News April 27, 2016

Publishing groups concerned over Sony/ATV, Jackson, deal

The agreement between Sony Corp and the Michael Jackson estate to buy the remaining stake in Sony/ATV has spooked other publishers. They argue that it will give Sony Corp outright ownership of the world’s biggest music publishing company.

The Brussels-based Independent Music Publishers Forum, which represents independent music publishers around the world, has expressed “concern” that the US$733 million (A$950.6 million) deal will result in a “concentration of catalogue in the hands of Sony ATV, a company which arguably holds some 30% of the music publishing market.” 

This, it says, would “put further strain on pricing and give Sony/ATV even more negotiating power on deal terms with over the top companies in the music market.”

The Sony/Jackson deal does not affect Sony’s 29% stake in EMI Music Publishing, or Jacksons estate’s 10%. Sony/ATV has annual revenue of $600-650 million ($778—842 million), made up of $600 million it generates, and the $125 million ($162.1 million) it makes for managing EMI Music Publishing.

IMPF President Pierre Mossiat confirms “IMPF intends to complain to the European Commission over the acquisition which needs to be carefully considered not only on the grounds of the distortion of the market it will cause, and in particular to independent music publishers, but also in the long run, the risk of reduced consumer choice and increased prices”.

Warner Music and indie labels trade group IMPALA have also expressed concern.

Warner Music has begun talks with competition regulators within the European Commission about the deal.

The European Commission has been tough with agreements which lead to possible market dominance. It forced Universal to sell a huge chunk of its assets, including Parlophone and Sanctuary, before it could buy EMI’s recorded music division.

In 2012, when Sony lead a consortium to buy EMI Music Publishing, it had to sell off Virgin Music Publishing and Famous Music UK as well as other publishing and songwriter catalogues. 

When Warner Music acquired Parlophone, it had to sell assets equivalent to 25%-33% of that label’s value. 

Impala wants the EC to force Sony to sell some of its catalogues before it green-lights the Jackson estate agreement.

Warner Music has declined to comment. But Impala’s Executive Chair Helen Smith stated, “The EU effectively set a limit three years ago due to concerns about prices. It is difficult to imagine how the Sony/ATV deal could secure approval from the European Commission. The buy out would reinforce the market power of the world’s biggest music publisher and give it control over more of the world’s music than before.”

After Sony/ATV, the second largest publisher is Universal Music Group, followed by Warner Music Group and BMG Music Publishing.

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