Universal Music Group’s chief executive told lawmakers on Thursday that the company’s proposed $1.9 billion merger with EMI would be good for the industry by clearing the way for the record company to breathe new life into EMI.
“(We would) reinvigorate EMI’s labels with Universal’s resources, expertise and innovation so that EMI can continue its tradition of discovery, producing and sharing with the world some of the greatest music of our time,” said Lucian Grainge, Universal Music Group chairman and CEO, at a hearing before the Senate antitrust subcommittee.
But opponents of the transaction — led by Warner Music Group director Edgar Bronfman Jr. — urged lawmakers to block a deal that would merge two of the four largest record labels, and according to critics, give Universal undue power over the distribution of music online.
“As more consumers demand their music through the Internet, the merged entity, a super label, has the inherent incentive and ability to maintain dominance by exerting its market power over this nascent market,” added Gigi Sohn, president and CEO of the Public Knowledge consumer watchdog group, who also wants regulators to block the deal.
Irving Azoff, executive chairman of Live Nation Entertainment Inc., said the merger -- which critics charge would give Universal more than a 40% share of the U.S. market for recorded music -- would serve the interests of musicians because Universal has made a commitment to revive EMI’s Capitol Records.
“There will actually be another record company for artists to explore, if they want to,” Azoff said.
Also during the hearing, Azoff publicly accused Warner, which he said had been trying to buy EMI for years, of trying to persuade the federal government to block the deal to give Warner another chance to buy EMI.
“Warner had a chance to outbid Universal in this process, but chose to walk away,” Azoff told the antitrust subcommittee. “Now they regret their decision and are spending millions to fight the deal.”
Said Bronfman, during the hearing: “The fact of the matter is that the merger would create a market-dominant position (for Universal) that could not have been achieved by Warner had Warner acquired EMI.”
“Granting this merger grants to Universal the sole right to determine what digital services live and what digital services die,” Bronfman added.
“We are absolutely committed to giving the artist as many opportunities to get their music to as many consumers and fans as we can,” said Grainge, in response, during the hearing.
“We would be insane not to license, develop and make our music available through as many platforms and retailers as possible,” Grainge added.
The proposed deal is currently under review by the Federal Trade Commission