Jean-René Fourtou, chairman of Vivendi, has taken charge of Universal Music’s bid for EMI’s record labels, in an attempt to persuade sceptical European regulators not to block the ₤1.2bn deal or demand costly concessions.
Universal’s French parent has markedly changed its approach since last month’s abrupt exit of Jean-Bernard Lévy, Vivendi’s chief executive, people familiar with the bid process said.
Mr Fourtou wanted to show that Universal was willing to make concessions to quell fears that the deal could harm smaller labels and crush digital music innovation, rather than challenging every argument from the European Commission, they said.
He is also emphasising Vivendi’s credentials as a European company with a long-term vision for prized European cultural assets including recordings by The Beatles and Charles Aznavour, they added.
The new tone makes it less likely that Vivendi will sell or spin off Universal Music as it reviews restructuring options to address a weak share price and calm restive investors. Mr Fourtou said last week that Universal was integral to Vivendi’s commitment to creative content.
“The European Commission won’t want to humiliate Vivendi at a time when it’s weak,” one person close to the bid process said. However, the Commission has been not always accepted such arguments from supposed “European champions”.
The Commission has set out sweeping objections to the deal, notably arguing that Universal already extracts higher prices from digital distributors as the world’s largest recorded music company and could push prices up if it owned EMI.
It also raised concerns about Universal’s potential market share, particularly in jazz, classical music, radio and television shows such as The Voice.
Universal has filed a confidential response to the Commission’s objections, but has turned down the option of pressing its case in hearings before officials. Lucian Grainge, Universal’s CEO, faced tough questioning from US senators last month, cheering rivals who had hoped to air their opposition in Brussels.
Universal’s bid has become entangled with questions over Vivendi’s strategy as the French group debates possible disposals or a split that would create separate telecoms and media groups.
Mr Fourtou and Edgar Bronfman Jr, the former Warner Music chairman and CEO, discussed Universal over lunch in Paris more than a month ago, people briefed on the meeting said.
However, they denied that Mr Bronfman had made any overture to buy Universal or that Mr Fourtou had encouraged the idea that it might be sold. Rivals including Warner are expected to bid for any assets Universal sells to get the EMI deal through.
A meeting on Wednesday of Impala, an independent music lobby group, showed that small labels remain split over the deal.
Martin Mills, whose XL label releases Adele’s albums in Europe, has dubbed Universal “monopolists” but Impala’s president, Patrick Zelnik of Naïve, supports the deal if it comes with far-reaching “remedies” to help small labels access new digital services.
Industry members expect Impala to strike a deal with Universal, but its position may not be clear before a board vote, expected next week.