by Moses Avalon
It’s official, EMI has lost in court and it’s now only a matter of time before its assets are chopped up, dispersed and the famous Capital Records building in Hollywood goes condo. After EMI is dismantled there will remain only WMG, UNI and Sony as the remaining “Big Three” labels in the US and the UK.
The Silicon Valley giants are probably very excited today, since this means that there are only three major record distributors left to take over before they can finally buy up their catalogs and not have to deal with the RIAA or their stupid one-sided interpretation of the Copyright Act.
Yes, this is great day indeed for those who think music should be free because the Beatles recordings along with Led Zeppelin, Rolling Stones, and many others will probably soon be the property of an ISP giant, or computer company who will use them as loss leader to attract subscribers.
If you need to catch up go to the link below, but basically what has happened is that Terra Firma, who bought EMI in 2007, it seems paid a bit too much for the company and cannot pay CitiBank, the financier of the deal, under the terms of their loan agreement.
Rather than pay back the loan, or ask for a refinanced one, Terra Firma sued their bankers by asserting that CitiBank basically “tricked” them into borrowing $4 Billion from them to buy the faltering record company. The trick manifested, according to EMI lawyers, by CitiBank not disclosing that nobody else was interested in buying EMI at that price. Apparently Terra Firma never heard of a little thing called “Due Diligence.” Sounds like a lawsuit that only a music lawyer could come up with: you owe me because I didn’t do my homework and spent too much.
Ironically, a CitiBank executive said under oath that the record company made a bad deal and now they just don’t want to live with it; a cruel twist because usually it’s the record company telling the artist that very same thing.
A jury took less than five hours to agree that the suit was dumb and now EMI will very likely be foreclosed upon. Rumors that Terra Firma’s owner, Guy Hands, had raised some private money to help maintain the loans have turned out to be little more than wishful thinking.
Who are the likely buyers for EMI vestiges? My number one draft pick is, do-no-evil tech giant, Google. They have made substantial investment in their soon-to-be music subscription service. And while Warner and UNI will have their checkbooks out, financially, none of them can out bid Google, with their seemingly bottomless pit of cash, which, when pitted against WMG’s debt and UNI’s massive overhead, will be no contest.
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