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NY Times Poo Poo’s Apple/Uni Deal

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We had a couple of reports yesterday about a possible Apple bid for Universal Music: GERALDINE FABRIKANT with LAURA M. HOLSON see the glass as half empty:

    Apple, the iconoclastic computer maker, has discussed an investment in Universal Music, the world’s largest recording company, people close to the discussions said yesterday. These people, however, also cautioned that a deal was unlikely to be concluded.

    ….The talks between Apple and Vivendi covered the concept of buying as much as a third of the music unit, according to people close to the discussions. But the talks appear to have been just exploratory discussions that did not go far.

    “Vivendi has a very strong interest in generating as much perceived interest in all of these assets as they can,” one investment banker said.

    The notion of having Apple buy all of Universal Music was also discussed, but the likelihood of Apple’s making that offer seemed remote to the people close to the discussions yesterday.

    ….Several people close to the discussions said it seemed unlikely that a deal would ultimately happen. One executive who talked recently with Steven P. Jobs, Apple’s chief executive, about the music business said: “It makes no sense. He didn’t seem like a buyer of music.”

    Indeed, the new plan for an online store seems to eliminate Apple’s need to have any interest in the music business because it would have access to the music. “Why buy the cow when you already have the milk?” one executive close to Apple’s planning said.

    Any close relationship with the Universal Music Group would also be problematic for Mr. Jobs because the other labels would surely balk at doing business with Apple if it controlled their largest competitor.

Maybe this downplaying report is a smokescreen for continued negotiations – or maybe the deal just doesn’t make sense.

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About Eric Olsen

  • http://www.geocities.com/drclueful Chris Clark

    Not much different from Sony’s strategy, and increasingly Microsoft’s, or Matsushita (Panasonic) when it owned, er, Universal (then known as MCA), or RCA way back when. Grabbing a piece of the digital-entertainment pie gives Apple a new revenue stream from a category it seems to be dominating (MP3 players), and I doubt Jobs will make the same mistakes as he did with the PC market (i.e., those pesky software–read that content–developers). Can’t wait to see how Dell stays in the game (I’d buy Nintendo if I were Mike).

  • http://www.resonation.ca Jim Carruthers

    I am of two minds about this story. I’ve seen stock analysts downgrade this rumour, but then they know nothing about music or business, they only know buying and selling of pieces of paper.

    Apple has been positioning itself as a digital hub, and it needs software for that. Hence Uni is a natural fit, since the current and former owners have no clue about the net.

    On the downside, the music biz is hardwired into analog via the copyright laws. In the world of legislation, music can only exist as printed sheet music and plastic audio carriers. Digital distribution is outside. While Steve can buy Universal, he can’t buy the publishing (yes, he will buy a significant portion, but not all of it), and the publishers are the real bottleneck, stuck in the world of 45s, sheet music and piano rolls.

    However, it would be great to see Apple kick the music biz firmly in the arse.