One Down, Three To Go: The Music Biz Shrinks Yet Again, as Courts Close EMI
EMI has lost in court and it's now only a matter of time before its assets are chopped up
It's official, EMI has lost in court and it's now only a matter of time before its assets are chopped up, dispersed and the famous Capital Records building in Hollywood goes condo. After EMI is dismantled there will remain only WMG, UNI and Sony as the remaining "Big Three" labels in the US and the UK.
The Silicon Valley giants are probably very excited today, since this means that there are only three major record distributors left to destroy before they can finally buy up their catalogs and not have to deal with the RIAA or their stupid one-sided interpretation of the Copyright Act.
Yes, this is great day indeed for those who think music should be free. Because the Beatles recordings along with Led Zeppelin, Rolling Stones, and many others will probably soon be the property of an ISP giant, or computer company who will use them as loss leader to attract subscribers.
If you need to catch up go here, but basically what has happened is that Terra Firma, who bought EMI in 2007, it seems paid a bit too much for the company and can not pay CitiBank, the financier of the deal, under the terms of their loan agreement.
Rather than pay back the loan, or ask for a refinanced one, Terra Firm sued their bankers by asserting that CitiBank basically "tricked" them into borrowing $4 Billion from them to buy the faltering record company. The trick manifested, according to EMI lawyers, by CitiBank not disclosing that nobody else was interested in buying EMI at that price. Apparently Terra Firma never heard of a little thing called due diligence.
Sounds like a law suit that only a music lawyer could come up with: you owe me because I didn't do my homework and spent too much.
Ironically, a CitiBank executive said under oath that the record company made a bad deal and now they just don't want to live with it; a cruel twist because usually it's the record company telling the artist that very same thing. I wonder how they feel being at the other end of that pitch?
A jury took less than five hours to agree that the suit was dumb and now EMI will very likely be foreclosed upon. Rumors that Terra Firma's owner, Guy Hands, had raised some private money to help maintain the loans have turned out to be little more than wishful thinking.
Who are the likely buyers for EMI vestiges? My number one draft pick is, do-no-evil tech giant, Google. They have made substantial investment in their soon-to-be music subscription service. And while Warner and UNI will have their checkbooks out, financially, none of them can out bid Google, with their seemingly bottomless pit of cash, which, when pitted against WMG's debt and UNI's massive overhead, will be no contest.
And while it might seem that one of the remaining Big Three would desperately want the vintage catalog, it's Google that has the stronger motivation to over pay. With their music store just months away, what better way to say "See, we're better than iTunes," than to offer the one thing that iTunes has none of– the Beatles original recordings.
Can't you just already see the TV adds; "Its a Google Revolution."
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