“Apple Computer Inc. is in discussions about buying Universal Music Group, the world’s largest record company, for as much as $6 billion, according to a published report Friday. Talks between Apple and Vivendi Universal, Universal Music Group’s parent company, have been held secretly for months, the Los Angeles Times reported. Apple may offer $5 billion to $6 billion for the music company before Vivendi’s April 29 board meeting, the newspaper said, citing sources it did not identify. When reached by the newspaper, representatives for both Apple and Vivendi declined to comment about the possible deal,” Associaed Press is reporting today.
The Associated Press continuies, “Apple, which has annual sales of about $5.7 billion, owns less than 3 percent of the desktop computing market but has indicated that supplying music to customers may be its future. The Cupertino, Calif.-based company has been testing a service that allows users to buy and download digital music for their computers. The service is expected to debut by the end of April. Universal reaps about $6 billion in sales annually from artists such as 50 Cent, Shania Twain and U2, but has seen operating profits slide 23 percent last year. It accounts for about 25 percent of all CD sales and has such top labels as Interscope and Def Jam. Vivendi first approached Apple CEO Steve Jobs in December, not long after its music executives visited Apple’s headquarters to view a demonstration of Apple’s new digital service, sources told the Times.” Full article here.
Chuck Philips, Los Angeles Times Staff Writer, writes, “In a pairing that would alter the architecture of the music business, Apple Computer Inc. is in talks with Vivendi Universal to buy Universal Music Group, the world’s largest record company, for as much as $6 billion, sources said. Such a seemingly unlikely combination would instantly make technology guru Steve Jobs, Apple’s co-founder and chief executive, the most powerful player in the record industry.” Full article here.
MacDailyNews Take: At first blush, we thought it was April 1st again. After thinking about it for five minutes, we still don’t see why Apple would want to take on a massive debt load to get an extremely fickle business (artists come and go and hit and flop regularly) that Apple can’t begin to understand. (It could be argued that with their current 3-4% market share Apple doesn’t even understand the computer business; read “marketing computers,” not making them). Sure, Jobs’ Pixar background lends understanding of the “entertainment” business, but, as Jobs surely knows, Pixar isn’t Pixar without John Lasseter. And staking $6 billion on an enterprise dependent upon talent that can walk out, suck, make hits or bombs at whim, or simply drop dead doesn’t seem wise to us. We see “Mac OS X on Intel” as happening before Apple buys Universal Music Group for $6 billion, but then again, this *is* Apple we’re talking about here…