Home » News » Business News » As the 2008 fire crisis aggravates, UMG’s sale hits an ‘indefinite pause’

As the 2008 fire crisis aggravates, UMG’s sale hits an ‘indefinite pause’

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French mass media conglomerate Vivendi’s planned sale of a portion of Universal Music Group may have been delayed substantially into 2020.

It was only last week when Vivendi SA had suspended its planned sale of Universal Music Group for six months for unspecified reasons.  However, that was before the label got slapped with a $100 million lawsuit as a result of its cover-up of the 2008 Universal Studios fire.

Soon after, the New York Times ran a follow-up story which detailed about the additional 700+ artists who were affected by the blaze. The list now included prominent artists such as Sheryl Crow, Courtney Love, Bryan Adams, Eminem, R.E.M., and the surviving members of Nirvana.

The Digital Music News report states, “According to a pair of sources on the prospective buyer side, the crisis is now pushing Vivendi’s restart date well into 2020.  The ‘indefinite pause,’ as one source describes it, will allow the label to gird through the current fire-related crisis, one that may include multiple lawsuits, artist defections, and even an executive shakeup.”

“It’s negatively impacting [UMG’s] valuation and creating all kinds of uncertainty to state the obvious,” one source relayed, referencing a negotiation with one potential buyer.

“You suddenly can say, ‘I see risks A, B, and C, give me a lower price to make up for that’.  The guidance we’re getting is wait much longer than six months for things to start up again,” said the source who spoke to the news website.

The crisis is helping to cool UMG’s nosebleed valuation, which one analyst recently pegged at $50 billion.  All of which offers one explanation for why Vivendi is putting things on a lengthy pause, the report said.

The French media giant was hoping that the fire-related crisis would be sorted out quickly, however that’s not the case.  Vivendi CEO and chairman Arnaud de Puyfontaine had recently commented on the attention surrounding more than 500,000 destroyed masters as “just noise”.

On the other hand, UMG chairman Lucian Grainge downplayed the damage and promised complete transparency in the matter. Contrary to their promises, the label is now facing the wrath and frustration among superstar artists.

 

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