EMI sale could happen this year

Analysts offer scenarios at Billboard symposium

NEW YORK -- A sale of EMI's recorded music business to Warner Music Group could happen later this year given Terra Firma's financial challenges, music industry experts said here Thursday.

"I would auction off the music publishing business and dump the recorded music business to Warner," Sanford C. Bernstein analyst Michael Nathanson said when asked about possible deal scenarios on a panel at the Billboard Music & Money Symposium.

Timothy Komada, managing partner at venture capital firm Deep Fork Capital, echoed that "there could be more value" in separating EMI's recorded music business, and sell it to Warner, from the music publishing business, which may be attractive for private equity firms.

Tuba Amobi, analyst at Standard & Poor's Equity Research, said a deal is possible, because EMI owner Terra Firma is in "much more dire straights" financially than in the past. Warner Music similarly "sounds more willing to explore" an acquisition and could even go for the whole company, even though the resulting high debt leverage would be a challenge for a publicly traded firm.

Synergies could be "even more compelling" than those of the recent Live Nation-Ticketmaster merger, Amobi said.

The panel also gave its thoughts on the Live Nation-Ticketmaster deal.

"I'm blown away that that deal was approved," Nathanson said, calling it great for the companies.

"The lines are blurring right now," said Amobi. "The whole business model is changing." He said he is bullish on the merged entity's outlook and recommends investors buy the stock.

But Komada warned that the company could face more anti-trust reviews later. "They could be a victim of their own success," he said.

The panelists also suggested that mobile music firms may be attractive takeover candidates, while telecom carriers, ISPs and device makers may want to acquire music.