Universal backed over EMI takeover
Universal Music Group has won the qualified support of two North American artists' unions for its proposed 1.9 billion US dollars (£1.193bn) acquisition of the recorded music division of the UK's EMI Group Ltd.
The unions gave their conditional backing in letters sent last week to the Federal Trade Commission.
In their letters, Sag-Aftra and the American Federation of Musicians said they would support the deal if there were adequate mechanisms to ensure that Universal complies with its commitment to re-invest in artist development.
EMI is home to the recorded music of The Beatles, as well as American artists such as Norah Jones and The Smashing Pumpkins. Universal artists include Rihanna, Lady Gaga and U2.
"It has been wrenching to watch EMI wither" as its former private equity owner Terra Firma cut costs, wrote Kim Roberts Hedgpeth, Sag-Aftra's co-national executive director. She urged regulators to examine Universal's commitments to artist development.
"Should the commission be satisfied that there are adequate mechanisms to ensure compliance with those commitments, we respectfully request that it look favourably on Universal Music Group's stewardship over EMI," she wrote.
Universal said in a statement it was "delighted" that the unions took a positive view of its plans.
In late 2010, Terra Firma defaulted on the 5.5 billion US dollars (£3.45bn) in debt it amassed in its 2007 purchase of EMI. Lender Citigroup foreclosed on the storied recording label in February of last year, and agreed to sell it in two parts for 4.1 billion US dollars (£2.57bn) in November.
Universal, a division of France's Vivendi SA, agreed to buy the recorded music side. A consortium led by Sony/ATV agreed to buy the publishing assets for 2.2 billion US dollars (£1.38bn).
That has sparked fears of market dominance. On the recording side, the purchase would give Universal about a 40% market share in the US, towering over Sony Music Entertainment at 29% and Warner Music Group at 19%. It will also be among the world's largest music publishers.