“Warner Music Group Corp., the world’s third-largest recording company with such artists as Eric Clapton, Michael Buble and Paramore, is being sold for about $1.3 billion as a global decline in CD sales weighs down the industry,” Ryan Nakashima reports for The Associated Press.
“Len Blavatnik’s Access Industries is paying $8.25 a share and will take on about $2 billion in Warner debt and $320 million in cash. The total values the company at about $3 billion,” Nakashima reports. “The deal, announced by the companies Friday, comes as U.S. recorded music sales are half what they were about a decade ago. Gains in digital sales have started to flatten, and CD sales continue to fall. That means Blavatnik will have to cut staff and other expenses further and hope that a new wave of innovation will carry digital music sales higher.”
“Blavatnik is a former board member who was part of the group that bought the company in 2004. He has about a 2 percent stake in the company,” Nakashima reports. The sale ends a seven-year run by investors led by Chief Executive Edgar Bronfman Jr., who purchased the company from Time Warner Inc. with private equity backing for $2.6 billion. Those investors slashed payrolls and took other measures to cope with music’s decline. They took the company public a year later to help recoup their investment. There are now just 3,700 employees, down from 5,100 in late 2003.”
Nakashima reports, “The Russian-born Blavatnik will likely have to cut even more — so much so that billionaire Ron Burkle balked at pursuing the company past an initial round of bidding. Burkle worried that cuts might start to hurt Warner-signed artists he considers friends, such as Red Hot Chili Peppers, according to a person familiar with the matter.Bronfman will remain CEO after the sale.”
Read more in the full article here.
MacDailyNews Take: It just will not die! It will outlive us all.
[Thanks to MacDailyNews Reader “Ellis D.” for the heads up.]