Britain Laments Loss of EMI as Its Musical Voice

Behind the applause and promises of “a marriage made in heaven,” there were audible sighs of regret in Britain last week over the proposed union between the country’s last great music company, EMI, and the music assets of its Yankee competitor, Time Warner.

“There’s no room for sentiment in this Information Age, but there is something slightly sad about seeing one of the last bastions of the British entertainment industry being swallowed up by its American rival,” commentator Gerald Mcauliffe wrote in the Scotsman newspaper.

The impending merger “removes the last British footprint on the global music map, ending an empire founded in 1897,” another commentator, Norman Lebrecht, lamented in London’s Daily Telegraph.

These were not yearnings for a lost empire, however, so much as acknowledgments that EMI had “lost its urge for independent survival,” as Lebrecht put it, and given in to globalization.

“Inevitable” was the word most often used to describe the deal that would reduce the number of major international record companies to four--Warner EMI, Universal, Sony and Bertelsmann.

EMI has been considered an obvious target for a takeover ever since merger talks with Universal Music, a subsidiary of Seagram, collapsed in 1998. The question was when, not if, a corporate marriage would take place in an era of mega-mergers. Just this month, British pharmaceutical firm Glaxo Wellcome and the investment-banking unit of Schroders announced mergers with U.S. firms.

So, rather than cry over the sale of the family jewels, as EMI’s bountiful catalog of Beatles, Rolling Stones and other music is seen, industry analysts focused primarily on the price while critics pondered the impact on music.

City of London analysts said the deal was a bonanza for EMI’s top bosses, who will be able to cash in EMI share options, but not so good for shareholders, who stand to gain a dividend of about $1.65 per share while losing control of the board.

“I am sure EMI shareholders would have hoped the company could have extracted a better deal with this kind of back catalog,” Jeremy Batstone of NatWest Stockbrokers said. “If they had really wanted to act in the best interest of shareholders, they would have held out for a higher offer.”

Batstone said he expected intense scrutiny and perhaps trouble from regulators over the deal.

“The worry is that this tendency to monopoly will limit consumer choice and deny new talent outlets,” the Independent newspaper wrote in an editorial.

Industry analysts said that EMI had bet on size and the Internet--Warner’s proposed merger with America Online--to survive in the fast-changing music market, but some music critics wondered if this would create a big hulk of a company unable to jump on new talent or to respond quickly to new fads.

“True, the Net is going to transform many aspects of entertainment, sales and marketing, but record companies seem to be remarkably quick to forget that they’ve been built on music and musicians,” wrote Adam Sweeting, who covers music for the Guardian newspaper.

Ben Knowles, an editor of weekly music magazine Melody Maker, concurred.

“What worries me is how a band can gain a footing in the music market,” Knowles said. “When Universal and [PolyGram] merged, a lot of names were dropped. The ones who lost out were the middle-market-ranking alternative kind of bands that pose more of a risk.”

“If EMI-Warner had done that five years ago, one of the first to go would have been Radiohead, who were not successful with their first numbers. Now they’re the biggest in the market. And probably bands like Oasis and Radiohead have greater longevity and so will survive better than shorter-term bands like R&B; girl groups,” he said.

Paul Trynka, editor of pop music monthly Mojo, worried that in the new world order regional tastes would be sacrificed to economies of scale--homogenized music that can be sold massively across the globe.

“We will lose individual local culture. Ultimately it will be like the movie industry, where movies are only accepted when the companies realize they can make money in lots of territories from Korea and Singapore to America and Europe,” Trynka said.

“You will get blander music because all the idiosyncrasies of the local music scene will disappear,” he predicted.

Nonsense, countered Ajax Scott, editor of Music Week magazine. The merger was forged by Warner Music Group chairman Roger Ames and EMI Recorded Music chief Ken Berry, two of the “great mavericks” of the music industry.

“If there was to be any marriage, these are the two people who could get along,” Scott said. “They represent the risk-taking entrepreneurial spirit of the music industry.”

Moreover, Scott noted, although the big guys are getting bigger, independents also are stronger and claim more than 22% of the market.

That’s right, said Alan McGee, founder of Creation Records, the label for Oasis, who is forming an Internet record company to be called Poptones. He called the merger “very positive” for independents.

“People are looking at this in a shallow, one-dimensional way. What’s really happening is that the Internet is buying into the music business, which has been conservative, filled to the brim with dull-minded individuals and slow to pick up on technology. The Internet companies are going to own music companies as content libraries,” McGee said.

“It’s the greatest time in 30 years to be independent. Bands will be getting dropped and new bands will not be getting signed, and in comes Alan McGee. There is a huge space for people like me to come in and pick up the slack,” he said.

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Janet Stobart of The Times’ London Bureau contributed to this report.