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Sony to become world’s No.1 music publisher with $2.3 billion EMI deal

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TOKYO (Reuters) – Sony Corp (6758.T) said on Tuesday it would pay $2.3 billion, in order to control the EMI, the world’s largest music-publisher in an industry that has found new life in streaming services.

Sony Corp’s new President and Chief Executive Officer Kenichiro Yoshida attends a press conference about your business plan in the company’s headquarters in Tokyo, Japan, may 22, 2018. REUTERS/Toru HanaiThe acquisition, which gives Sony a catalog of more than 2 million songs from artists such as Kanye West, Sam Smith and Sia, is the largest so far of the new CEO Kenichiro Yoshida.

The deal the benefits of the rapid growth in music streaming services such as Spotify (SPOT.N) and Apple of music (AAPL.A) the hazards of a recovery in the music industry.

It also fits in with Yoshida mission to make revenue sources more stable, after its predecessor was developed around the turn a significant trend, shifted the company focus away from low-margin consumer electronics, entertainment content and image sensors.

“This investment in content of intellectual property is an important building block for our long-term growth,” he said at a press conference.

EMI 15 percent of the music publishing industry, would the current Sony ATV said currently commands the business, make the Japanese entertainment and electronics giant is the market leader with a market share of 26 percent, a spokesman for the company.

Other big players in the Universal Music Group and Warner Music Group do not belong, although their market share, available immediately.
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Under the deal, Sony, which is already up and running, EMI Music Publishing, raise your property to around 90 percent from 30 percent currently, due to the purchase of Mubadala Investment Company holding.

“The increase in digital streaming-expansion of the songwriter’s royalty revenue, with Sony’s acquisition value as the administrator of the copyrights secured by direct deals with the likes of Spotify, Apple, Music, Google Play, SoundCloud, and YouTube, the” Macquarie analyst Damian Thong said in a report.

Yoshida, who took the helm in April, said his strategy was to prioritize stable cash flow while minimising the impact of volatile sales cycles, game consoles and other electronic gadgets.

In line with the strategy of Sony, no operating result was goal for the group in a new three-year business plan, the company announced on Tuesday.

Instead, the company said it aims to generate a total output of 2 trillion yen ($18 billion) or more in cash flow in the next three years, up to 500 billion yen from the last three years.

Gaming and image sensors continue to be contributors to the greatest profit.

Sony sees operating profit in its semiconductor business, which includes image sensors, growing to 160-200 billion yen in the fiscal year to the end of March 2021, compared with a forecast of 100 billion yen for this year.

The expansion of the sensors-applications beyond smartphones into automotive areas would be the key, Yoshida said.

But operating earnings at its video games unit is expected to be between 130 billion yen 170 billion yen, down from 190 billion yen forecast for the current year. In this time, its PlayStation 4 would be nearing the end of a game console, the typical life cycle.

Sony shares ended 2 percent lower, hurt in part by the weaker Outlook for the gaming business.