Intetresting stats they throw around in this article...IF they are to be believed, that is !
Courtesy of Reuters...
Can Recovery Play Into Universal Music Auction?
Wed June 25, 2003 08:53 PM ET
By Sue Zeidler
LOS ANGELES (Reuters) - Universal Music, the world's largest music company, finds itself up for possible sale at a time when sentiment -- if not sales -- has begun to brighten for the long-battered recording industry.
After more than two years of sales declines, a dearth of big hits and rampant online piracy, some music executives are more upbeat these days, citing the success of Apple Computer Inc.'s online music store and an aggressive crackdown against users of file-swapping services.
"I think we're all feeling cautiously optimistic. There's a lot of good signs that a turnaround is beginning. We're all tremendously pleased by the impact of the Apple service," said Zach Horowitz, president, chief operating officer of Universal Music.
Universal Music, home to such acts as Eminem and U2, is being considered for sale as part of an auction of Vivendi Universal's U.S. entertainment assets.
Three corporate groups have made bids for Vivendi Universal Entertainment plus Vivendi's music company, according to sources familiar with the auction. The groups are led by Edgar Bronfman Jr., oil billionaire Marvin Davis and cable TV magnate John Malone's Liberty Media Corp.
Analysts expect bidders to value the music business at around $5 billion to $6 billion -- just five to six times its 2002 earnings before interest, taxes, depreciation and amortization. The mooted valuation is also down sharply from the $10.4 billion Universal paid for PolyGram in 1999.
Although it is unclear whether Vivendi will opt to sell the music unit or wait for a recovery to lift valuations, any buyer would be getting a company that could be poised for a rebound, analysts said.
"For someone with the right vision, it's probably a very good time to buy a music company, particularly if music
businesses are being discounted right now," said Larry Rosin, president of Edison Media Research.
'INCREDIBLE CHANGES'
"With all the incredible changes the music industry is going through right now, change implies opportunity for someone who knows how to seize it," he said.
An Edison study found 61 percent of 12-to-17-year-olds surveyed this year said they have burned a copy of someone else's CD instead of buying their own.
On a more positive note for the industry, the survey found 50 percent of Americans between 12 and 44 believe downloading for free is morally wrong, up from just 39 percent in 2002.
Experts say the change reflects the music industry's success in the courtroom and in a public relations campaign. The industry said on Wednesday it would track down and sue the heaviest users of services like Kazaa.
By targeting individuals and offering alternatives like Apple's service on more widely used Windows-based systems later this year, the industry hopes to turn its fortunes around.
"The consumption of music has never been greater. It's just that it's not monetized," Horowitz said. "I think we will have two or three years where we will see a transition, after which, the potential of the Internet will explode and we will have significant revenue, the likes of which we haven't seen in many years now."
While Vivendi has said it wanted to keep the music group because the industry was poised for a turnaround, the French conglomerate, aiming to cut debt, has not ruled anything out.
One source familiar with the matter said Vivendi may seek to retain a minority stake in the assets it sells.
Meanwhile, other labels like EMI Group Plc, AOL Time Warner Inc.'s Warner Music and Bertelsmann AG's BMG have been in on-again, off-again merger talks, sources near the labels have said.
But with talk of a recovery now beginning to emerge, the negotiations may take on a different tone.
"I don't know how to value a music company when the future is unclear. The music business invariably has been up and down and come back. There is no question this is the most serious side but the way the music companies are attacking the problem shows the first glimmers of hope," Howard Stringer, the head of Sony Corp.'s U.S. operations, said on Wednesday.
http://asia.reuters.com/newsArticle.jht ... ID=2990917
Can Recovery Play Into Universal Music Auction?
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mikenycLI
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"An Edison study found 61 percent of 12-to-17-year-olds surveyed this year said they have burned a copy of someone else's CD instead of buying their own.
On a more positive note for the industry, the survey found 50 percent of Americans between 12 and 44 believe downloading for free is morally wrong, up from just 39 percent in 2002.
Experts say the change reflects the music industry's success in the courtroom and in a public relations campaign. The industry said on Wednesday it would track down and sue the heaviest users of services like Kazaa."
I guess the threat to sue the "heaviest users" is part of their "public relations" campaign, right ? That's so special.
It would be refreshing to just say, " the artists we presently have under contract are producing mediocre to crap music, that NO ONE, really, wants to buy" and "we are genuinely, sorry, that we are too large a company, and what we regularly produce for sale, just isn't enough to support our being a profitable business".
That these Music Companies, bite the very hand that feeds them, is the worse strategy, that I can think of. It's like catching mercury, and it's only going to result in MORE "stealing", as they call it.
What the Morons aren't, probably, telling us, is that the same people that say downloading is "morally wrong", these very same people, plus EVEN MORE, are downloading. So where is their logic here, other than to delude themselves, for their stockholders ? It's nowhere !
On a more positive note for the industry, the survey found 50 percent of Americans between 12 and 44 believe downloading for free is morally wrong, up from just 39 percent in 2002.
Experts say the change reflects the music industry's success in the courtroom and in a public relations campaign. The industry said on Wednesday it would track down and sue the heaviest users of services like Kazaa."
I guess the threat to sue the "heaviest users" is part of their "public relations" campaign, right ? That's so special.
It would be refreshing to just say, " the artists we presently have under contract are producing mediocre to crap music, that NO ONE, really, wants to buy" and "we are genuinely, sorry, that we are too large a company, and what we regularly produce for sale, just isn't enough to support our being a profitable business".
That these Music Companies, bite the very hand that feeds them, is the worse strategy, that I can think of. It's like catching mercury, and it's only going to result in MORE "stealing", as they call it.
What the Morons aren't, probably, telling us, is that the same people that say downloading is "morally wrong", these very same people, plus EVEN MORE, are downloading. So where is their logic here, other than to delude themselves, for their stockholders ? It's nowhere !