Zelnik: Universal/EMI divestments must not benefit majors

Patrick Zelnik Naive IMPALA

IMPALA co-president Patrick Zelnik has told Music Week that independent labels must ensure divestments from Universal's proposed £1.2bn takeover of EMI don't fall into the hands of majors or private equity funds.

Zelnik famously spoke out over his support for the deal last week - so long as the right concessions make their way to the independent sector. This revelation followed an internal IMPALA meeting which saw over 50% of the board vote in favour of Zelnik's proposals.

When asked by Music Week if Lucian Grainge's initial offer to IMPALA - which included first refusal on €250m-worth of assets, such as Virgin Records, Chrysalis UK (without Robbie Williams) and EMI Classics - went far enough in terms of remedies, Zelnik said:

"I think this question is obsolete. There was a vote on this issue in an IMPALA board meeting in Barcelona on May 31,2012. Two thirds of the board members voted in favour of starting negotiating remedies because they felt the commission was unlikely to block the merger.

"But don't get me wrong, I do agree with Martin Mills on the fact that a Warner/EMI merger could have been more virtuous for the independents. But they did not make the deal. Universal did.

"In 2007, I was part of the team that led to the historic Warner IMPALA deal that, were it not for the disastrous bid by Guy Hands, would have led to a radically beneficial rebalancing of the industry. Through that deal and the stimulating vision and support of Martin Mills, Merlin got its initial funding.

"Now, the situation has changed. The digital revolution requires a new approach and we must all - majors and independents - find remedies which will accelerate the monetisation of contents on [the] Internet.

"Regarding divestments, they should also be extended to licensing and distribution. If the merger goes through a very significant part of their catalogue and artist roster should be licensed to or distributed by independent SME's who are struggling for life.

"In any case, divestment should not benefit other majors or private equity funds."

IMPALA's public position is still anti- the merger, and the trade body has rejected Grainge's initial advance - making Zelnik's position within the group possibly uncomfortable.

"I think IMPALA will survive with or without me," he said. "For 12 years,I have fought against the devastating effects of concentration. I have not changed my mind: no mergers without remedies."

Zelnick, founder of French indie Naive, has been reported as being in line for a management position at Virgin Records, in a bid funded by Richard Branson. When pressed ont he point, he said:

"Richard declared, in a statement, that he is keen to work on an arrangement with me to reacquire the company he created. But this is just fiction for the moment. In Richard' s case, fiction is always very close to reality."


Tags: universal, emi, UMG/EMI Merger, impala, Universal/EMI, Patrick Zelnik, Martin Mills

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