Abu Dhabi-based investment fund Mubadala will sell its majority stake in EMI Music to Sony for an estimated $2.3 billion, in a move that will give the multinational control of two million songs by artists such as Queen, Pink, Kanye West and Pharrell Williams.
Sony is set to acquire Mubadala Investment Company’s 60 percent stake, increasing its total stake to 90 percent in the music publishing company.
The deal comes as the music industry is enjoying a “resurgence” due to the rise of paid subscription-based music streaming services, according to Sony chief executive Kenichiro Yoshida.
“In the entertainment space, we are focusing on building a strong IP (intellectual property) portfolio, and I believe this acquisition will be a particularly significant milestone for our long-term growth,” he said.
Mubadala Capital — the financial investment arm of the UAE fund — first invested in EMI in 2012, partnering with Sony and the Michael Jackson Estate to acquire the company from a wholly-owned subsidiary of Citigroup.
Since then, the fund has worked with Sony’s music publishing arm — Sony/ATV — to reinvest in existing songwriters on EMI’s books as well as expand the company’s catalog by signing up new talent.
These efforts, coupled with the rise in online paid-for music streaming, has pushed up the value of EMI Music Publishing’s catalog, according to a May 22 statement from Mubadala.
“EMI Music Publishing represents one of the world’s largest and most diverse catalog of copyrights with iconic songs that span every decade over the last one hundred years,” said Adib Mattar, head of private equity for Mubadala Capital and chairman of EMI Music Publishing.
“Writers and artists only stand to benefit under consolidated ownership and should feel proud to be part of the Sony family. The sale of our consortium’s interest in EMI represents a milestone for Mubadala and our private equity business.” he said.
Analysts have also welcomed Sony’s move to acquire EMI Music as they see the Tokyo-headquartered firm look to increase its focus on IP content such as music, animation, movies and gaming.
“Sony’s shifting from hardware to more content and services,” Ray Wang, principal analyst at Constellation Research based in Silicon Valley, US, told Arab News.
“Sony’s new CEO Yoshida will be detailing his plans in the next few weeks, but we believe that they see that the music business is back on the rise and that the IP rights are playing a key role in creating subscription growth in the future,” he said.
“They have seen growth from services such as Spotify and iTunes and Amazon in the streaming market. Hence, the acquisition helps them remain the no.1 music publisher and copyright holder of music.”
YouTube is the latest company to join the online music streaming business, with plans to roll out its new service in the US, Australia, New Zealand, South Korea, and Mexico this month. As per other music services, a free account featuring adverts will be available as well as a “premium” paid-for subscription without any ads.
EMI Music Publishing posted revenues of $663 million and adjusted operating income of $181 million for the fiscal year ending March 31, 2018. It is the second largest music publishing company in the world by revenue.
