"Assuming everything goes through the regulatory hurdles—and I’m confident it should—I think we could be a force to be reckoned with, quite frankly."
——PLG U.K. CEO Andria Vidler

WHAT GETTING PARLOPHONE MEANS FOR WARNER MUSIC

Blavatnik, Cooper and Their Team Demonstrate Their Commitment to Competing in the Frontline Business by Making the Aggressive Pickup, Which Brings Them a Batch of Competitive Acts, a Rich Catalog and
Warner Music’s acquisition of Parlophone will clearly strengthen its position as the #3 major music group. But what, exactly, did Len Blavatnik get for the $765 million he peeled yesterday? The Parlophone Label Group includes not only Parlophone but also the presently inactive Chrysalis and Ensign labels, along with EMI’s recorded music ops in Belgium, the Czech Republic, Denmark, France, Norway, Portugal, Spain, Slovakia and Sweden. Parlophone has annual revenues of about £300m ($475m) and earnings before interest, tax, depreciation and amortization of about £70m, sources told the Financial Times.

PLG’s roster and catalog of masters include (in alphabetical order), Air, Kate Bush, Coldplay, Daft Punk, Danger Mouse, Deep Purple, Duran Duran, David Guetta, Gorillaz, Iron Maiden, Jethro Tull, Kylie Minogue, Pet Shop Boys, Pink Floyd, Radiohead, Tinie Tempah and Tina Turner. Of Parlophone’s current acts, the biggest is Coldplay, and Warner has to feel elated about its new prize by virtue of the fact that the band owes two more albums under its current deal.

Lucian Grainge reflected on the forced sacrifice of Parlophone in an interview with HITS last September. “Around 15 or 16 years ago, EMI started to move Parlophone forward as a brand and to sign artists to it, Coldplay, Kylie and so on, he said. “If you actually look at the successes of Virgin over these last years and how Virgin became an improved proposition, it started to balance out more. But Parlophone as a label has achieved a great deal and we're sorry to have lost it.”

Also feeling the loss are BMG and Sony, who’d made a joint bid, and reportedly planned to divvy up the asset in terms of current acts (Sony) and catalog (BMG); Simon Fuller and Chris Blackwell; and Ron Perelman.

Warner’s revenue should now be almost $3.2 billion annually, while its U.S. marketshare will be about 20.5% to 21%. WMG will finance deal through a new term loan, meaning that the company will now carry about $3 billion in debt.

What’s the future of Parlophone’s present staff of 800-900? PLG U.K. CEO Andria Vidler told Music Week she’s optimistic that her key peeps will get new jobs from the new overlords. She took heart from Stephen Cooper’s assurance that Warner is "committed to making this a great outcome for Parlophone’s artists and employees, who will find in WMG a similar spirit and culture that is dedicated to providing the most supportive and innovative home for recording artists."

"I don’t think Steve Cooper would have chosen the words he did in the press release if he wasn’t sending PLG staff a deliberate, positive signal," said Vidler. "I think Warner understands that artists buy into teams and develop relationships—trusting relationships—with staff. That comes across in their press release. I don’t think they would have said that if they hadn’t recognized that for artists [staff relationships] are very important.”

As for Parlophone’s value to WMG going forward, Vidler was similarly upbeat. "Assuming everything goes through the regulatory hurdles—and I’m confident it should—I think we could be a force to be reckoned with, quite frankly," she said. "I think the Warners business has been more strategically aligned with our approach over the last couple of years - one of the reasons I think it’s a great home. Their strategy with artists, the way they work with artists is more similar to EMI and it should make for as easy a transition for artists as possible."

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