Sony (snejf) is buying EMI Music Publishing, putting into their hands a catalog of 2.1 million songs by Beyonce, Carole King and other artists while embarking on a new growth plan based on content and services.
The Japanese The company will buy about 60 percent equity interest from a consortium led by Mubadala Investment Co. for about $ 2 billion, Sony said in a statement. The Tokyo-based company already owns nearly 40 percent of EMI, operates the business and has been in talks to purchase the library in recent months.
EMI's extensive catalog will solidify Sony's position as the largest music publisher in the midst of a boom in broadcast services that have boosted ratings for music copyright. The transaction is the first major strategic move of Kenichiro Yoshida, who took over as executive director in April. It also unveiled a three-year plan on Tuesday that covers Sony's growing dependence on revenue from games and entertainment subscriptions.
"We are delighted to incorporate EMI Music Publishing into the Sony family and maintain our number one position in the music publishing industry," Yoshida said in the statement.
Sony is paying $ 1.9 billion for the 60 percent stake of the consortium's capital. With the cost of warrants for shares and management incentives, the price is $ 2.3 billion, said a spokesman for the company.
"This is certainly on the bright side of what we expected," said David Dai, an analyst at Sanford. C. Bernstein & Co. in Hong Kong. "It's a high price to pay for the strategy of changing from hardware to content."
In its mid-year plan, Sony predicted earnings growth in most divisions over the next three years, but offered a more conservative outlook that weighed on stocks. For example, it is projected that the annual operating profit in the game and networks will be 130 to 170 billion in March 2021, compared to the outlook of 190 billion in the current year. Sony shares fell as much as 3.7 percent, the biggest intraday drop since May 1 after the earnings announcement.
Mubadala said the EMI agreement is based on a business value of $ 4,750 million, exceeding its goal of obtaining at least $ 4 billion. That's twice what the group led by Sony, which also includes billionaire David Geffen, paid for the business six years ago. That makes the sale the biggest transaction in the music industry since the last time EMI changed hands.
The music publication has offered owners a constant source of cash, in contrast to the more cyclical music business, which depends on successes and retail sales. Sales have historically gone up and down depending on the success of new releases in a given quarter.
The growing paid streaming services of Spotify Ltd. and Apple Inc. have boosted the music industry's sales for three years in a row and attracted investors to splurge on catalogs. The labels have the song recordings, while the editors own the songs as they were originally written.
Last month, Sony revealed that it will record a gain of almost $ 1 billion from its stake in Spotify after the public debut of the broadcast service.