The smart money is on Morris’ departure for Sony Music coinciding with Weiss’ arrival at UMG


Our In-House Pundit Gazes Into His Crystal Ball, but Much of What He Sees Is Fuzzy Indeed
In looking ahead to what promises to be a year of wall-to-wall transition, there’s only one place to begin. Guy Hands will go down fighting—filing an appeal after losing his court case with Citigroup, and trying to get another check for himself following the nearly $19m bonus he just received from Terra Firma, while the EMI rank and file continue to twist in the wind. But his days as the owner of EMI are surely coming to an end, and it seems that everyone in the industry is placing a bet on who will wind up with the company’s assets. While the conventional wisdom—which has EMI Music Publishing (valued at around $2 billion) going to BMG Rights Management and Warner Music Group landing recorded music—remains a distinct possibility, other scenarios can’t be ruled out. BMG chief Hartwig Masuch surprised everyone in December when he expressed his desire to acquire EMI’s recorded music catalog, but industry veterans point out that BMG probably won’t be able to put in a competitive bid with WMG, Sony or UMG because it doesn’t possess the synergies that would justify such a bid, which would be in the $600-650m range, according to published reports. The deal will go to the highest bidder with the least amount of potential problems getting through regulatory, which could give BMG, with its deep pockets and lack of significant recorded music assets, a leg up. By contrast, Warner—which is trying to restore Warner Bros. Records to its former glory under Rob Cavallo, Todd Moscowitz and Livia Tortella—not only faces the same regulatory issues that derailed previous attempts to buy EMI, it must also persuade primary investors T.H. Lee Partners, et al., to pony up more monies in a business that has been steadily shrinking for nearly a decade. Not only that, but WMG lost marketshare last year, while the company’s ongoing streak of quarterly losses probably won’t have the money men chomping at the bit to make another investment in music. But any of the three major music groups could conceivably buy all of EMI, absorb records, keep just enough publishing to satisfy regulatory and sell the rest to the highest bidder... Change is also imminent at two other majors, with questions surrounding the timing of a dramatic upcoming exchange of ranking executives. Doug Morris’ status as outgoing UMG chief and the reported offer from Sony Music to play the same role has everyone speculating about when the move will take place. Wonderers wonder if Universal would block him from leaving to take a new job considering all he’s done for the company, including naming and mentoring his successor. Clearly, forcing him to stay would generate much negative PR for UMG in the media. The smart money is on Morris’ departure for Sony Music coinciding with the arrival of Barry Weiss, whom Lucian Grainge has handpicked as the company’s East Coast operations chief in a newly created key post. Weiss’ Sony deal expires at the end of April, but he’s already begun talking with Universal executives and artists as he acclimates himself to the new culture. There’s much conjecture about how the upcoming East Coast reorganization will go down and what it will look like, with Grainge having locked in Monte and Avery Lipman, while both Sylvia Rhone and L.A. Reid are believed to have quite a bit of time remaining on their respective deals. Most expect that there will be some consolidation, and that Weiss will play a significant role, in collaboration with Grainge, in determining the changes to be made in terms of both infrastructure and personnel… Meanwhile, on the West Coast, what magic trick will Irving Azoff pull off this year, and how will Jimmy Iovine’s involvement impact the music of American Idol?… Whereas 2010 kicked off with an unexpected bang behind four straight six-figure debuts in Ke$ha, Vampire Weekend, Hope for Haiti and Lady Antebellum, this January resembles a black hole, as the majors have failed to put even one major brand in play. If anything, the picture for February is even more distressing. The Grammys take place on the eve of Valentine’s Day, and nothing on the schedule has the appeal of last year’s perfectly timed Sade release. The first chance for a big score won’t come until March, when Cash Money/Universal Motown releases Lil Wayne’s Tha Carter IV, which prognosticators are saying could bow in the neighborhood of 750k, and Jive/JLG comes with Britney Spears; the Kanye West/Jay-Z joint project may also drop that month… Names in the Rumor Mill: Robert Morgado, Michael Fuchs, Andy Lack, Rolf Schmidt-Holtz, Guy Hands, Eric Nicoli and Roger Faxon.
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