Corporate money Crazy in Love with Music again as Sony EMI deal shows

The entertain and tech giant is paying twice what the operation was worth when it last changed hands six years ago

Pharrell Williams songs are published by EMI MP (Getty)

Sony’s paying a high price for 60 per cent of EMI Music Publishing, and the rights to 2.1m pieces of music including the back catalogues of artists ranging from Queen to Beyonce to Pharrell Williams.

The purchase price is listed at $2.3bn (£1.7bn) but it is also assuming $1.4bn of debt, which gives EMI MP an “enterprise value” of $4.75bn including the 30 per cent Sony already owns and the 10 per cent retained by the Jackson family estate.

To give that some context, it’s roughly twice what the business was worth when it last changed hands six years ago. The inflation in its value is a mark of spectacular revival of the music business that has been driven by subscription based streaming services such as Spotify and Apple Music.

Sony bought in alongside a consortium led by Abu Dhabi’s Mubadala Investment Company in that transaction.

The latter will, to quote one of Mr Williams’ more famous compositions, be very Happy with the price, which comfortably meets its return targets. But an “excited” Sony is equally Happy to pay.

The acquisition fits with the strategic goals of new CEO Kenichiro Yoshida, who took over from Kazuo Hirai earlier this year having worked closely with his old boss to revive the fortunes of the business, in that it moves Sony further into services and away from the fickle business of hardware.

Securing the controlling interest in EMI MP also means he can bring the operation fully into the Sony fold as a subsidiary and concentrate on working out how best to exploit the 100 years worth of popular songs he’s got his hands on alongside the extensive catalogue Sony already owns.

Streaming means music makes money again, lots of it, in a way big companies love. The subscription model makes for relatively low risk and predictable revenues. Cha ching!

With so much more of those set to flow into Mr Yoshida’s coffers he can experiment with further exploiting what he has to his heart’s content. Some have suggested a cross over with Sony’s gaming interests - which has been tried but with limited success up until now. He could also look at distribution alongside Sony’s other assets.

Whatever he does, now the company is healthy again Mr Yoshida can afford for a few of his initiative to, if you’ll forgive me for quoting one of his Queen songs, Bite the Dust.

Meanwhile the hammer will certainly fall, like another Queen outing, on plenty more deals like this because there’s nothing like one getting done to spark a whole raft of them, all the more so now corporate money is like Beyonce: Crazy in Love with music again.