Time Warner Selling Warner Music to Bronfman
A group of investors led by Edgar Bronfman Jr. scored a victory in its bid for Time Warner Inc’s Warner Music today, signing a $2.6 billion deal to buy its recorded music and music publishing business.
The Bronfman Group beat out an estimated $1 billion bid by EMI for the recorded music portion of the business.
By choosing the Bronfman bid, Time Warner is forsaking as much as $300 million in cost savings it could have realized by combining with EMI.
On the other hand, Time Warner is getting more cash up front by selling the entire business, which includes the music publishing company, and will have an easier path to regulatory approval. In the past, European and U.S. regulators have frowned on consolidation within the music business.
“It would have taken many months to complete a deal with EMI,” Time Warner Chief Executive Dick Parsons told Reuters in an interview. The Bronfman deal is expected to close within 60 days, the company said.
Bronfman has had long ties to the music business, first as a songwriter for the likes of Dionne Warwick and Celine Dion and later as head of Seagram when he bought entertainment group MCA from Japan’s Matsushita for $5.7 billion. On his watch, the renamed Universal Music bought Polygram, creating the world’s largest record company.
Here’s an interesting list of key facts on Warner Music:
Ranking: The world’s fourth biggest music company after Universal Music, Sony Music and EMI Group Plc.
Artists: Madonna, Alanis Morissette, R.E.M., Missy Elliott, Red Hot Chili Peppers, Enya, Bjork, The Darkness, Kid Rock, Eric Clapton, David Gray, Faith Hill, Linkin Park, Michelle Branch.
Top selling album in 2002: Red Hot Chili Peppers “By the Way.”
Labels: Warner Bros., Atlantic, Elektra, Rhino, Word.
Revenues: $4.2 billion for year to end December 2002.
Global market share in 2002: 11.9%.
Warner Music is part of Time Warner and sold its DVD/CD manufacturing business to Cinram International Inc. for $1.05 billion last month.