The contraction and consolidation continues:
- the two companies confirmed Tuesday Universal Music Group’s (UMG) acquisition of DreamWorks Records, which sources estimate to be worth $100 million.
….Discussions about the sale of DreamWorks Records arose earlier this year when UMG began to renegotiate its own distribution agreement with DreamWorks. The acquisition is expected to be finalized by early 2004 and is subject to regulatory approvals.
For DreamWorks, the divestiture of the music group allows the company to streamline its operations and cut costs, given the worldwide slump in music sales. For UMG, already the world’s largest music concern with 30% market share domestically, the DreamWorks acquisition further bolsters its arsenal and comes on the heels of UMG’s plan to lay off 1,350 staffers, saving an estimated $200 million per year in operating costs.
UMG plans to fold DreamWorks Records under Jimmy Iovine’s Interscope Geffen A&M label. Former Epic Records Group president Polly Anthony is currently in talks to take an executive role at UMG — possibly at DreamWorks, as it is likely that DreamWorks Records principals Mo Ostin and Lenny Waronker will leave. Ostin and Waronker both have an equity stake in DreamWorks Records, which will be paid out as part of the sale, sources said.
Extensive layoffs are expected at DreamWorks Records as part of the transition.
DreamWorks Records’ artist roster includes: Nelly Furtado, Papa Roach, Rufus Wainwright, AFI, the late Elliott Smith, Toby Keith, the Isley Brothers and Floetry.
“Building DreamWorks Records has been one of the great professional experiences of my career,” said Ostin, who was previously head of Warner Bros. Records. [Hollywood Reporter]
If it hasn’t happened already, there will soon be more people unemployed by the music industry than employed.