Why did the EC give Sony’s acquisition of Sony/ATV such an easy ride?

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William-Hochberg-webThe following MBW blog comes from experienced US attorney William Hochberg (pictured) from law firm Greenberg Glusker – which represents major songwriters and music publishing interests, including the estate of Bob Marley, the Ray Charles Foundation and award winning songwriters and composers. MBW asked Hochberg to note down his expert thoughts on Sony Corp’s purchase of the Jackson Estate’s stake in Sony/ATV – which was this week cleared by the EC. It means Sony should soon be in full control of copyrights from the likes of Michael Jackson, The Beatles, James Brown, Oasis, Eminem, Taylor Swift and Ed Sheeran.


What a difference four years makes.

In 2012, the European Commission made Sony jump through hoops to purchase EMI for $2.2 billion, requiring it to spin-off Virgin and Famous Music catalogs, which competitor BMG happily bought up. 

Today, the Commission gives a green light with no conditions and the US Federal Trade Commissions is expected to follow suit.

This is a disappointment to smaller publishers who might have bid for spun off assets. It also either signals a decline in the value of publishing assets generally, or it shows that Sony/ATV got a relative bargain at $750 Million for half of the company.

This, even though Sony/ATV’s stake in EMI was not involved in the buy-back, reportedly, because it only involved Sony/ATV proper.

“While you may be seeing a decline in publishing value in the short term, it sure looks healthy when you take a long view.”

So while you may be seeing a relative decline in music publishing value in the short term, it sure looks healthy when you take a longer view.

Sony/ATV is a whole lot more expensive today than that day in 1985 when Michael Jackson acquired ATV music for $47.5 Million.

That’s almost a 16-time appreciation in 30 years.

But going back to why the Commission has gone easier on Sony this time than four years ago, I think it is because there’s a heightened recognition by governmental regulators in Europe and the US that the music business is tough and getting tougher, and they don’t want regulations to discourage further investment.

Also, the music publishing business is especially challenged because not only are they getting a much smaller piece of the streaming pie than record labels (reportedly 6:1 with Spotify, 14:1 with Pandora), but successful songwriters often don’t want to enter into straight publishing deals anymore.

“The music publishing business is especially challenged because not only are they getting a much smaller piece of the streaming pie than labels, but successful songwriters often don’t want straight deals anymore.”

They want to keep their copyrights and just do administration deals, which are not as lucrative or long-term for the music publishers, who want to acquire copyrights. Kobalt and Wixen, for example, which specialize in administration agreements, have benefited from the trend.

Huge congloms like SonyATV, UMPG and Warner/Chappell, not so much. They certainly have massive catalogs of classic hits, but they are challenged when it comes to signing new deals.

SonyATV’s acquisition of 100% of this massive collection of catalogs, without having to spin off any assets and setting themselves up with their sister record company as a one-stop because of their control share, makes it easier for them to compete and will attract more investment.

So is this good for songwriters?

Many songwriters will continue to turn away from the huge congloms in favor of smaller publishers or admin-only deals, but the old school music publishing technique of waving shiny jewels and large wads of cash in front of young, promising but broke songwriters to get them to sign away their copyrights to the publishers will continue unabated for the foreseeable future.


A wee legal note: Greenberg Glusker was in no way involved in the Sony Corp purchase of the Jackson Estate stake in Sony/ATV.Music Business Worldwide

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