Indies Fight On Two Fronts

The breakup and sale of EMI leaves the indie music companies fighting on two fronts – opposing the recorded music business going to Universal and the publishing interests to a consortium led by Sony.

IMPALA, the Brussels-based organisation that looks after the interests of the industry’s independents, had set out its stall before either deal was done.

A day before Universal’s $1.9 billion deal to buy EMI’s record business Nov. 11, IMPALA reiterated its opposition to the number of major music companies being reduced from four to three.

Within hours of that deal being done, it released another statement expressing confidence that the European regulators would block it, despite Universal offering to sell off parts of it for about euro 500 million.

IMPALA executive chair Helen Smith said IMPALA would take a similar course of action if Sony completes the purchase of EMI publishing, which it has agreed to do for about $2.1 billion.

BMG Rights Management is believed to be the runner up for the publishing interests.

In the case of Universal, regulatory scrutiny will be based on the fact that European commissioners ordered the Vivendi-owned company to sell off assets when it bought BMG’s publishing.

The commissioners took the view Universal already controlled too much of the global music market.

European and U.S. regulators may take different views on the deal, although in the past it’s a situation they tried to avoid. EMI’s share of the American record business is less than 10 percent and market dominance may be less of a factor.

In Europe the regulatory authorities are also to some degree bound by their previous statements regarding market dominance in the cultural sector.