Selling music companies
No one wants to pay for music. Yet investors are splurging on music firms
May 12th 2011 | from the print edition
And you thought Cher was extravagant
SAY what you like about the men who built business empires from the wreckage of Soviet communism. To money-losing Western outfits, they are angels. Roman Abramovich turned Chelsea football club into a winner. Alexander Lebedev rescued the Evening Standard and Independent newspapers. And on May 6th Len Blavatnik, an oil magnate, agreed to pay $3.3 billion for Warner Music Group. The stunned reaction among music executives suggests that his is the greatest act of charity yet.
Warner Music was born in 2003, when Edgar Bronfman and a group of investors paid $2.6 billion for Time Warner’s music division. Mr Bronfman, heir to a whisky fortune, was known as an unlucky investor. New York magazine called him “possibly the stupidest person in the media business”. Not any more. He has managed to sell a company in a collapsing industry for substantially more than it cost (and there are rumours that another suitor will yet try to trump Mr Blavatnik’s offer). It is like making a killing on a buggy-whip firm in the car-crazy 1920s.