Photo Credit: Tash Williams
Despite facing considerable indie-sector criticism, Universal Music Group’s $775 million Downtown Music Holdings buyout is reportedly poised to receive EU approval.
That’s according to outlets including Reuters, which cited “people with direct knowledge of the matter.” However, neither UMG nor the European Commission has commented publicly on the subject, and the latter entity is still scheduled to deliver its final decision by February 27th.
Last time we checked in on the proposed acquisition – which, besides the mentioned pushback, has apparently drawn support from some in the indie community – evidence indicated that UMG had offered to sell Downtown’s Curve Royalty Systems.
At least as suggested by the available information, this relatively small concession would then assuage the Commission’s “only remaining concern” and enable the deal to cross the finish line.
Is the divestment actually on the table, and will it really drive the purchase into the endzone? On one hand, the outcome definitely doesn’t appear out of the question; Universal Music itself described the “only remaining concern” after submitting “a robust remedy” to the Commission last month.
Perception-wise, blocking an insignificant element of the massive investment would perhaps help the Commission demonstrate its regulatory sway and justify the overarching approval to indies.
Of course, the same step would allow the play to close; at the end of the day, Downtown is an American company, and Universal Music has strong ties to Europe in its Hilversum corporate headquarters as well as its Euronext Amsterdam listing.
On the other hand, anonymous sources are inherently unreliable. And here, one needn’t stretch the imagination to surmise which side likely provided details about the Commission’s decision-making process prior to the corresponding disclosure.
This ties back to an interesting EU-specific example that could prove insightful now: The European Commission’s early 2024 Apple fine fake out.
As we reported nearly two years ago, the penalty stemmed from an antitrust complaint levied by Spotify. Long story short, a couple weeks before the Commission made the fine official, a number of outlets, citing “sources,” pointed to an imminent $540 million bill for Apple.
In the end, though, said outlets’ timing predictions were a bit off, and they badly missed the mark in terms of the fine’s size: a staggering $2 billion or so. (Not to be confused with last year’s $600 million fine, the 2024 penalty promptly elicited an ongoing appeal from Apple.)
Bearing all that (plus the presumed positioning of the “sources”) in mind, could the rumblings of approval be designed to throw the public off the scent and maximize the impact of an announcement in the opposite direction? Or to steer the situation towards a certain outcome?
History says it’s not impossible, and with a month and change until the deadline, we won’t have to wait very long to find out one way or the other.
