Universal Takeover

Universal Music Group

(from Billboard Magazine, October 6, 2012)  Universal Music Group is now the official owner of EMI and there has been major talk about how the two companies plan on merging into one.  EMI could not provide Universal Music Group with complete data until the deal was done on Friday, but sources say that there has been dialogue between the various functions and departments at the two companies.  EMI executives have said that they do not know if they have a vote when it comes to decision making, but they do have a voice, which they greatly appreciate since they are the acquired company.

Universal Music Group has already successfully merged record labels before.  In 1999, Universal Music Group bought PolyGram and put the two companies together and created an entity that was greater than the sum of its parts, with its market share growing year after year.  Universal Music Group used the Boston Consulting Group to help with the integration when they bought PolyGram and they are using them again to help integrate EMI.

The biggest speculation of the merge is the areas they plan on actually merging the companies together, and where they are going to continue to be separate.  Universal Music Group Chairman/CEO, Lucian Grainge, has already said that Capitol Records will continue to be a stand-alone label and he has promised to double its A&R budget, as well as that of the Virgin label.  Capitol will keep the Christian and country genres, along with Blue Note, under its umbrella.  Industry watchers believe that it is very likely Capitol Nashville will be merged with Mercury Nashville, creating a company that will have a 45% market share in country albums in the United States.  Universal Music Group’s position within the R&B market will be bolstered by the addition of EMI, giving them a 50% market share in R&B and a 60% market share in rap, a subgenre of R&B.  Universal Music Group’s rock market share is too difficult to determine because Parlophone and Chrysalis records are released under Capitol and their market share is hidden within Capitol’s overall market share.