Asset Mgt. Firm Eyes EMI Music Publishing

The New York Post is reporting today (5/27) that asset management firm Kohlberg Kravis Roberts (KKR) is in talks to buy a stake in EMI Music Publishing and combine those operations into a separate entity that would be 51 percent controlled by EMI, with the rest being controlled by KKR-owned BMG Rights Management.

Post sources report that EMI owner Terra Firma is also in talks with others about selling a stake in the music-publishing division
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“This move does not surprise me,” a source said. “EMI only got enough money to survive another six months before they need to raise money again.”

A source familiar with KKR said the buyout giant is not going to be aggressive and was in no rush to strike a deal with EMI. KKR and Terra Firma offered no comment.

The discussions with KKR mark another twist in Terra Firma boss Guy Hands’ quest to keep EMI afloat amid a cash crunch and a bruising fight with lender Citigroup.

KKR was in talks this past winter with Warner Music Group about launching a break-up bid for EMI as the label teetered on the financial brink. However, EMI got a reprieve when investors earlier this month approved a request from Hands to inject more money into the label and keep it from defaulting for another year.

A deal to sell a piece of the music publishing business could give EMI several years of breathing room.
That, in turn, could enable EMI to renew talks to license its music rights in North America to Universal Music Group. Such a deal, which EMI was close to inking before the discussions broke down this spring, would enable EMI to cut costs while also raising cash.

Reportedly KKR has been looking to bolster its music assets. Last September the firm committed to investing $332 million for a 51 percent stake in BMG Rights Management. Since then, BMG has been in buying mode, acquiring Crosstown Records and Cherry Lane Music Publishing.