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Most hard-core observers insist that Warner Music is now a bona fide seller looking to beat Citi and EMI to market.
I.B. BAD: SO MANY QUESTIONS
For Example: Who Will Get EMI? Is WMG a Buyer or Seller? Will Vivendi Delay Doug Morris' Move to Sony Music? What Will UMG's East Coast Operations Look Like Post-Consolidation?
Less than a month into 2011, the entire music business is in a state of turbulence, and each day, it seems, brings with it additional, frequently unexpected plot twists as well as more unanswered questions. In the latest head scratcher, is Warner Music a seller, a buyer or both? Most hard-core observers of the game view the recent revelations in the N.Y. Times—that WMG has hired Goldman Sachs to shop the company but is still a prospective buyer for EMI—as Warner’s own spin. These observers insist that the company is now a bona fide seller looking to beat Citi and EMI to market. Some believe Edgar Bronfman would be perfectly willing to sell Warner/Chappell in order to gobble up all of EMI. Would such a maneuver pacify regulators, or would the reduction of four major music groups to three weigh just as heavily with the EU? Or would he need to sell WCM in order to have the funds to buy EMI as a whole?... Scott Sperling and his fellow players at T.H. Lee Partners have been in this deal far longer than the norm for private equity firms, so they may well have decided it’s time to get out while there may actually be a legitimate buyer in KKR/BMG. Does T.H. Lee also believe that the value of the music asset they acquired in 2004 will continue to decrease in value? Does Edgar Bronfman’s insider-trading conviction have any impact on what the primary investors will do, and how does the conviction affect his ability to run a publicly traded company, if at all? Was ownership anticipating the conviction?... KKR/BMG insiders believe it will be easier to buy EMI from Citi than WMG from Bronfman, because Citi is a distressed seller. Is Sony also a player in the upcoming sweepstakes for EMI and/or Warner/Chappell?... Roger Faxon is said to have a very strong relationship with Citi and could be instrumental in the negotiations with the bank. Does Faxon have a plan up his sleeve to save EMI? Some of his close associates believe he’ll be able to command a seat at the table with the new owners, whoever they may turn out to be… Citi’s reported invitation to Guy Hands to buy EMI a second time for £1.6 billion has the rank and file at the company alternately laughing hysterically and quaking in their boots. Would Citi sell EMI to another potential buyer for the same price, and what is the bank’s exposure? It appears that Citi’s price tag to Hands has set a new low for the value of both EMI and WMG. BTIG’s Rich Greenfield has put a “sell” rating on the stock, with a target price of $4.50. “Why would anyone buy Warner with the EMI auction looming?” he asks… When is Doug Morris getting out of his deal? Sony wants him to start in April, right after the exit of Rolf Schmidt-Holtz, but Vivendi appears to be putting up some resistance. One area of concern to all parties is Morris’ non-compete clause, which runs until his deal ends on Dec. 31. It’s still unknown when Vivendi will let him go—it could even be relatively soon—but Morris is said to be content no matter how the French choose to play it. Nonetheless, many of his friends and family have expressed their surprise at Vivendi’s seeming stonewalling considering that Morris so thoughtfully and responsibly handpicked and mentored his successor, devising what most consider to be an extremely well thought out succession plan, unlike those of most deposed monarchs. If he meets continuing resistance, Morris may simply wait until next Jan. 1 and start clean. But who would run Sony Music in the meantime?... All of this high-profile activity has put Epic far below the radar, but the label, which is being overseen by Rob Stringer following the exit of Amanda Ghost, has quietly scored this week’s #3 album with The Script. Will Stringer wait for Morris before attempting to apply the fix to the long-struggling label?... Surprising his staff, who thought he’d embarked on his next adventure, L.A. Reid is still running the show at IDJ following a red-hot Q4. What are the implications of Reid’s unexpected move, and how does Lucian Grainge view it? Are they in agreement about Reid’s recommitment, or is the IDJ chief freelancing?... According to those in the know, Barry Weiss is behaving in an extremely proactive manner vis a vis UMG, and speculation continues about the nature of Weiss’ plan for UMG’s East Coast operations. Universal Republic’s Monte and Avery Lipman were the first to get a new deal; how will Reid and Universal Motown’s Sylvia Rhone fit into the recalibrated and consolidated hierarchy?... Names in the Rumor Mill: Lyor Cohen, Marty Bandier, Mel Lewinter, John Branca, Ivan Gavin, Richard Sanders, Thomas Hesse and Kevin Kelleher
A HOLLY, JOLLY
HITS LIST
A December to remember (12/6a)
REVENUE CHART:
MALONE IS MONEY
Yet another post about Post (12/6a)
TAYLOR LIGHTS HER "CHRISTMAS TREE"
With lots of shiny tinsel (12/6a)
THE HAPPY WARRIOR OF THE RECORD BUSINESS
What a great guy (12/6a)
GRAMMY CHEW: WHO ARE THESE PEOPLE, ANYWAY?
Those who fail to learn from the past are destined to repeat it. (12/6a)
EGGNOG!
Ours is mostly bourbon.
MISTLETOE!
Delicious in salads.
CHESTNUTS!
Ours are roasting, but it could be these slim-fit jeans.
WEED!
An entire Christmas tree made of it. Is what we want for Christmas.
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