UMG’s Virgin Music Group is hoping to close its $775m acquisition of independent powerhouse Downtown Music Holdings by the end of this year, but European indie body Impala is gearing up for a fight against the deal going through.
This morning, it has issued a call to regulators globally – not just in Europe – to “put an end to UMG’s ‘juggernaut’ strategy of rapid acquisitions around the world, crushing everything in its path”.
Impala is protesting at the prospect of UMG owning Downtown, including its FUGA and CD Baby distribution subsidiaries, while also referencing its recent completion of an acquisition of independent group PIAS.
“A thriving music market needs effective competition and plenty of routes to market for labels and artists. UMG is planning the exact opposite because they want to control access to the market,” said Impala executive chair Helen Smith.
“The two other music majors, Sony and Warner, are also buying up music businesses in key markets. With far fewer options, many labels and artists are going to be shut out.”
This isn’t just talk. Impala said that it has sent several regulators “detailed analyses of the damage these acquisitions would wreak on the music market if they go ahead” as it lobbies for them to step in and investigate the deal.
“Higher prices and greater control over the deal structures of digital services is inevitable and UMG would have unparalleled access to its competitors’ data,” it claimed.
When the deal was announced, Downtown founder Justin Kalifowitz described it as “a tremendous recognition of the importance and vitality of independent music”.
Regulators will be mulling Impala’s arguments that this vitality will be damaged if they give the acquisition the green light, as well as any arguments put forward to the contrary by UMG and Virgin Music Group.
