philip Seymour Hoffman and Katherine Heigl, with musical acts such as Dave Matthews Band, Coldplay, Toby Keith, Aerosmith, Phish, Black Eyed Peas, The Dead, Robert Plant and Alison Krauss. The youngest of the three brothers, 47-year-old Tom Gores has an estimated net worth of $2.4 billion, and recently made a successful bid to acquire the Detroit Pistons basketball team, along with the Palace of Auburn Hills, where they play. Gores founded Platinum Equity in 1995, with the firm averaging $8b to $12b annually in revenue, wityh a portfolio that includes the San Diego Union-Tribune, the Cadillac-based recreational powerboat manufacturer Four Winns LLC and assets of bankrupt Minneapolis-based Genmar Holdings. The acquisition of Alliance Entertainment from Source Interlink Companies by Platinum and the Gores Group in Sept. 2010 marked the first time the two brothers joined forces to make a deal.

Finally, the pronouncement by short-lived EMI Chairman Charles Allen that he’s “keen” to make a move on the company as part of an investment group is getting a good laugh out of industry observers.

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