Shall Four Become Three?

WWhen Warner Music Group (WMG) was sold to Access Industries for a sum of $3bn in May, it was widely expected that the sale of EMI would follow suit.

Indeed, the February takeover of EMI by the New York-based Citigroup financial services company was never expected to last and it has come as no surprise that the smallest member of the leading record labels is now up for sale.

However, for the first time since WMG was put up for sale, the music industry Big Four — Universal Music Group (UMG), Sony Music Entertainment, WMG, and EMI — are preparing for the possibility of further concentration of the music market.

The sale of EMI is set to ignite a fierce bidding war, as was the case when Sony pushed Access Industries all the way in the bidding for WMG. The billionaire behind Access Industries — Len Blavatnik — would do well to increase his newfound title of music mogul by adding EMI to the Media and Telecommunications side of Access Industries.

EMI

Whether Sony, whose bid for WMG earlier this year faltered presumably because of the United States’ antitrust laws, can come to acquire EMI is another kettle of fish.

Yet surely the competitiveness of the music industry should be under scrutiny regardless of who should come to acquire EMI. The concentration of market power within the hands of four major players appears to be at odds with the United States Department of Justice Antitrust Division and its mission to “promote economic competition through enforcing and providing guidance on antitrust laws and principles”.

That the acquisition of EMI by any of the other members of the Big Four would surely represent an even greater challenge to competition in the music industry cannot be doubted; this would present a direct challenge to the Clayton Act (one of three major antitrust laws in the United States), which is a civil statute prohibiting mergers or acquisitions that are likely to diminish competition.

However, in the world of Lady Gaga albums being sold for $0.99 it is questionable whether the acquisition of EMI by another member of the Big Four is likely to result in an increase in prices to consumers.

Although the scope for debate is huge and the possibility of an outsider’s acquiring EMI a possibility, the question dominating the airwaves is whether the Big Four is to become the Big Three…