EU approves Vivendi Universal's buy of BMG unit

BRUSSELS, May 22 (Reuters) Vivendi's Universal Music won European Union approval on Tuesday to buy BMG Music Publishing for 1.63 billion euros ( BRUSSELS, May 22 (Reuters) Vivendi's Universal Music won European Union approval on Tuesday to buy BMG Music Publishing for 1.63 billion euros ($2.19 billion) and become the largest publisher in a world remade by the Internet.

The EU's executive Commission had expressed serious concerns the deal would give the combination too much market power, but Vivendi erased the doubts by agreeing to sell a group of high-profile music publishing catalogues.

''We are delighted that the European Commission has approved our acquisition of BMG Music Publishing,'' said Doug Morris, chairman and chief executive of Universal Music Group.

An Internet-driven transition is reshaping the music industry. In the recorded music field, a weakened EMI Group is about to be sold and a Sony-BMG joint venture -- not related to music publishing -- is still under review in Brussels.

Universal won access to the thousands of song rights of BMG Music Publishing, including artists such as Coldplay, Christina Aguilera and Barry Manilow.

Publishers have been increasingly coveted because they are shielded from some of the piracy issues that have rattled the music industry.

In addition to generating revenue when CDs or downloads are sold, publishers make money by licensing songs to be performed live and for use in films and television shows.

The Commission said it had been concerned Universal would have ''the ability and the incentive to increase prices for online rights as regards Anglo-American repertoires''.

HITS ONLINE Vivendi overcame those concerns and opposition from independent music publishing group Impala, which had shown its muscle by persuading a court to annul the Commission's approval of Sony-BMG.

Universal has committed to sell a number of important catalogues within the 30-member European Economic Area, covering Anglo-American copyrights involving artists such as the Kaiser Chiefs, Justin Timberlake and R. Kelly, the Commission said.

Universal will divest the Zomba UK, 19 Music, 19 Songs, BBC music publishing and Rondor UK catalogues as well as an EEA licence for the catalogue of Zomba US.

That deals with a Commission concern that Universal would have controlled more than half of the chart hits and become a ''must have'' for online and mobile music services.

Brussels acknowledged part of the problem came about because it had encouraged the shift from national licences to EU-wide sales.

Impala, a group of 3,500 independent music producers and publishers, had a mixed reaction.

It said the Commission action ''sends a clear message to all the majors (music firms) that mergers without concessions will not be permitted.'' But Impala added it might take the Commission to court if its members believe Brussels failed to do enough.

''We now need to examine the decision in detail to see what it actually means,'' said Michel Lambot, an Impala board member.

Since Impala's court victory against the Commission, Sony Music and Bertelsmann's BMG have re-applied to the EU executive for approval of their joint venture. The Commission suspended its review on March 23, asking them to provide more information.

For its part, EMI said on Monday it agreed to a $4.7 billion offer from private equity firm Terra Firma. But Warner Music Group may counter that, setting off a takeover battle.

REUTERS DKS DB2005 .19 billion) and become the largest publisher in a world remade by the Internet.

The EU's executive Commission had expressed serious concerns the deal would give the combination too much market power, but Vivendi erased the doubts by agreeing to sell a group of high-profile music publishing catalogues.

''We are delighted that the European Commission has approved our acquisition of BMG Music Publishing,'' said Doug Morris, chairman and chief executive of Universal Music Group.

An Internet-driven transition is reshaping the music industry. In the recorded music field, a weakened EMI Group is about to be sold and a Sony-BMG joint venture -- not related to music publishing -- is still under review in Brussels.

Universal won access to the thousands of song rights of BMG Music Publishing, including artists such as Coldplay, Christina Aguilera and Barry Manilow.

Publishers have been increasingly coveted because they are shielded from some of the piracy issues that have rattled the music industry.

In addition to generating revenue when CDs or downloads are sold, publishers make money by licensing songs to be performed live and for use in films and television shows.

The Commission said it had been concerned Universal would have ''the ability and the incentive to increase prices for online rights as regards Anglo-American repertoires''.

HITS ONLINE Vivendi overcame those concerns and opposition from independent music publishing group Impala, which had shown its muscle by persuading a court to annul the Commission's approval of Sony-BMG.

Universal has committed to sell a number of important catalogues within the 30-member European Economic Area, covering Anglo-American copyrights involving artists such as the Kaiser Chiefs, Justin Timberlake and R. Kelly, the Commission said.

Universal will divest the Zomba UK, 19 Music, 19 Songs, BBC music publishing and Rondor UK catalogues as well as an EEA licence for the catalogue of Zomba US.

That deals with a Commission concern that Universal would have controlled more than half of the chart hits and become a ''must have'' for online and mobile music services.

Brussels acknowledged part of the problem came about because it had encouraged the shift from national licences to EU-wide sales.

Impala, a group of 3,500 independent music producers and publishers, had a mixed reaction.

It said the Commission action ''sends a clear message to all the majors (music firms) that mergers without concessions will not be permitted.'' But Impala added it might take the Commission to court if its members believe Brussels failed to do enough.

''We now need to examine the decision in detail to see what it actually means,'' said Michel Lambot, an Impala board member.

Since Impala's court victory against the Commission, Sony Music and Bertelsmann's BMG have re-applied to the EU executive for approval of their joint venture. The Commission suspended its review on March 23, asking them to provide more information.

For its part, EMI said on Monday it agreed to a .7 billion offer from private equity firm Terra Firma. But Warner Music Group may counter that, setting off a takeover battle.

REUTERS DKS DB2005