Universal Music CEO Open to Asset Sales, Commitments to Seal EMI Deal
Lucian Grainge says he is "extremely open-minded" about "behavioral remedies as well as divestitures” to get EU approval for the acquisition of the recorded music business.
LONDON - Vivendi's Universal Music Group is willing to sell assets and make commitments about its future dealings with digital start-ups, independent labels and larger rivals to win regulatory approval of its proposed acquisition of the recorded music arm of EMI, UMG chairman and CEO Lucian Grainge told the Financial Times.
European regulators have in a recent filing of concerns about the $1.9 billion deal raised fears that UMG's market share could exceed 50 percent in some countries. The company, whose artists include Lady Gaga, last week filed its response after getting a couple of extra days to do so.
Sources said that Vivendi and UMG have in recent weeks refocused their effort to win regulatory approval by signaling willingness to make concessions.
“I’m extremely open-minded about working with the [European] Commission in the context of behavioral remedies as well as divestitures,” Grainge told the FT in his first interview since unveiling the bid in November.
The paper said UMG has told the European Commission that it would increase investment in developing new artists across its own and EMI's labels.
The music giant will also propose to regulators in the coming weeks a “manifesto” for restoring music industry growth, it reported.
Asked why UMG needs to acquire part of EMI, Grainge told the FT: "I refuse as the industry leader to accept steady decline."
He decided to skip this week’s gathering of media and tech moguls in Sun Valley, Idaho to focus on the regulatory review. “I reluctantly decided it would be best if I were in a European timezone,” he said.
UBS analyst Polo Tang said in a report Wednesday that Japanese regulators approved the deal on Tuesday.
He lauded Grainge and Vivendi for focusing on pushing the acquisition through. But he also said: "One of the key issues here for Vivendi though is to get the deal approved with the smallest possible amount of disposals as the more asset sales they have to do the less benefits they can get out of the merger."
So far, Vivendi has committed to €500 million of asset sales ($615 million). "We believe Vivendi could be forced to more concessions to obtain the regulatory approval," Tang said.