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Will Blavatnik and Cooper give Cohen the power to create a real alternative to Hertz and Avis?

I.B. BAD ON THE YEAR IN MUSIC, PART TWO: WMG & EMI

What Was the Big Four 12 Months Ago Is Now the Big Two, After Warner Music Was Sold and EMI Was Split in Two
WARNER MUSIC
A year ago, Lyor Cohen appeared to be the commander in chief in waiting for WMG; instead, the company was sold to Len Blavatnik’s Access Industries, and Cohen was moved sideways to the oversight of recorded music, which would have still been a big job had Warner been able to acquire EMI, while Blavatnik brought in turnaround specialist Stephen Cooper as CEO, replacing Edgar Bronfman, who has just left the company, his long-standing dream of a combined WMG-EMI shattered for good. At this point, it’s anyone’s guess what Cohen will do next.

According to Warner insiders, Bronfman’s fate was sealed when Scott Sperling and his fellow investors decided to sell and Blavatnik took the bait. In retrospect, it’s telling that Bronfman moved to London in 2009, as his bankers looked for an out—and T.H. Lee, et al., beat Citi to market by putting another major music company on the block before it could auction off EMI.

Almost 20 years earlier, Bronfman sold Dupont and in short order bought MCA, Geffen and PolyGram, the latter acquisition bringing him Island, Motown, A&M and Mercury, as well as a wildly successful European company. After spending more than $15 billion of the family money, he sold to Vivendi and lost the family yet more billions. He then bought WMG and thereafter made some bad decisions and at times misread the market. In this case, the bankers and principals got rich, while the common stockholders took the hit, as opposed to his family, which made for less stressful family Seders, if nothing else.

At Warner, Bronfman managed to shrink both records and publishing into smaller companies than they’d been when he bought them. Many believe the only smart move Bronfman made in 20 years was hiring Doug Morris and allowing him to build Universal into a monster.

Will key Warner Music executives migrate to Sony or UMG now that the EMI deal is kaput and the long-term strategic plan for Warner appears problematic? Or will Blavatnik and Cooper give Cohen the power to create a real alternative to Hertz and Avis?

Meanwhile, Rob Cavallo and Todd Moscowitz, who continue retooling Warner Bros. Records, are having a big December with Michael Buble and the Black Keys.

EMI
Roger Faxon
’s increasingly desperate efforts to convince Citigroup to keep the company intact came to naught when the bank dealt recorded music to UMG and EMI Music Publishing to Sony/ATV, headed by Faxon’s former boss and successor Marty Bandier, who is not likely to keep Faxon around once the acquisition is finalized. Could he have a future at BMG or Warner Music? In any case, Faxon has an $8m golden parachute to look forward to.

Severely handicapped by uncertainty and ineptitude at the corporate level, EMI’s U.S. company has won the respect of the entire industry by performing so effectively under the strong leadership of Greg Thompson.

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