Sony's $2.3B EMI Takeover Deal Faces Opposition From IMPALA

Per Reuters, IMPALA — an independent music body — has filed an official complaint with the European Commission (EC), opposing Sony Corp (ADR)'s SNE $2.3 billion takeover bid for EMI Music Publishing, citing high market concentration.

In May 2018, Sony made an offer to gain control of EMI, a multinational music publishing company, which would give it rights to songs from artists such as Drake, Sam Smith, Pharrell Williams and Sia, among others. The company has agreed to buy the 60 percent stake in EMI held by Mubadala Investment Company, to increase its stake to 90 percent. Last month, it acquired the estate of Michael Jackson's minority share of EMI.

According to IMPALA, Sony's control of EMI would give it monopolistic powers to do what it wants. The deal would give the Japanese conglomerate the capacity and influence to negotiate online rights for its recording and publishing catalogs, and promote its global collection on radio and in playlists. The successful buyout would almost double the number of songs Sony controls from 2.2 to 4.2 million compositions. There will be a risk that Sony might focus more on bigger-selling Anglo-American hits rather than local songs.

The transaction would also harm collecting societies, songwriters, composers and consumers who would then face higher charges for music services. The key area will be online market, where more concentration is likely to cause competition concerns. Sony would have massive bargaining power to leverage both publishing and recorded music markets, which it can exercise without the constraint of its current consortium partners.

The EC will assess the proposed transaction once Sony submits its formal notification. It will then decide upon whether the deal would lead to a significant impediment to effective competition.

Related Links:

Morgan Stanley: How Gaming Stocks Like EA Can Cash In On Streaming, Subscription Trends

Analyst Says Sell Spotify As Shares Are Too Expensive Right Now