Universal Music’s Purchase of EMI Backed by Two Trade Unions

Universal Music Group Inc.’s proposed purchase of EMI Group (EMIS)’s recorded music business could be good for music industry workers, according to two trade unions that praised Universal’s track record on labor agreements.

The unions, which represent musicians and recording artists, made the comments in letters to U.S. Federal Trade Commission Chairman Jon Leibowitz obtained by Bloomberg News. They urged the merger be approved if the FTC gives credence to Universal’s commitments to rebuild the 114-year-old U.K. record label.

Citigroup Inc. (C) agreed in November to sell London-based EMI’s publishing unit to Sony Corp. (6758) and its recorded music business to Vivendi SA (VIV)’s Universal, the world’s biggest record company, for a total of $4.1 billion. The proposed breakup of London-based EMI, which owns Abbey Road Studios, sells Beatles albums and publishes songs by the late Amy Winehouse, ended a nine-month bidding war.

Universal’s “compliance with and respect for its collective bargaining agreements has been positive when compared to its peer companies,” said the American Federation of Musicians in an April 12 letter to Leibowitz. “Sustaining the EMI legacy” under Universal’s oversight “would appear to benefit AMF recording musicians.”

Commitment to Music

The Screen Actors Guild and the American Federation of Television and Radio Artists, which recently merged into a single group known as SAG-AFTRA representing more than 150,000 members, said Universal has shown commitment to the music industry, investing in new artists and innovative musical genres, in a separate letter with the same date.

“For EMI to be left to further drift into oblivion, or for EMI to be acquired and sold off in pieces by capital investment speculators with no appreciation for, or commitment to, artists who fuel the recording industry, would ill serve the industry,” SAG-AFTRA said.

Universal is “committed to reinvesting in EMI to create even more opportunities for new and established artists, expand the marketplace with more music and support new digital services,” the company said in an e-mailed statement in which it welcomed the unions’ support.

Mitch Katz, a spokesman, confirmed the FTC received the letter from the American Federation of Musicians. Kim Roberts Hedgpeth, co-national executive director of SAG-AFTRA, confirmed by e-mail he had also written to Liebowitz.

Citigroup Seizure

Citigroup, the New York-based lender, seized EMI in February 2011 after investor Guy Hands, founder of U.K. private equity firm Terra Ferma Capital Partners, fell out of compliance with loan covenants.

Warner Music Group, owned by billionaire Len Blavatnik’s Access Industries Holdings Inc., failed in its bid to buy EMI and opposes the sale, Warner board member Edgar Bronfman Jr. said earlier this year.

Washington-based public advocacy group Public Knowledge last month urged the FTC to carefully scrutinize the transaction to see whether it hurts competition in the music industry. The sale of EMI assets would reduce the number of major record labels from four to three and could put control of the emergence of new distribution options for the entire industry in UMG’s hands, Public Knowledge said March 7.

The sale of EMI is also being scrutinized by European authorities, which last month extended their review to Sept. 6 following a request by the companies.

California Attorney General Kamala Harris is also probing the planned purchase of EMI, two people familiar with the situation told Bloomberg News last month.

To contact the reporter on this story: Sara Forden in Washington at sforden@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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