Big Machine, founded by Scott Borchetta in 2005, may fetch more than $200 million, said the people, who weren’t authorized to talk publicly. Negotiations are at an early stage and an agreement may not be completed, they said. Universal Music Group also may enter the bidding, one of the people said.
Doug Morris, Sony Music’s chairman and chief executive officer since July, is recruiting hit-making producers. Last week, Morris hired Lukasz “Dr. Luke” Gottwald, who has 20 No. 1 songs, to start a new Sony label. Borchetta, with a roster of the biggest country acts, would run Sony’s Nashville, Tennessee- based operation as part of the sale, the people said.
“Expanding the music lineup is positive, and country music has a certain demand in the U.S.,” said Ryosuke Katsura, an analyst at Mizuho Securities Co. in Tokyo. “However, what the market wants to see is Sony turning around its TV business first, and the company may be better off focusing on that.”
The New York Times earlier reported Sony’s hiring of Dr. Luke and said Sony and Vivendi SA-owned Universal Music may bid for Big Machine and another label, Cash Money Records, home to rappers Lil Wayne, Drake and Nicki Minaj.
Sony paid $10 million to Dr. Luke and has committed another $55 million over five years to his label, Kemosabe Records, the people said.
Andy Kipnes, a spokesman for Dr. Luke, didn’t respond to messages seeking comment.
Universal Music, where Morris departed as chairman in March, is under contract to distribute Big Machine records through 2012, the people said.
Sony, based in Tokyo, is investing in its music business, which contributed $315.2 million in operating profit on $1.29 billion in revenue in the three-month period ended Sept. 30.
Earlier this month, Sony, Japan’s largest consumer- electronics exporter, forecast its fourth consecutive annual loss and slashed the annual TV sales target. After losing about 480 billion yen ($6.2 billion) in the past seven fiscal years from its TV business, Sony began reorganizing the business into three groups.
The maker of Bravia TVs is taking a 50 billion-yen charge for streamlining its main TV operation, which is estimated to lose 175 billion yen this fiscal year, Sony said Nov. 2.
Through its Sony/ATV Music Publishing partnership with Michael Jackson’s estate, the company has offered about $2 billion for EMI Group’s publishing operation, people said earlier.
Citigroup Inc. (C) is selling London-based EMI after it seized the company in February for falling out of compliance with loan covenants.
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