Universal Music's future in doubt
By Chuck Philips
Business Reporter
July 9, 2002
Universal Music Group, the world's premier music company and home to such stars as Eminem and Pavarotti, may be headed for the auction block -- without a buyer in sight.
The sudden ouster of Vivendi Universal Chairman Jean-Marie Messier and the crash of the French media giant's stock has led company insiders and Wall Street analysts to predict that the new management will likely try to shed some of its $30 billion debt by spinning off Universal Music and other entertainment assets.
Had such an opportunity come just four years ago, the world's entertainment corporations would have been jockeying for a piece of the music property. Now, silence.
"For someone to step up and buy [Universal Music Group] right now, they would have to believe that the music business in its current form has a strong future ahead of it," said Michael B. Nathanson, an analyst with Sanford C. Bernstein & Co. "There is no one left who believes that."
Plagued by surging piracy, plunging profits and rebellion among its artist ranks, Universal and other music corporations are struggling to sustain a way of doing business that, analysts say, is on the verge of imploding.
Things are so bad that one of the biggest music firms, EMI Group, threatened this year to fire top executives who refused a 50 percent pay cut. Most agreed.
With the situation threatening to worsen, music corporations are scrambling to come up with some way to salvage the industry. One solution being debated would transform the world's largest labels into de facto management firms.
Companies including Sony Music Entertainment, Bertelsmann Music Group and Vivendi's Def Jam Group are considering a contract system under which labels would become "partners" in all aspects of the careers of newly assigned artists. The partnership would include concert tours, advertising sponsorships, and film and TV deals in the hopes of generating new streams of revenue.
Chuck Philips is a reporter for the Los Angeles Times, a Tribune Publishing newspaper.
Copyright © 2002, Orlando Sentinel
http://www.orlandosentinel.com/busi...070902jul09.story?coll=orl-business-headlines
By Chuck Philips
Business Reporter
July 9, 2002
Universal Music Group, the world's premier music company and home to such stars as Eminem and Pavarotti, may be headed for the auction block -- without a buyer in sight.
The sudden ouster of Vivendi Universal Chairman Jean-Marie Messier and the crash of the French media giant's stock has led company insiders and Wall Street analysts to predict that the new management will likely try to shed some of its $30 billion debt by spinning off Universal Music and other entertainment assets.
Had such an opportunity come just four years ago, the world's entertainment corporations would have been jockeying for a piece of the music property. Now, silence.
"For someone to step up and buy [Universal Music Group] right now, they would have to believe that the music business in its current form has a strong future ahead of it," said Michael B. Nathanson, an analyst with Sanford C. Bernstein & Co. "There is no one left who believes that."
Plagued by surging piracy, plunging profits and rebellion among its artist ranks, Universal and other music corporations are struggling to sustain a way of doing business that, analysts say, is on the verge of imploding.
Things are so bad that one of the biggest music firms, EMI Group, threatened this year to fire top executives who refused a 50 percent pay cut. Most agreed.
With the situation threatening to worsen, music corporations are scrambling to come up with some way to salvage the industry. One solution being debated would transform the world's largest labels into de facto management firms.
Companies including Sony Music Entertainment, Bertelsmann Music Group and Vivendi's Def Jam Group are considering a contract system under which labels would become "partners" in all aspects of the careers of newly assigned artists. The partnership would include concert tours, advertising sponsorships, and film and TV deals in the hopes of generating new streams of revenue.
Chuck Philips is a reporter for the Los Angeles Times, a Tribune Publishing newspaper.
Copyright © 2002, Orlando Sentinel
http://www.orlandosentinel.com/busi...070902jul09.story?coll=orl-business-headlines