Sony Corp said on Tuesday it would pay about $2.3 billion to gain control of EMI, becoming the world’s largest music publisher in an industry that has found new life on the back of streaming services.
The acquisition is the biggest strategic move yet by new CEO Kenichiro Yoshida and gives Sony a catalogue of more than 2 million songs from artists such as Kanye West, Sam Smith and Sia.
The deal is part of Yoshida’s mission to make revenue streams more stable with rights to entertainment content — a strategy that follows a major revamp by his predecessor which shifted Sony's focus away from low-margin consumer electronics. “This investment in content intellectual property is a key stepping stone for our long-term growth,” he told a news conference.
The spread of the internet led to a shrinking of the music market from around 1999 to 2014, Yoshida said, but added that has turned around with the growth of fixed-price music streaming services.
“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 in a report.
The deal values EMI Music Publishing at $4.75 billion including debt, more than double the $2.2 billion value given in 2011 when a consortium led by Sony won bidding rights for the company. Sony, which has run the business since then, will buy a 60 per cent stake owned by Mubadala Investment Company, lifting its ownership to around 90 per cent from 30 per cent currently.
EMI currently commands 15 per cent of the music publishing industry which combined with its Sony ATV business would make the Japanese giant the industry leader with market share of 26 per cent, a company spokesman said. Other key players include Universal Music Group and Warner Music Group although their market share figures were not immediately available.
Yoshida, who took the helm in April, also beefed up Sony’s content offerings this month with a $185 million deal to take a 39 per cent stake in Peanuts Holdings, the company behind Snoopy and Charlie Brown.