Universal Music chairman in exit talks

By Andrew Edgecliffe-Johnson  and Ben Fenton  1/24/11 Financial Times

Doug Morris, chairman of Universal Music, is in talks about an early exit from his contract with Vivendi, Universal’s French owner, to allow him to become chairman and chief executive of the rival Sony Music Entertainment, according to two people familiar with the negotiations.

Sony wants Mr Morris to start in April, as Rolf Schmidt-Holtz, chairman and chief executive of its recorded music division, is due to leave on March 31. However, the earliest departure date Mr Morris’s French employers will countenance is July, these people said, while a Vivendi official noted that Mr Morris, 72, was under contract until the end of the year.

A third person familiar with the discussions cautioned that no agreement had been signed and no announcement was imminent. Universal, Sony and Sony Music declined to comment.

A delay to Mr Morris’s long-rumoured arrival could require Sony to ask Mr Schmidt-Holtz to stay longer, or to appoint an interim executive to lead the number two recorded music company.

The tug-of-war between Sony and Vivendi comes as Sony Music and Universal are watching potential auctions at their smaller rivals, EMI and Warner Music, with concern that a combination could create stronger competition, and hope ownership changes may shake out assets they could add to their own portfolios, or allow them to lure away worried artists. Neither company would be allowed to buy EMI or Warner’s recorded music assets in full, but they could buy individual catalogues and countries.

Sony ATV, a music publishing joint venture between Michael Jackson’s estate and Sony, has looked at the Warner-Chappell publishing business.

Warner Music has appointed advisers to weigh offers for some or all of the company, but also covets EMI, which will fall into Citigroup’s control in July unless Terra Firma, Guy Hands’ private equity group, can find at least £100m ($160m) more to put into the British company he bought on the eve of the financial crisis in 2007.

The prospect of two music groups changing hands has attracted attention from private equity groups including Kohlberg Kravis Roberts, Permira and Apollo – and every large rival music publisher and recorded music company. However, discussions are at an early stage and initial proposals – including some between Mr Hands and Warner – have lacked financial detail.

Jean-Bernard Levy, Vivendi’s chairman, was asked at a music industry conference in Cannes whether Universal would want any parts of EMI, but joked: “Not the debt.”

Mr Levy stoked speculation that Spotify, the European digital music service that has so far signed up only Sony Music for a US launch, may be close to agreement with Universal, saying he expected Spotify “to find agreements with all its partners that it could launch as early as possible in the United States”.

He also hinted at plans for Universal to expand in emerging markets, noting recent music deals with mobile operators in Brazil, India, the Middle East and Singapore.



Tags: ,

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: