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Considering that the market multiples for publishing catalogs are inflated and out of whack at the moment, if WMG is sold in one piece, it should fetch well above its $2.6 billion purchase price back in 2004.
WHEELS & DEALS: WHITHER WARNER?
Rodel Tells Us What's Going On Aboard Edgar & Lyor's Sinking Ship
by Rodel Delfin

GORDON GEKKO, PART DEUX: Further chatter going on about what may transpire at Warner Music Group in the coming months, outside of the staff layoffs. The WMG stock price continues to stagnate, hovering around $17 a share (well below its 52-week high of 30.59), as the company continues to post very disappointing quarterly numbers—and don’t forget the exponential downward slide of physical CD sales this year.

So it isn’t surprising that there’s lots of speculation out there about private equity investors Thomas H. Lee Partners, et al., cashing out and exiting the fold, which is their modus operandi. Besides, they’ve already made a healthy profit—from debt refinancing, dividends and, of course, the group’s IPO.

So, what’s their play? The true value of the company is Warner/Chappell’s publishing catalog, along with the recorded-music catalogs of Warner Bros., Atlantic and Elektra. Considering that the market multiples for publishing catalogs are inflated and out of whack at the moment, if WMG is sold in one piece, it should fetch well above its $2.6 billion purchase price back in 2004.

Then again, the group could be broken up and sold off separately, with the publishing division garnering a larger sale price. And don’t forget that if an EMI-WMG deal ever does go down, one of the publishing divisions would have to be divested to pass regulatory muster, with conventional wisdom still pointing to Warner/Chappell as the company to be sold off.

There are too many scenarios to speculate about at the moment, but it’s not far-fetched to expect some moves to go down soon involving the leverage buyout investors (i.e. T.H. Lee and group) and/or W/C. We can probably also expect Edgar to stay aboard the HMS Titanic. Stay tuned…

BACK TO WEASEL LAND: For those of you still employed and chasing the front-line heat, start looking for a new gig (I keed, I keed!). But seriously, folks, one kid who did get a new gig after departing a major is former Epic A&R hitter Chris Foitle, who lands at MySpace Records. He’ll be based at the company’s Beverly Hills offices, where he’ll spend his afternoons scouting talent, playing ping-pong with Tom Anderson and posting messages to Tila Tequila… The Crush-managed female songstress Charlotte Sometimes continues to do the label meet-and-greets. This one may get nutty soon… L.A-based rockers The 88 have signed with Rob Stevenson at Island Records. We’ve been fans of these guys for quite some time now, and it’s surprising that they remained free agents for this long…

BUZZIN’: Kevin Law, Level 7 Records and Amplify Music Confab…Hit me up: [email protected]

Buzz Gigs
WAR TAPES Wed., May 23    Club Moscow  11:00 p.m.         L.A.
SOUNDS UNDER RADIO  Tue., May 29  Mercury Lounge 10: 00 p.m. N.Y.
COCO B’S  Tues., June 5  Troubadour     TBD   L.A.

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