With Universal finally completing the protracted takeover of
EMI, the music world watches on with bated breath to determine the business acumen
of Universal’s chief Lucian Grange. As a heads up, Grange has bold plans for
the mega music label.
In a move best described as entrepreneurial, Grange will
launch a new imprint [Virgin EMI] for new and unsigned British acts, as well as
launching a UK-version of the iconic North American label Capitol Records.
Some may scratch their heads at the rationale behind the
huge investment, however we need to dig deeper to discover as to how Grange can
budget for such a risk. It’s all about timing…
In late 2011, Grange commenced his full acquisition of EMI
on the condition that Universal would pay Citibank [the appointed Receiver of
EMI] their asking price regardless of the European Commission’s anti-trust
investigation of the transaction. History tells us that Universal was forced to
offload the Parlophone label to Warner Music, albeit the global equity markets
began to rally to the benefit of media stocks. The end result is that Grange
has acquired two-thirds of EMI for fifty percent of the 2011 asking price.
Grange is both a traditionalist and a visionary when it
comes to the music business. Universal controls the sound recordings of artists
ranging from the Beatles to Motown acts to Eminem; this is a guaranteed cash
flow for generations to come. At the same time, the 2012 “Gangnam Style” frenzy
has inspired Grange to realise how huge profits can be made in music by
employing new and different media to promote popular artists.
Guy Hands [former EMI boss] was a private equity specialist,
whereas Lucian Grange has spent his entire career working for record labels.
Hands paid far too much for EMI in the middle of global financial unrest,
whereas Grange appears to have timed the closure of this acquisition for a good
price and at a time when recorded music sales have displayed a positive
turnaround. The music industry has changed forever, however the industry still
requires well-credentialed music people to run a corporate music label.
