Bronfman plans Warner Music IPO

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The Independent Online

Warner Music, the label taken private a year ago by a consortium led by the US media mogul Edgar Bronfman, will become a public company again under plans for an initial public offering valuing the group at about $5bn (£2.6bn).

Its consortium of private equity owners said yesterday in a securities filing they would float stock worth about $750m in Warner Music, the world's fourth-largest music company whose artists range from Madonna to Linkin Park.

The move marks a dramatic recovery for the New York-based Warner Music, which was sold last year by its parent Time Warner, for $2.6bn, to Mr Bronfman, the Seagram whisky heir, and his private equity partners.

At the time, Time Warner was regarded as having offloaded a poorly performing business in a sector that was widely seen to be ailing. Music piracy and competition from internet music providers were hitting sales and eating into profits.

The deal was also seen as a last-gasp chance for Mr Bronfman to rebuild his reputation, after his decision five years ago to sell the Bronfman family's Seagram empire to Vivendi Universal of France, for $34bn, in an all-stock deal turned out to be highly damaging. The Bronfmans lost billions of dollars as Jean-Marie Messier, Vivendi's chief executive, pushed the enlarged group towards bankruptcy. Mr Bronfman was appointed executive vice-chairman of Vivendi Universal, the parent of Universal Music, in December 2000 and resigned in 2002.

Since taking over as chairman and chief executive of Warner Music, Mr Bronfman has sliced $250m of costs from the business by axing 1,000 jobs, or 20 per cent of the workforce. Warner Music's Atlantic and Elektra labels were also merged, a new senior management team was installed and stringent cuts were imposed in finance, legal affairs and other back-office functions. The measures have put Warner Music into more robust health, and it justified the proposed IPO by citing strong cash flow, stable revenues and a roster of leading artists.

The IPO will provide Warner Music with the cash to do a deal many in the media industry have long expected: a merger with Britain's EMI.