LOS ANGELES - billionaire Len Blavatnik spends $ 1.3 billion to buy Warner Music Group Corp. a decade in a strong decline of CD sales for the music industry.
Which can make him a sucker online for many years of radically personal or a learned to buy the company at the beginning of a revolution in digital music.
The agreement of the Warner Music values to 3 billion dollars, including debt and cash - still over 2.6 billion was sold in 2004, when the music industry was twice as large.
Warner Music was created in 1929 as a means for Warner Bros. Pictures acquire the copyright of music for films. Warner Bros. Records was created in 1958 to distribute original strips of film and then has to discover such artists as Neil Young and Grateful Dead.
Today, the company is Faith Hill, Red Hot Chile Peppers, Linkin Park and Josh Groban.
A battle of the last ten years with online piracy has devastated the industry. Although Warner is expected to have to deal with it better than other record companies, some industry analysts praised Warner vendors for encashment of.
Analyst actions of Standard & Poor Tuna Amobi he calls "one of the best deals in space music of all time" - at least for sellers.
His opinion of the purchaser was not so rosy.
"Any time that you have cashed investors deep in some cases of glamour, anything can happen," said Amobi.
Purchase of this is possible Blavatnik, through the Access Industries Company it controls, could be to reveal sound.
It is essentially buying in an industry that can't get much worse. And you can enjoy the benefits of cutting if duplicate jobs he successfully bid for EMI Group Ltd. Britain, that Citibank should sell out quickly.
During this time, the digital innovations could prepare the industry for a revival.
The recent sales figures suggest that the agreement is well timed.
Sales of albums to the United States increased by 1.4 percent in the first four months of the year at 146 million, according to Nielsen SoundScan. Although the United States of CD sales dropped by 9% during the same period, it is less the 20% drop in 2010.
If the gains continue, it could mark the first time the sales of this album unit, assisted by digital downloads, have increased since 2004.
The elevator is not only due to one-time factors as a scan of the best artists performing albums at a time, according to Nielsen analytics vice President David Bakula. Not even discounts may account for gains; follow the pink sales even if most of the new now sell for $1.29 each, an increase of 99 cents a few years ago.
Still, there is no doubt that people pay less for music and wait for more. Total U.S. sales were only $ 6.3 billion last year, down 14.3 billion to the Summit in 2000.
People require of the best ways to store, play and share music, on any device and at any time, and they do not want to pay much for it, said Adam Klein, the head of the direction of the digital music club eMusic.
Consumers 'perception of the value has changed and will continue to change", he said. "The industry move quickly enough to follow that piracy will be rampant.".
Amazon.com Inc. has a new service that allows people to share, look and listen to music without having to store it on personal devices at all. It is believed that the Google Inc. and Apple Inc. working on something similar.
Digital music is in part being retained by the huge costs of operation of the labels of music now and levies high, they must require the innovators, said Klein. Reduce costs will promote the technology that will attract more people to pay for music.
It is a painful process which will lead to more layoffs. Warner has now just 3,700 employees, down 5 100 in late 2003.
Blavatnik, 53, is not facing these hurdles blindly. The investor of Russian origin was part of the group headed by the Chief Executive Edgar Bronfman Jr., who bought the company from Time Warner Inc. in 2004. He served on its Board of directors until 2008 and was always on a set of 2%.
These investors reduced payroll and took other measures such as the signing of artists to encompassing rights deals, which gave Warner Music concerts and freight revenues to cope with reductions of recorded music. They took the public company a year later to help recoup their investment.
Bronfman and Thomas h. Lee and Bain Capital partners have agreed to vote their game combined for 56 per cent for the agreement. It would pay shareholders $8.25 per share when it closes. That was planned to occur in September.
Investors have already obtained return their investment of $ 1.05 billion, more than 30 per cent more through special dividends and fees of management over the years. The sale means that they have almost doubled their money.
"We believe that this transaction is an exceptional opportunity to maximization of value which serves the interest of the shareholders as well as the interest of our artists and songwriters, music lovers and the wonderful people of this society," Bronfman said in a statement.
Blavatnik may need to acquire other companies to achieve larger savings to make the company work. Many people think his decision to keep Bronfman as CEO means that Blavatnik is considering a bid for EMI, which Bronfman has tried in vain to purchase in the past.
Citibank is looking to sell EMI after capture of the Group of private capital in the hands of Guy Terra Firma in February.
Other groups who lost to bid for Warner was ranked third - including No. 2 music company Sony Corp. - are also the search for parts that can be put at the disposal of this agreement, should anti-trust regulators require or Warner should raise funds.
In a possible scenario, new owner of Warner would try to buy no. 4 EMI combined to take advantage of radically personal to a company. He would then throw some music labels or get rid of one of the publishing divisions to satisfy regulators.
Universal Music Group, Vivendi, classified SA No. 1, is also looking to buy parts of Warner, EMI, or both.
Easing of concerns over the sale is the fact that Blavatnik includes digital business, said Fred Goodman, a contributing editor of the magazine Rolling Stone, and author of "" fool of Fortune: Edgar Bronfman Jr., Warner Music and an industry in crisis. "" Blavatnik authorized once music recordings to Warner for an Internet service and cell phone, that it has operated in Russia.
"Many people interested in buying Warner Music were not really interested in doing something else that top-down management... make the company smaller and smaller and taking profits out by lowering," Goodman said. "" "". I think one of a few guys Blavatnik where you think it is perhaps not the case. ?
Warner Music stock rose 28 cents, or 3.5 per cent, to close Friday at $8.18. It hit its 52-week high earlier in the day at $8.24, a penny short of the offer price.
