'Deep Rifts' Exposed In Universal-EMI Merger Hearing

The US Senate hearing over the much talked aboutUniversal-EMImerger took place yesterday, with industry rifts coming to the fore infront of the subcommittee.The proposed deal, which will see the Universal Music Group acquire EMI Music's recorded music division for $1.9 billion, is coming under the glare and anti-trust regulators and a decision on whether the deal will be green lit is expected in the coming months.

The European Commission will also give their verdict on the matter in September.

Here's a few key notes from the extensive American reporting around yesterday's hearing:

Wall Street Journal: "In opening the hearing, the panel's chairman, Wisconsin Democrat Herb Kohl, asked: 'Will Universal's music catalog be so large as to make it a gatekeeper that can make or break any new online service?

[Univeral Chief Executive Lucian] Grainge brushed that concern aside, saying that even his company could not afford to ignore new ways to sell music. 'We would be insane not to license, develop, make our music available through as many platforms, through as many retailers as possible,' he said."

New York Times: "Testifying in favor were Lucian Grainge of Universal; Roger Faxon of EMI; and Irving Azoff of Live Nation Entertainment. They argued that the Internet has weakened the record companies, thus making another step toward consolidation less than worrisome."

Financial Times: "[The hearing] exposed deep rifts among industry members and regulators over whether the deal would rebuild a shattered industry or kill the next generation of digital music innovators... Mr Grainge's testimony contained no promises of disposals or behavioural concessions that might address the concerns of competition authorities and those of competitors.

New York Times: “'Market power is why they're doing this,' Martin Mills, the founder of Beggars Group, said at the hearing. 'The power to dominate Internet services and impose their demands upon them, the power to leverage a disproportionately onerous deal, the power to squeeze out the competition.'”

Wall Street Journal: "EMI CEO Roger Faxon, on hand to support the deal, offered a tepid endorsement. 'I don't think it's a bad thing to happen,' he said of the deal. 'There are many scenarios I could map out which I think would be good things to happen. But none of those are available'

Reuters: "Universal Music Group brought out big-name allies as it made its case on Thursday before U.S. lawmakers for its much-criticized deal to buy a chunk of rival EMI. Irving Azoff, the executive chairman of Live Nation Entertainment... told a congressional hearing that increased competition in digital music will make the mega-music merger less worrisome."

Tuna Amobu, a senior analyst at Standard & Poor's, discusses the bid here.