Sony buys $2.3bn controlling stake with EMI

Sony says it has agreed to buy a controlling stake in EMI Music Publishing for $2.3 billion (£1.71billion) as it looks to boost its music portfolio.

 The deal means Sony will indirectly own about 90 percent of the record label and some two million songs by artists from Queen and Carole King to Alicia Keys and Pharrell Williams.

Sony said it was thrilled with the deal, which is subject to approval. The announcement comes as Sony unveils its mid-term plan.

EMI, which has its headquarters in London, is currently owned by a consortium led by Sony. It is one of the world’s biggest music publishing firms. Sony already owns 2.3 million music copyrights, including the Beatles catalogue.

The Japanese tech giant’s deal, announced on Tuesday with the Abu Dhabi-based investment firm Mubadala, will mean EMI will become a consolidated subsidiary of Sony.

Mubadala’s private equity arm has controlled and managed EMI Music Publishing on behalf of Mubadala and other third-party investors since 2012, Sony said. Before that, EMI was owned by Citigroup.

According to Kenichiro Yoshida, Sony’s president and chief executive said, “We are thrilled to bring EMI Music Publishing into the Sony family and maintain our world number one position in the music publishing industry,”.

 Yoshida said the music business had enjoyed resurgence over the past couple of years, driven largely by the rise of paid subscription-based streaming services.

“In the entertainment space, we are focusing on building a strong IP portfolio, and I believe this acquisition will be a particularly significant milestone for our long-term growth,” he said.

Sony is expected to unveil a three-year plan to move away from making any more gadgets and towards a bigger focus on gaming subscriptions and entertainment.

EMI currently commands 15 per cent of the music publishing industry which with the current Sony ATV business would make the Japanese entertainment and electronics giant the industry leader with market share of 26 per cent, a company spokesman said.

Other major players include Universal Music Group and Warner Music Group although their market share figures were not immediately available.

Under the deal, Sony, which already runs EMI Music Publishing, will lift its ownership to roughly 90 per cent from 30 per cent currently by buying Mubadala Investment Company’s holding.

“The rise in digital streaming is also expanding songwriter royalty revenues, with Sony capturing value as manager of the copyrights backed by direct deals with the likes of Spotify, Apple Music, Google Play, SoundCloud and YouTube,” Macquarie analyst Damian Thong said.