BIZ BUZZ: Usually when a big corporate...

BIZ BUZZ: Usually when a big corporate deal goes down in the entertainment industry, the pundits have answers to the whys and wherefores before the day’s done. But the purchase last week of Virgin Records by Thorn EMI for a whopping $973 million has the industry and Wall Street experts scratching their heads. Why was EMI willing to pay Virgin founder Richard Branson that much--reportedly at least $200 million more than any other company had bid?

Some industry sources view the Virgin acquisition as a good strategic move for EMI. Others suggest that no matter how many records the Rolling Stones, Janet Jackson and Paula Abdul sell in the years ahead, EMI will never turn a profit on the pact. Several insiders speculated that Thorn EMI would use the Virgin deal to sweeten a planned public offering of its music division, asking as much as $5 billion before the end of 1992.

“You might ask yourself why no other major company chose to outbid Thorn EMI on Virgin or why nobody else even seriously entered the hunt,” one prominent official told Pop Eye. “The catalogue is not very deep. Much of the publishing will run out soon. The fact is they’re attempting to build market share for an eventual spin-off of the music company and a cash-out.”

Another theory is that Jim Fifield, EMI’s chief executive officer and president, may try to raise the money from investment bankers on his own, buy the music company from Thorn EMI and then take it public.

“Either way,” another executive said. “The public is going to pay the freight on this one.”