If this latest effort to merge Warner Music Group and EMI goes through, the combined companies model could well be “never say never.” So what changed between last summer’s shutdown after a European court ruling lessened chances of approval? This time when WMG approached EMI it had a potentially valuable asset beyond cash or stock — an agreement from the Independent Music Publishers and Labels Association (Impala) pledging full support of a WMG acquisition of EMI before the European Commission and other regulatory bodies. According to a statement released by WMG Tuesday after EMI went public, that agreement covers guarantees by WMG:
— funding for Merlin, the indie global rights licensing platform announced last month at Midem,
— divestiture of some recorded music assets
— the rather nebulous promise to purse “various other behavioral commitments” that would help the indie sector and the”recorded music market as a whole.”
— IMPALA keeps its standing in other cases, maintaining “its position that the Sony/BMG and Universal/BMG transactions continue to raise competition issues unless suitable remedies are offered.”
WSJ (sub. req.): “While it would be up to the European Commission to rule whether an EMI-Warner merger is anticompetitive, Impala’s support makes approval more likely. U.S. antitrust authorities aren’t expected to object because EMI doesn’t have a strong position in the U.S.” As the Journal notes, the executive changes at EMI could help — the departures of Alain Levy and David Munns lessens potential rivalries. Also, I’d add, the appointment of John Gildersleeve as non-executive chairman and the shift of Sir Eric Nicoli to operations gives Bronfman someone new to deal with at the negotiating table.