Sony To Become World’s No.1 Music Publisher With $2.3 Billion EMI Deal

On Tuesday, new CEO Kenichiro Yoshida of Sony Corporation said that it would pay about $2.3 billion to attain control of EMI, thereby becoming the most prominent music publisher in an industry that found new life in streaming services in the world. The acquisition, which brings Sony a catalog of more than 2 million songs from artists such as Sam Smith, Kanye West, and Sia, is the biggest so far. The deal intends to take advantage of the great growth in streaming music services like Apple Music and Spotify which are a massive hit in the music industry.

It also is in favor with Yoshida’s mission to render revenue streams more firm after his predecessor caused for a major turnover that shifted the focus of the firm away from low-margin consumer electronics to the entertainment content and image sensors. Yoshida added, “This investment we are making in content, intellectual property is a key factor to step up for our long-term growth.” EMI currently requires 15 percent of the music publishing industry with which the current Sony ATV business would be making the Japanese the industry leader for the entertainment and electronics giant with  26 percent market share, a company spokesman said.

Other significant players include Warner Music Group and Universal Music Group although their market share figures were not instantaneously available. Under the deal,  EMI Music Publishing, which is already under the control of Sony will lift its ownership by purchasing the Mubadala Investment Company’s holding to roughly 90 percent from 30 percent. Damian Thong, Macquarie analyst said, “The digital streaming uprise is also enlarging the royalty revenues of the songwriters, with Sony gaining value as the manager of the copyrights backed by direct deals with Apple Music, SoundCloud, Spotify, Google Music and YouTube.”

Yoshida, who took the authority in April, said his strategy was to make stable cash flow a priority while reducing the impact of unstable cycles of sales of game consoles and other electronic gadgets. In co-operation with the strategy, Sony didn't give any target for operating profit for the group in a new three-year business plan which the company announced on Tuesday. Instead, the company said it's objective is to generate a total of 2 trillion yen ($18 billion) or even more in cash flow over the upcoming three years, up by 500 billion yen from the previous three years.

The most significant profit contributors set to remain will be the image sensors and Gaming. The operating profit of Sony at its semiconductor business, which involves image sensors, stemming to 160-200 B yen in the financial year which ends by March 2021, anticipated with a prediction of 100 billion yen for this year.  Yoshida said that the key lies in the expansion of the sensors’ applications beyond smartphones into automotive areas. But this financial year, the video games unit operating cost is expected to drop down ranging somewhere between 130 B yen and 170 B yen,  from 190 B yen forecast.

Source: Reuters

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