Universal Music May Sell Coldplay Label Parlophone to Seal $1.9 Billion EMI Deal (Report)
LONDON - Vivendi's Universal Music Group is ready to sell British label Parlophone Records, the home of the Beatles and Coldplay, to win European regulatory approval for its proposed $1.9 billion acquisition of EMI's recorded music business.
The proposal to divest the iconic Parlophone label, reported by the Wall Street Journal, marks a shift in UMG's antitrust strategy as it has so far focused on selling more dormant labels and catalogs of older library music.
Universal though is unwilling to sell music by some key Parlophone acts, including the Beatles and Queen, the Journal said.
Coldplay could be the biggest act that it would have to give up, while Katy Perry could stay with UMG. She is an EMI star, but is signed to the company's Capitol Records label in the U.S., so could stay with UMG after a deal with EU regulators, the Journal said.
A UMG representative declined to comment on the report that cited sources, but a formal submission of the divestiture proposal to the European Commission could come on Friday or early next week.
Vivendi and UMG have been in extended talks with EU regulators about concessions that would help win approval for the EMI deal. Regulators have expressed concern about the combined company's market share.
UMG executives have in recent weeks signaled a willingness to sell some assets and promise certain behavioral remedies, such as vows not to abuse digital pricing power and the like.
UMG planned to offer a sale of Virgin Records to founder Richard Branson as a key divestiture. But European regulators signaled that this wouldn't be enough, according to the Journal.
EMI has owned Parlophone since the 1930s.
Potential buyers could include German media giant Bertelsmann, which exited the recorded music business in 2004, according to the Journal. It remains active in the music publishing industry via a joint venture with private equity firm Kohlberg Kravis Roberts. Their BMG Rights Management could buy Parlophone.
BMG Rights executives couldn't immediately be reached, the Journal said.
The paper said the possible sale comes after regulators originally told UMG that they wanted the music major to find ways to move current acts to competing labels as part of its concessions for the EMI deal. UMG argued that this amounted to treating artists like "secondhand cars," the Journal said.