/// Meet Warner Music’s New Owner (For Now): Len Blavatnik [MediaMemo]
Warner Music Group has a new owner: Len Blavatnik, a Russian-born billionaire who already owned part of the music label. Next question: Will Blavatnik keep his new purchase, carve it up, or try to double down on his music bet? Reuters says Blavatnik’s Access Group has won the auction for Warner with an offer of $8.25, which will give the company an enterprise value of $3.3 billion. The Warner auction has dragged on for months, but reports for the last few days have put Blavatnik in the lead. [UPDATE: Warner has confirmed the deal via press release. It's all-cash, as expected, and will be financed in part by Credit Suisse and UBS. It's expected to close in Q3.] The deal will be a victory for the consortium of private equity groups that bought the company from Time Warner in 2004; they’ve already recouped their initial $2.6 billion investment via dividend payouts, so the purchase will be pure profit. And it’s also supposed to be good news for Warner CEO Edgar Bronfman Jr., who supposedly would like to keep running the music company; he has had a long relationship with Blavatnik, who had previously served on Warner’s board. (“They know that our people are the best in the business,” Bronfman told his employees via an internal memo this morning.) But Blavatnik’s win may not be the last move for Warner. Speculation will immediately move on to the status of EMI Music Group, which is currently owned by Citigroup but won’t be for long. Warner and EMI have been trying to merge for more than a decade, so it’s possible that Blavatnik will try to make that happen with another deal. In a related scenario, he may try to sell off part of Warner–most likely its Warner/Chappell publishing arm. A logical buyer for that asset would be the Sony/ATV music publishing company, which was also bidding for Warner this week. Side note: Blavatnik’s win, for now, also means that Internet star Sean Parker won’t own a piece of the music business; Parker was aligned with supermarket magnate Ron Burkle ‘s bid for Warner, and Burkle dropped out last week. Here’s Bronfman’s companywide memo announcing the deal: Dear Colleagues: Today marks a milestone in our evolution as a company. We have just announced that Warner Music Group is being acquired by Access Industries. This is strong validation that WMG is today one of the most progressive forces in music and recognition that we are well-positioned to succeed through the industry transition. Access is deeply committed to helping us achieve our fullest potential in the years to come. They value our rich history and understand that success relies on a relentless commitment to artist development and A&R. They know that our people are the best in the business.
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Meet Warner Music’s New Owner (For Now): Len Blavatnik [MediaMemo]