Viacom in the running for pounds 5bn EMI

VIACOM, the US media and entertainment group, is emerging as a leading contender to bid for Thorn EMI's lucrative pounds 5bn music and retail division. The business is in effect up for grabs following Thorn's recent decision to seek a demerger of its rental division early next year.

Last week, Viacom announced plans to slash its borrowings by $1.7bn (pounds 1.1bn) by spinning off its cable television operations to rival Tele-Communications Inc (TCI).

Viacom, which owns the MTV music channel, incurred huge debts after buying the Paramount film studios and Blockbuster video stores. But a series of asset disposals, including the sale of Madison Square Garden in New York for more than $1bn (pounds 625m), have helped transform the balance sheet, enabling Viacom once again to challenge Rupert Murdoch's News Corporation in the race to become the world's premier supplier of entertainment software.

According to a Viacom spokesman in New York, the TCI deal reduces Viacom's net debt to $8bn (pounds 5bn), equivalent to 40 per cent of its current stock market capitalisation.

The spokesman declined to comment on whether Viacom is interested in taking a minority stake in EMI or acquiring it outright. But Frank Biondi, Viacom's chief executive officer, has made no secret of the fact that he is keen to enter the music business, either from scratch or through acquisition. "We are looking at a number of options," the spokesman added.

Analysts say the EMI record label, with labels ranging from Virgin and Chrysalis and big artists from the Beatles to Blur, would make an ideal fit for Viacom.

"A deal with EMI would certainly make sense if Viacom can leverage it," says a stockbroking source at Salomon Brothers in New York.

In particular, access to Viacom's music and video stores, coupled with the MTV pop channel - the most powerful medium in the music world - would allow EMI to increase its share of the US record market, the largest in the world.

"EMI lacks critical mass in the US," says Greg Feehely, leisure analyst at Kleinwort Benson. "Its main problem is the need to push volumes through other distribution channels. We reckon their market share of the North American market has fallen to 8 per cent from 12 per cent last year." He notes that Viacom's strong retailing presence in the US would also tie in with EMI's plans to expand the HMV music chain and Dillons bookshops.

It is unlikely that EMI's attractions will be lost on Viacom, either. EMI is the world's only free-standing record major. The other four big hitters are tied up in larger media and entertainment groups. BMG is controlled by Bertelsmann, Time Warner owns Warner, Sony is part of its Japanese parent, while Philips has 80 per cent of Polygram.

EMI should fetch a high price, having turned in an average compound growth rate of over 30 per cent in the last five years.

According to Kleinwort Benson, EMI is worth pounds 4.8bn, while the Thorn electrical retailing division may be worth pounds 1.9bn. That implies a share price of pounds 15.50, compared with Friday's closing price of pounds 13.81, which values Thorn- EMI at pounds 5.9bn.

But Viacom is unlikely to have a free run. Disney Corporation and US music mogul David Geffen are also said to be interested.

News
news

Emergency call 'started off dumb, but got pretty serious'

Sport
Erik Lamela celebrates his goal
football

Argentinian scored 'rabona' wonder goal for Tottenham in Europa League – see it here

News
The cartoon produced by Bruce MacKinnon for the Halifax Chronicle-Herald on Thursday, showing the bronze soldiers of the war memorial in Ottawa welcoming Corporal Cirillo into their midst
news
News
peopleFox presenter gives her less than favourable view of women in politics
PROMOTED VIDEO
Voices
Funds raised from the sale of poppies help the members of the armed forces with financial difficulties
voicesLindsey German: The best way of protecting soldiers is to stop sending them into disastrous conflicts
News
The Edge and his wife, Morleigh Steinberg, at the Academy Awards in 2014
peopleGuitarist faces protests over plan to build mansions in Malibu
Property
One bedroom terraced house for sale, Richmond Avenue, Islington, London N1. On with Winkworths for £275,000.
property
Voices
Nigel Farage has backed DJ Mike Read's new Ukip song
voicesNigel Farage: Where is the Left’s outrage over the sexual abuse of girls in the North of England?
News
i100
Arts and Entertainment
Taylor Swift performs at the 2014 iHeart Radio Music Festival
musicReview: 1989's songs attempt to encapsulate dramatic emotional change in a few striking lines
News
Mario Balotelli has been accused of 'threateningly' telling a woman to stop photographing his Ferrari
peoplePolice investigate claim Balotelli acted 'threateningly' towards a woman photographing his Ferrari
Arts and Entertainment
Paul Anderson plays Arthur Shelby in Peaky Blinders series two
tvReview: Arthur Shelby Jr seems to be losing his mind as his younger brother lets him run riot in London
News
ebooksAn unforgettable anthology of contemporary reportage
Voices
Don’t try this at home: DIY has now fallen out of favour
voicesNick Harding, who never did know his awl from his elbow, is glad to see the back of it
Arts and Entertainment
Miranda Hart has called time on her award-winning BBC sitcom, Miranda
tv
Sport
Phil Jones (left) attempts to stop the progress of West Bromwich Albion’s James Morrison on Monday
Chelsea test can be the making of Jones and Rojo, writes Paul Scholes
Arts and Entertainment
Saw point: Bradley Cooper and Jennifer Lawrence in ‘Serena’
filmReview: Serena is a strangely dour and downbeat affair
Life and Style
The Zinger Double Down King, which is a bun-less burger released in Korea
food + drinkKFC unveils breadless meat beast
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Markit EDM (CADIS) Developer

£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

SQL Developer with T-SQL, Watford, Hertfordshire - £350 - £360

£350 - £360 per day: Ashdown Group: SQL Developer with T-SQL, Watford, Hertfor...

Chief Financial Officer

120-150k: Accountancy Action: We are looking for an experienced CFO from a min...

IT Systems Business Analyst - Watford - £28k + bonus + benefits

£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...

Day In a Page

Wilko Johnson, now the bad news: musician splits with manager after police investigate assault claims

Wilko Johnson, now the bad news

Former Dr Feelgood splits with manager after police investigate assault claims
Mark Udall: The Democrat Senator with a fight on his hands ahead of the US midterm elections

Mark Udall: The Democrat Senator with a fight on his hands

The Senator for Colorado is for gay rights, for abortion rights – and in the Republicans’ sights as they threaten to take control of the Senate next month
New discoveries show more contact between far-flung prehistoric humans than had been thought

New discoveries show more contact between far-flung prehistoric humans than had been thought

Evidence found of contact between Easter Islanders and South America
Cerys Matthews reveals how her uncle taped 150 interviews for a biography of Dylan Thomas

Cerys Matthews on Dylan Thomas

The singer reveals how her uncle taped 150 interviews for a biography of the famous Welsh poet
DIY is not fun and we've finally realised this as a nation

Homebase closures: 'DIY is not fun'

Homebase has announced the closure of one in four of its stores. Nick Harding, who never did know his awl from his elbow, is glad to see the back of DIY
The Battle of the Five Armies: Air New Zealand releases new Hobbit-inspired in-flight video

Air New Zealand's wizard in-flight video

The airline has released a new Hobbit-inspired clip dubbed "The most epic safety video ever made"
Pumpkin spice is the flavour of the month - but can you stomach the sweetness?

Pumpkin spice is the flavour of the month

The combination of cinnamon, clove, nutmeg (and no actual pumpkin), now flavours everything from lattes to cream cheese in the US
11 best sonic skincare brushes

11 best sonic skincare brushes

Forget the flannel - take skincare to the next level by using your favourite cleanser with a sonic facial brush
Paul Scholes column: I'm not worried about Manchester United's defence - Chelsea test can be the making of Phil Jones and Marcos Rojo

Paul Scholes column

I'm not worried about Manchester United's defence - Chelsea test can be the making of Jones and Rojo
Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

While other sports are stalked by corruption, we are an easy target for the critics
Jamie Roberts exclusive interview: 'I'm a man of my word – I'll stay in Paris'

Jamie Roberts: 'I'm a man of my word – I'll stay in Paris'

Wales centre says he’s not coming home but is looking to establish himself at Racing Métro
How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

A crime that reveals London's dark heart

How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?
Meet 'Porridge' and 'Vampire': Chinese state TV is offering advice for citizens picking a Western moniker

Lost in translation: Western monikers

Chinese state TV is offering advice for citizens picking a Western moniker. Simon Usborne, who met a 'Porridge' and a 'Vampire' while in China, can see the problem
Handy hacks that make life easier: New book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone

Handy hacks that make life easier

New book reveals how to rid your email inbox of spam, protect your passwords and amplify your iPhone with a loo-roll
KidZania lets children try their hands at being a firefighter, doctor or factory worker for the day

KidZania: It's a small world

The new 'educational entertainment experience' in London's Shepherd's Bush will allow children to try out the jobs that are usually undertaken by adults, including firefighter, doctor or factory worker