EMI Hearing Dives Into Digital

A recent Senate hearing regarding Universal and EMI’s proposed $1.9 billion merger explored the impact such a deal could have on the industry and whether the merged companies would exert too much control over the world of digital music distribution.

As expected, Live Nation Entertainment chairman Irving Azoff went to bat for the merger, along with Universal CEO Lucian Grainge and EMI CEO Roger Faxon.

The trio argued before the U.S. Senate Judiciary subcommittee on Antitrust, Competition Policy and Consumer Rights that it’s not the size of a label that matters, but the quality of music it produces. They explained it benefits to license as many digital music services as it possibly can.

“The thought that we would constrict our artists who we’ve invested in and construct the investment we make in EMI to dissolve the market would be commercial suicide,” Grainge said, according to the NY Times.

Azoff added the deal would, in fact, serve the interests of musicians, because Universal plans to revive EMI’s Capitol Records. He also reportedly accused Warner Music Group of attempting to block the merger out of self-interest, noting the company has had its sights on EMI for some time.

“Warner had the chance to outbid Universal in this process, but chose to walk away,” he said, according to The Wrap. “Now they regret their decision and are spending millions to fight the deal.”

Of course, WMG’s Edgar Bronfman Jr. responded and urged lawmakers to block the deal, The Wrap noted, along with Beggars Group’s Martin Mills and Gigi Sohn of advocacy group Public Knowledge.

“The fact of the matter is the merger would create a market-dominant position (for Universal) that could not have been achieved by Warner had Warner acquired EMI,” Bronfman said. “Granting this merger grants to Universal the sole right to determine what digital services live and what digital services die.”

The Federal Trade Commission and the European Commission are currently conducting antitrust reviews of the deal.