Universal Music is revaluating their stance on their deal to purchase EMI Music, as competitors continue to suggest that cuts to make the label less monopolistic don’t go far enough. Universal agreed to buy EMI from Citigroup Inc. last year for $1.9 billion, but may end up with an even smaller label on their hands if the European Commission continues to “rip the heart out of the deal” and force Universal to sell EMI to a new buyer.
Universal Music recently met with the European Union to discuss if the offer to sell 60% of EMI’s European assets would satisfy competition concerns, but a few third parties looking at the proposals feel that the cuts still don’t go far enough in reducing EMI’s presence in some European markets. Universal may also have to lose global rights to EMI assets and even put more up for sale, making the label less attractive for Universal’s owner, French conglomerate Vivendi (who is said to be buried in massive debt and under pressure to improve earnings, facing a deadline to pay for EMI in September).“If the Commission rips the heart out of this deal then we would lose money on it,” said an unnamed senior executive at Universal in a report from This Is Money. “But we are not going to do a deal that does not make sense.”

The executive goes on to mention that Universal was not the highest bidder for EMI, but the only ones who were prepared to take on the regulatory risk.

“Some of those bidders are talking to us about buying assets,” he said. “We would have no problem selling EMI but we’re not at that stage yet.”

It is believed that Warner Music may possibly be interested in purchasing EMI, as they’ve already tried a few times to do so. So would those who missed out when Universal agreed to buy EMI last year, said to include U.S. billionaires Ron Burkle, Ron Perelman and the Gores brothers.

Last month, Universal offered to sell EMI’s Parlophone Records (which houses Coldplay and Gorillaz among others) in the United Kingdom while being able to retain the Beatles catalog. It has also offered to sell the European rights to the music of Pink Floyd, among other offerings like selling the labels EMI Classics and Virgin Classics in places like France, Belgium, and Sweden.

Universal would hold a global market share of 40% (50% in parts of Europe) with this deal.