UMG Concessions Reportedly Not Enough For EU Regulators
July 20, 2012
Universal Music is expected to offer greater concessions and sell off more assets in its quest to acquire approval of its deal to buy EMI Music. According to multiple reports, European Commission regulators have rejected UMG's initial offer to sell off assets, including Virgin Records, and wants Universal to put even more pieces of EMI and UMG up for sale before getting their approval.
UMG CEO Lucian Grainge will reportedly offer indie labels (represented by trade group IMPALA) a "first right" to bid on properties the label plans to spin off. Universal would also create a "funding mechanism" to help IMPALA with these purchases.
According to reports from the UK, Grainge has told IMPALA he is willing to sell off Chrysallis UK, Ensign, Mute, EMI/Virgin Classics, Jazzland and Sanctuary. However, a sell-off of Virgin Records appears to no longer be in the cards.
The Guardian reports that "Had the EC been sympathetic to Universal's initial offer of divestments, the regulator would have informally sounded out third parties in the industry, a process known as 'market testing.' But it is understood that the commission this week declined to market test the package that was on offer, prompting Universal to consider more sales of record labels or its catalog."
With this newest setback, the European regulators could now extend the process into September, further pushing back UMG's plans. The Guardian notes that when the UMG-EMI deal was announced last November, Vivendi agreed to pay out £1.2 billion 10 months after the fact, regardless of if the sale was approved. That deadline is coming up in September as well.