Warner will divest PLG assets to indies

Warner Music Goup has signed an agreement with IMPALA and Merlin which means it must allow independent music companies to buy, license or distribute a ‘significant portion’ of Parlophone Label Group assets or their equivalent in WMG-owned assets’.

According to sources, that amounts to assets worth around 25% of the proposed price Warner is willing to pay for PLG (£487m) – a concession from the major in order to keep the European Commission happy with the buyout.

When investigating Universal Music‘s acquisition of EMI Music, the European Commission found the resultant market concentration a concern, which was why UMG was forced to divest Parlophone Label Group. Now Warner is facing the same scrutiny for its proposed PLG buy, which will see assets from artists including David Bowie, Blur and Coldplay, hence the new deal with the indies.

Other measures designed to help rebalance the recorded music market will also be put in place including behavioural commitments and capacity-building initiatives for independents, which again will be implemented by Merlin and IMPALA.

Helen Smith, Executive Chair, IMPALA, said: “Having not blocked the sale of EMI, the result we have negotiated offers regulators the “best of both worlds” in strengthening the independents by bringing more scale into the sector and by creating a more effective challenger to the Universal Sony duopoly.

“Making sure our deal benefits labels of all sizes is a top priority and, by setting out the principles the parties agree are essential, we believe we have found a “blueprint” for a market where independent artists should have a more level playing field. It is great to see Warner’s commitment to the independent sector reach fruition in this way.”

Charles Caldas, CEO Merlin, commented: “We consistently said that the best result for our members was for the UMG/EMI transaction to be blocked outright. Once it became clear that this was not going to happen, and that we were going to be faced with further market concentration, we had a duty to ensure our members had the best possible chance to continue to compete.

“This opportunity, to grow into what would otherwise be an unbridgeable gap between the largest majors and the rest of the market, should improve their ability to do so.”

Stephen Cooper, CEO, WMG, said, “We are pleased to have entered into an agreement under which we will work together with IMPALA and Merlin to support and strengthen the independent music community. We believe this is an important step that will help to foster an environment in which the independent music community can continue to thrive and create new opportunities for growth, benefiting the music industry as a whole and all of its constituents. “

This agreement represents the culmination of a long-standing accord between Warner Music Group and the independent music community that concentration should be accompanied by measures to reinforce the independents which was first formalized when the parties agreed potential measures in the event that WMG acquired EMI Group in 2007.Music Business Worldwide

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