IS WARNER/CHAPPELL ON THE BLOCK?

Executives from BMG Rights Management, the pubbery backed by private equity firm KKR, gathered in New York this week to discuss bidding for Warner/Chappell should regulatory agencies force the new owner to divest itself of certain assets.

BMG would like to bulk up its holdings or sell them, while UMG and Sony/ATV would presumably also be interested bidders if Warner/Chappell should come on the market.

The commonly accepted scenario is that Blavatnik would like to make a play for EMI, which Citigroup is expected to soon put on the market with a price tag near or even more than the $3.3 billion the Russian entrepreneur paid for WMG, with a clear cost savings from combining the #3 and #4 music groups in the world. To make that happen at regulatory, Blavatnik will have to divest some assets after winning approval in the U.S. this week. He is expected to close the deal in late summer once he gets clearance in Europe.

According to a source, Citigroup could fetch between $3.3 billion and $4 billion for EMI because of its size globally. Guy Hands' private-equity firm Terra Firma paid $4.7 billion for EMI back in 2007.

Citi is expected to start shopping EMI once it goes through the music group's books, although some indicate it might also be waiting for Warner to complete its sale process.

While Blavatnik is assumed to be the highest bidder for EMI, the regulatory issues associated with a Warner combination could deter Citigroup, which will want to execute a quick deal.