Sony acquires EMI music in $1.9bn deal

Sony (NYSE: SNE) has announced plans to buy EMI Music Publishing in a US$1.9 billion (£1.4 billion) deal.

The deal will give Sony the rights to over two million songs by artists including Alicia Keys, Pharrell Williams and Queen.

“We are thrilled to bring EMI Music Publishing into the Sony family and maintain our number one position in the music publishing industry,” said Sony chief executive Kenichiro Yoshida. 

“In the entertainment space, we are focusing on building a strong IP [intellectual property] portfolio, and I believe this acquisition will be a particularly significant milestone for our long-term growth.”

Yoshida took over former chief executive Kazuo Hirai earlier this year, who stepped down after spending the past six years recovering the company from deep financial troubles. Hirai led an aggressive cost-cutting drive at Sony, axing thousands of jobs and selling business units.

“If there’s a challenge, organisationally or financially, I have to get in there and do it myself,” Hirai told the Guardian in January. “When businesses are running well, we have fine executives who can run them day to day. But when the fires are up, somebody’s got to get in there and do the hard work, stop the fires and turn the business around.”

In April, the group reported a net profit of 380 billion yen for last year, a seven-fold increase on 2016’s profit. The boost in profit was helped by box office blockbusters including its Jumanji reboot.

On Tuesday, Sony unveiled its business strategy and financial targets for the next three years. It will focus on entertainment, financial services and electronics.

The deal will create the world’s biggest music publisher and add pressure to rivals Spotify (NYSE: SPOT) and Apple Music (NASDAQ: AAPL), who are driving the rapid growth in music streaming.

Macquarie analyst Damian Thong said: “The rise in digital streaming is also expanding songwriter royalty revenues, with Sony capturing value as manager of the copyrights backed by direct deals with the likes of Spotify, Apple Music, Google Play, SoundCloud and YouTube.”