Record Label Changes Tune: Universal And EMI’s Remains Released From Captivity, Says ALEX BRUMMER
One of the most embarrassing private equity episodes was Guy Hands’ Terra Firma’s 2007 purchase of over £3bn of iconic British music producer and distributor EMI.
His reasons for the deal were sensible enough. Hands saw a major British asset, the owner of music ranging from Elgar’s Land of Hope and Glory to the Rolling Stones, languish under the onslaught of piracy and digital music and with no clear strategic direction.
The timing was terrible. On the eve of the great financial crisis, and with debt around EMI’s neck, it became too hard for Terra Firma to handle. After a bitter legal dispute, EMI fell into the hands of Citigroup.
Rock royalty: EMI, once home to the Rolling Stones (pictured), was sold to Guy Hands’ Terra Firma private equity outfit in 2007
Universal Music, run by British music entrepreneur Sir Lucian Grainge, convinced owner Vivendi that it was the opportunity of a lifetime and it showed.
After ten years in the hands of Universal, it has been scrubbed well and the whole thing is coming back to the public markets with a valuation of £28 billion.
Unfortunately, the IPO will be in Amsterdam and not London, so EMI isn’t really coming home.
But the complexity of its ownership, with French tycoon Vincent Bollore at the wheel, almost certainly played a part in the Dutch launch.
In anticipation of the free float, Vivendi has been busy selling strategic interests in Universal. A group led by Chinese tech investor Tencent took 20 percent. And controversial American billionaire Bill Ackman acquired 10 percent.
All this makes for an eclectic stock register. As for Bollore himself, he will still manage around £5.1 billion worth of shares in Universal. Grainge is also in line for a huge payday.
Aside from the financial shenanigans that surround it all, the upside is that Universal and the remnants of EMI have been released from captivity.
In the intervening period, the challenges of piracy and illegal downloads have solved themselves and authorized streaming is a huge money-waster.
Indeed, a whole new distinct industry has sprung up around songbook ownership, with the British Hipgnosis being one of the main players.
Universal, which has an array of stars including Taylor Swift and Justin Bieber, has the ability to ensure proper distribution and ensure royalties end up in the right hands.
They are counting on you, Sir Lucian.
The rise of the sneaker is one of the cultural trends of our time. As a shoe manager recently told me, the black sneaker supplants the brogue even in the most formal of settings.
JD Sports, where the Rubin family car Pentland dominates the stock register with a 55 percent stake, is benefiting greatly from this trend.
The company’s latest forecast of doubling profits to £750m in the fiscal year to January 29 sent shares soaring. At nearly £12 billion, it is now the most valuable independent retailer in the FTSE 100.
Remarkably for a British retailer, it is doing well in the US, in a market that has historically been a jean for British retail.
Its success is attributable to the gruff management style of Executive Chairman Peter Cowgill. At a time when Britain is under enormous pressure to improve its governance, JD Sports is drawing little attention to it.
It was the compensation committee boss, Andrew Leslie, who took the penalty for Cowgill’s £4.3 million bonus, rather than the boss himself.
JD Sports is seen by landlords as one of the least cooperative companies when it comes to settling outstanding rents during the pandemic.
Despite its financial strength, it still refuses to reimburse taxpayers for corporate rates suspended during the pandemic.
The fact that Cowgill doesn’t stick to conventions doesn’t seem to bother investors. As long as revenues are sprinting and profits are moving fast, bad governance is seen through.
Ken Costa is one of the wisest and most moral voices in British finance.
His claim in the Financial Times that smart chip maker Arm should remain in British hands must be heard because of its value to the UK’s tech ecosystem and national security.
Currently on the table is a £30 billion bid from US chipmaker Nvidia, which would undermine Arm’s role as a neutral supplier.
The deal is under investigation by competition authorities around the world.
London’s Refloating Arm would bolster its independence and enhance the city’s reputation for supporting brilliant technology.