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Apple To Buy Vivendi's Music Division For $6 Billion

Originally posted by hvfsl
I cant believe you guys that say this is a bad idea, Apple is a multibillion dollar company and is spending millions (if this rumor is true) on accountants to see if this is viable, they know a lot more about the money than the people here. So if Apple does buy Universal (and it is only the music part, not the film part) it will most likely work out.
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As someone pointed out before... Apple as a company is worth about $700 million, they just happen to have $4.4 billion in cash reserves (more or less) from the good ol' days back in the mid 1980's when nearly everything computer related made moeny.

Look at all of the big time mergers in the last 3 years. Every single one is a failure. The most obvious, and colossal in terms of dollars, is AOL-TimeWarner. It is so bad, that the seperate branches of the company, specifically TW, are probably going to change the name from AOL-TW back to just TW. They are willing to do anything to seperate themselves from the stigma that AOL has brought. From the time the deal was announced, to the time it actually closed, it was already being realized that the deal was for way too much money. And of course, the Time and Warner merger didn't work out so well either... :rolleyes:

If this merger happens, and it goes bad (which it will), Apple could no longer exist.

Pick a market, and do well. Don't try to do it all... silver lined clouds have a habit of evaporating lately.
 
Microsoft will be Jealous

With all of this content, Apple will be able to better shape the future of digital music. If Apple is it's own middleman between the musician and the customer with online transactions, they will have the advantage of integrating the whole experience into the OS, unlike MP3.com. Out of the box, buying music online is something Apple should be able to do well.

What company will MS go after, oh yeah, they have NBC
 
Spending 6 billion dollars during lousy economy to buy a music company is such monumentally bad idea. It makes sense that if Apple wanted to make online music service, best way to do it is get its hands on the content. But this music service could turn out to be something akin to Newton, good idea that no one bought into.
 
All of you who keep saying that the music indusctry is a failure...

So what? Why has it gone down the drain? No one is buying CDs anymore. They are tired of paing 15 bucks for what is usuallt less than 10 songs, all because the record label wants to make a giant profit off of the CD. With a resonably priced music download service, Apple could make profit from every single download while offering the singles at a price lower than the unit price you pay on a CD! Hell, because you buy one single at a time, they could even make large profits from the lesser known bands out there. There are no production costs involved with a digital file. All that needs to be done is for it to be encoded once, and put on a server. Not a big deal compared to printing a CD label, CD case label, printing the CDs, etc etc. Of course this will still be done (for the moment), it won't be done as much. This would be an axtremely good move on Apple's part, because if I only have to pay for the music I liked, I would'nt be downloading them from Kazaa. They would have my business.
 
Originally posted by hvfsl

Also about Apple Recording Studios, they were the company the Beatles recorded for and they lost the case against Apple because the word 'Apple' is a generic word that can not be copyrighted. One of the system alert sounds is called sosume so-su-me (i think the spelling is wrong), in honor of winning the case.
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I'm pretty sure they settled with apple, I don't think apple records lost. I remember when iTunes came out, they sued apple again because apple had agreed not to get into the music business and apple had to pay them a few million dollars because of it all. Thats how I remember it anyway.
 
normally I'm not a fan of mergers & buyouts - but for Apple they've generally worked to their advantage.

As a lover of music who feels the industry is in serious trouble, I can't think of a better company to fix it than Apple.

The problem is that music isn't a creative industry anymore (in its products or how they are sold). Neither are computers for most companies, but Apple thrives on creativity.

Perfect fit, if you ask me. It'll give Apple some further clout, and Apple will start the record industry in a new, creative, and profitable direction.

I'm usually not an optimist ... but I think this will be great for music and for Apple.

I hope I'm right :) this could lead to some great things if it's done properly.
 
I just don't understand how people think that owning one of the major labels is going to help Apple in the online music or digital music service business. They will need all the major labels to participate to be a success. If Apple bought UMG, they would become a competitor. They need licensing deals and perhaps Universal is the first to license their catalog to Apple's music service.

Plus, Wall Street would kill Apple based on the other failures in merging technology companies with entertainment/content companies.
 
Universal did make 500 million in profit last year, so Apple would be purchasing a profitable company/division. What probably is going to happen in Microsoft will make a bid also to prevent Apple from buying Universal.
 
Re: I hope it wont materialize

Originally posted by ipiloot
1. It's a big risk to invest in ANY market going down despite the money and ideas, one has

2. There's no need to own a recording company to get the music to sell.

3. If it really happens, it shows that Apple has no ideas what to do with the money, they have in the business, they're really in - computers

4. It'd be stupid to put all the eggs in one basket - you risk eating Apple's profit and spending it on some music shop

5. It's stupid to put $6 billion depending on te success of the yet-to-be announced untested (market-wise) web-service.


The only positive thing is that the brand allows the company to du such things quite successfully. Sony did it and they're doing quite ok.
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You could have said the same thing about Phillip Morris a few years ago when they bought Kraft Foods. Now they're one of the few Cigarrette companies that are making money. Even Winston is pulling out of the Winston Cup.

Diversifying is never a bad idea.
 
The market doesn't like this idea. Apple has dipped below the 52 week low of $13.36.

Currently 8.07% loss.
 
Hrm.

I'm undecided on this one.

I can see where Jobs might be coming from, in that the music industry is a big cash-spinner and Apple has the money to invest. He's pretty much guaranteed a good return on any investment.

Now, add to that the whole copyright issue that currently plagues the industry... Effectively you have a solution to a problem by just suggesting Apple and Universal in the same sentence. This could essentially be where this whole online music service fits in... or not. Who's to say Apple isn't looking for longer term returns from a market outside of the computing spectrum?

Aside from the LA Times report there doesn't seem to be any other ratification (at this time) on this one, so it might be a good time to remind yourselves that is essentially no more than a rumour and the press have been known to get it wrong.

Chris, the don't believe it 'til you see it Guy
 
Originally posted by anthonymoody
The thing that gets me is this: Apple doesn't need to own a label (let alone the largest umbrella in the world) to provide music for its service. The labels are under increased scrutiny and pressure from congress to offer their content fairly and equally...not only to the ones they back like pressplay but to non industry players as well. So, at the end of the day, Apple should be able to sign licensing agreements with all 5 majors. They don't need to own one to do this.
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Licensing dips into profits. Besides the fact that if they pull this off, with Pixar, Apple Computers and Universal Music they can start to more directly compete with Sony. The record industry is slumping because more people are unemployed or taking pay cuts to keep their jobs. The economy is BAD. People don't spend money on music when the economy is bad. This would also be a great way to counter the DRM movement that is microsoft only and would hurt apple. I'm all for it!
 
Ok, firstly, Apple Computers lost the case against Apple Corp. (the Beatles' company). They agreed around 1980 that it was fine to use the name as long as Apple Computer didn't go into the music business. By around 1988 Apple Computers were quite prolific in the music industry though, as their computers were being used in studio's throughout the world. So Apple Corp. sued, and won. No contest really, Apple Computer broke the contract. Apple Computer said that their insurance companies should pay for it ($28 million or something), but the insurance companies disagreed and it went to court again, and again Apple Computer lost. They ended up paying about $35 million.

Secondly, the music industry isn't quite in the downturn the RIAA would have you believe. The figures have been massaged quite signficantly in order to paint the picture that they are heroes and that the listeners are scummy pirates of everything they can lay their hands on. Go looking for some of the other figures and you'll see it's not quite that bad at all. Music sells, that's not going to change any time soon. One of the biggest reasons they've been selling less is that they've been releasing less new content. Compare the figures to the high points of the early 1990's and you'll see that many more new albums were released then than now.

There is a real opportunity right now to change the way people listen to and buy music, unfortunately none of the record companies have quite seen that yet. Providing detailed customer recommendations based on your buying habits, sound samples and reviews from other customers works brilliantly for Amazon, but you might still end up buying a whole album just to get the two songs you want. Being able to pick and choose any song from any artist from any album and mix them together into any order you want would be a revolution. Some people have tried already, but they've never offered the choice or the ease of use that Apple have the opportunity to provide. This would be consumer choice at it's best. DRM is about reducing consumer choice, and that's why it's doomed to failure.

Buying Universal Music would give Apple a huge platform to build on if they do it right, since most people are law-abiding citizens. Guaranteed quality levels, customer service and ease of use will always be worth paying for, even if you can get it free on Kazaa or similar.
 
If Apple is going to puchase a music company, it might as well be Universal. Of the big 5 music companies (Universal, BMG Music, Sony, EMI, and Warner), Universal probably has the widest range in all of the different music genres. On the classical music side, they have DG, London/Decca, and Philips. On the jazz side they have the Verve label. In country they have MCA and Mercury.

Why would this be important? If there is any demographic that would actually purchase music online, as opposed to downloading it, which will probably continue no matter what happens, it would be people older than the 18-25 age range. If you are going to make money from the older music buying population, you better be able to provide the variety of content that they would want, which is why it would be important to have content from genres outside of the rock/pop area. Universal Music Group provides that breadth. Only Sony comes close in covering the jazz and classical genres, and their classical division is much weaker compared to Universal.
 
Re: Apple To Buy Vivendi's Music Division For $6 Billion

If Apple proceeds along this route, it will either fail or succeed. If it fails, Apple fails and we all definitely lose. If it succeeds, I think we still lose because more and more of Apple's corporate attention would be devoted towards Apple's music business at the expense of everything else.

I don't buy Apple products to create music or videos (nor to listen to music or watch videos). I buy them to make my personal, corporate, and academic (research) work a little easier (but not *that* much easier than using current Wintel products). Apple products have had the flexibility to help me to do that, though I have noticed that Apple's/Jobs' apparent obsession with music and video has caused the improvement of Apple products in the areas of *my* use to languish. Apple computers are under-powered, over-priced, and lacking in features that available to most of the world.

Mass-personalizing entertainment and leisure is, perhaps, a cool thing but, at the end of the day, it doesn't put food on the table or pay the mortgage, or help someone send their kids to college. If you learn nothing else from Microsoft's success (other than the futility of bitching about it), you should learn that mass-personalizing productivity and utility drives purchasing decisions more than entertainment. People will put up with crap because they accept the rationale behind that.

Apple seemed to be headed in the right direction - the "digital hub" concept personalizes utility - but has apparently been distracted by their corporate obsession. After all, how many of us have a digital hub in our homes that functiona t the level promised at the outset?

In a sluggish economy, is it really responsible to squander a strong cash posiiton on one shot? Maybe Apple knows some set of data that says "yes" but, as far as I can tell, the answer is strongly "no" ...
 
Re: perhaps not such a silly move at all

Originally posted by theaz
hmm

As I see it (and for whatever that may be worth), Apple has a very large sum of money in the bank cf with the actual size of the companies profits. While money in the bank is 'safe money', it may not be 'smart money.' Clearly, Apple as a company may not be using this investment potential to the best of its advantage.
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When the opportunity arises, companies such as Apple will look to invest in areas that they believe will provide (1) better long term returns than money in the bank, and (2) ways of securing the company's future. To look at both of these in turn.

(1) The music industry has been suffering a bit, with the stress being on *a bit*. But the music industry will never die. We need it to continue to distribute the music we love. Indeed, the music industry is not a new industry and has ebbed and turned before. It is most likely to rebound, and seems probable to return better long term results than the money in the bank would do. To argue that a merger with a major player in the music industry is just like a merger with AOL is rediculous to say the least: the two bear no resemblance what so ever.
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(2) As I already alluded to, the music industry has long term stability, despite its present downturn. Apple, as we see it at the moment, does *not*. One major push from a major market player such as Microsoft could see Apple fall over the edge. Of course, it is not in Microsofts best interest to do this at present, but the risk is still there. Consequently, buying into the music industry would provide Apple with long term stability in a way that its 4.4 billion dollars in the bank at present cannot.
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You definitely bring up a good point. I think after this, Apple, Pixar and Universal should unite under one corperation (maybe with a different name) but keep each company separate.
 
Originally posted by NicoMan
It's the guys at Time Warner who swapped their shares with AOL guys who are crying now, because their company used to be a decent business, as opposed to AOL.
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You're more accurate in that statement than you might even believe. From the horses mouth, I have heard that group A hates group B, and wants nothing to do with them.

I don't believe AOL was _never_ a good company, however. They are a good company... they just lacked vision for a long time. They offer a great product for the people it is targeted at.
 
the market's don't like it

Last I looked, Apple's share price was down 8.50% on very, very heavy trading.

Music companies are, at the moment, very much dead ducks until they reinvent themselves again.

This is something to be very careful about.

I'm sure apple has it's reasons, but it's not a done deal, that's for sure, but what's also for sure, is that Apple are clearly looking at it, a number of different sources are reporting it, including the BBC (they never get things wrong!)...

Music industry, very scary, would be wary myself.
 
Read Mixerman at ProSoundWeb.com

See how messed up the music biz is...

Read it really... it's AMAZING.. follow his effort to record a band. Follow the biz, through the AR, President, Band and Producer.

It's a crazy biz...

-Mike
 
for all those kazaa and limewire people out there

Not everyone is into stealing music, ok? I am into getting my music in a conveniant and cost effective way, and I've used limewire to "check bands out". I fI end up downloading like three tunes and like them I'll go buy the CD! I also use Limewire to get those "one songs" that I wouldn't buy an entire CD for. BUT, if a could pay for them I WOULD!

The fact is, all you people out there that won't pay for music are stealing. You are thieves, and what makes it worse is that you are stealing from musicians that you apparantly like. How can you say you like a band that you don't support???

So what we have here is a major coup for Apple if they can pull this off. They would be delivering the music in a much more flexible manner that would accomodate us all in a better more suitable manner and that would beneift EVERYONE.
 
As someone pointed out before... Apple as a company is worth about $700 million, they just happen to have $4.4 billion in cash reserves (more or less) from the good ol' days back in the mid 1980's when nearly everything computer related made moeny.
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Uh, I'm not sure what you mean when you say that Apple is "worth about $700 million," but the market deems Apple worth a hell of a lot more than that. Market capitalization (number of shares times price) is over $5 billion. If anyone wanted to buy Apple (the price of which would determine what Apple is "worth"), they would have to pay a substantial premium over that. Apple's probably "worth" at least $10B.

Anyway, a transaction this big is unlikely to be all-cash. There may be a mix of stock and cash. Also, Apple can raise cash in loads of ways -- it doesn't have to deplete its $4 billion piggy bank if it doesn't want to.
 
Re: Re: Apple To Buy Vivendi's Music Division For $6 Billion

Originally posted by strider42
If I remember right, apple has only 4 billion in cash reserves. Not that they'd buy it in cash, but it seems obvious that such a move would but a serious dent in apple's finances. Its a big gamble if they did go that route..
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Often when companies aquire assetts of other companies its with stock & even otuside investors...rarely they use cash for the bulk of it...It wouldn't suprise me if the cash was less than 700 million...not suprise me one bit...

Christopher
 
Originally posted by pcp_ip
The market doesn't like this idea. Apple has dipped below the 52 week low of $13.36.

Currently 8.07% loss.
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Umm... That is pretty typical of any buyout like this. Apple's price goes down, since it is a big change, and change can be scary. How many times do you hear about a companies stock price going up on rumors of a merger?
 
Re: Think carefully, and different.

Originally posted by jriga


Move a little farther out - plug your slim iPod into your car and you instantly have 500 cds with you
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This is what I am waiting for. It'd be great to plug my whole collection into the car stereo and use steering wheel contols to scroll thru it on a little LCD display(or even better a HUD).
 
Originally posted by tempo128bpm
I don't know why none of the articles mention this, but if Apple wants to get into the on-line music service business, Universal Music Group is the PERFECT record company to buy, because UMG already owns:

MP3.com
emusic.com
rollingstone.com
mp4.com

MP3.com and eMusic are both mature online music services with huge catalogs of music (and not just crappy unsigned bands that nobody has heard of). If Apple buys UMG, they'll be able to leverage the experience, the developers, the library of music, the existing code, the revenue stream, etc. etc. etc.
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Apple could be just aquiring mp3.com, emusic, and mp4.
 
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