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Clive Ng NOTE: The following article is from the Warner Music Group web site and is a press release issued by the company August 11, 2003. Investor Group Led by Thomas H. Lee Partners, Edgar Bronfman, Jr., Bain Capital and Providence Equity Partners to Purchase Warner Music Group and Create one of the World's Largest Independent Music Companies 11/24/2003
Investor Group to
Purchase Recorded Music and Music Publishing Businesses in Their
Entirety for Approximately $2.6 Billion in Cash NEW YORK - Time Warner Inc. (NYSE:TWX) and an investor group led by Thomas H. Lee Partners, Edgar Bronfman, Jr.'s Lexa Partners, Bain Capital and Providence Equity Partners today announced the sale of Time Warner's Warner Music Group, including its recorded music operations and Warner/Chappell music publishing business, to the investor group for approximately $2.6 billion in cash and other consideration, including the option of buying back into the business on favorable terms in the future. This purchase would create one of the world's largest independent music companies - home to an extraordinary roster of recording artists and songwriters; some of the best-known record labels in the industry, including Warner Bros., Atlantic and Elektra Records; and Warner/Chappell Music, one of the industry's largest music publishing companies with more than one million copyrights. The company will retain the name Warner Music Group.
Investor Group to
Build on Warner Music Strengths Scott M. Sperling, Managing Director of Thomas H. Lee Partners, said: "We look forward to partnering with Warner Music Group's talented management to build upon its world-renowned franchise and industry-leading brands. While we do not foresee an immediate upturn in the overall market for recorded music, we believe opportunities are emerging that bode well for the long-term future of the business and that Warner Music will continue to be in the forefront of capitalizing on these opportunities." Time Warner Chairman and CEO Dick Parsons said: "I'm very pleased that we are putting our music company in such capable hands. Despite my personal fondness for the music business as well as for all of our wonderful managers and music group employees, I believe that this transaction is clearly in the best interests of our company's shareholders. Not only will it greatly enhance our financial flexibility, it also will enable us to pursue higher growth opportunities in our other lines of business. At the same time, we expect to continue to work closely with Warner Music, and we are happy to have the option to participate in the music industry's eventual recovery. We thank Roger Ames for his superb leadership of the Warner Music Group over the past four years, and offer him and all of our music colleagues our best wishes." Jeff Bewkes, Chairman of Time Warner's Entertainment & Networks Group, said: "With this investor group's deep commitment to the music business, we believe this deal is the best outcome for the people of our music company, our stellar roster of artists and their millions of fans around the world. Even with this sale, we look forward to continuing to work closely with Warner Music through a number of productive relationships involving our other divisions. Finally, we appreciate the tremendous efforts of Roger and his management team in strengthening Warner Music and helping to make this deal happen." Roger Ames, Chairman and CEO of Warner Music Group, said: "I have every confidence that Warner Music will thrive under Edgar's leadership. His passion for the music business is clear, and his understanding of the creative process will be enormously important. It's an exciting chance to return to the independent roots that the music industry was built upon with what will be one of the world's largest independent music companies. These factors, along with the solid foundation we've built at the Music Group, mean we're very well positioned to take advantage of the technological advances that are spurring the industry's next phase of growth. I look forward to working with Edgar, as we strive to master the challenges our industry is facing."
Highlights of
Transaction This sale is expected to reduce Time Warner's reported net debt by approximately $2.6 billion. Any taxable gains from the transaction will be offset by existing capital and net operating losses. The transaction, which is subject to the customary regulatory reviews, is expected to take up to 60 days to close. The investor group has secured financing from leading investment banks, including Bank of America, Deutsche Bank, Lehman Brothers and Merrill Lynch. Merger and acquisition advice for the investor group was provided by each of the aforementioned banks as well as by AGM Partners and Jeffries & Co. Gary Fuhrman of GF Capital was the merger and acquisition advisor to Lexa Partners. Simpson Thacher & Bartlett provided legal advice for the group. Time Warner was advised by Morgan Stanley and Cravath, Swaine & Moore.
Experienced and
Well-Financed Investor Group Thomas H. Lee Partners, L.P., a Boston-based private equity firm with approximately $14 billion under management, focuses on identifying and acquiring substantial ownership positions in growth companies. They and other members of the investor group - Bain Capital and Providence Equity Partners - have been behind some of the most successful media investments of the past decade.
Warner Music Group The company's Warner Music International, with a roster of more than 800 artists, operates in more than 70 countries through various subsidiaries, affiliates and non-affiliated licensees. Warner Music also includes one of the world's leading music and print music publishers, Warner/Chappell, and WEA Corp., Warner Music Group's U.S. sales and retail marketing company. The company's current corporate Website is at www.wmg.com. Warner Music Group boasts a roster of some of today's most successful artists including: Bjork, Michelle Branch, Brandy, Tracy Chapman, Eric Clapton, Phil Collins, Ry Cooder, The Corrs, The Darkness, The Distillers, Missy Elliott, Enya, Fabolous, Fleetwood Mac, Amy Grant, David Gray, Green Day, Josh Groban, Emmylou Harris, Faith Hill, Jet, Jewel, Kick The Can Crew, Kid Rock, Gerald Levert, Madonna, Mana, matchbox twenty, MC Solaar, Metallica, Luis Miguel, Alanis Morissette, Jason Mraz, Nappy Roots, Randy Newman, P.O.D., Sean Paul, Laura Pausini, Tom Petty, Phish, Point Of Grace, Red Hot Chili Peppers, R.E.M., Damien Rice, Alejandro Sanz, Simple Plan, Sixpence None The Richer, Staind, Sugar Ray, Mariya Takeuchi, Third Eye Blind, Trapt, Tweet, Tatsuro Yamashita and Neil Young. Its catalog also includes such legendary artists as: B-52s, Black Sabbath, Jackson Browne, Ray Charles, John Coltrane, Miles Davis, Depeche Mode, Dire Straits, The Doobie Brothers, The Doors, Eagles, Aretha Franklin, The Grateful Dead, The Kinks, Led Zeppelin, Little Feat, Natalie Merchant/10,000 Maniacs, Joni Mitchell, The Ramones, Linda Ronstadt, Carly Simon, Paul Simon, Frank Sinatra, Talking Heads, James Taylor, Van Halen, Van Morrison and Warren Zevon. Among Warner Music's highlights in 2003:
Warner Music's artists and recordings won 13 Grammy Awards, with an additional 6 awards going to songwriters signed to Warner/Chappell at the 45th Annual Grammy Awards. Warner Music International increased its chart share in the UK, France and other territories in the first half of 2003.
Among Warner
Music's companies are: Over the years, Warner Bros. Records and Reprise Records have earned a reputation as artist-friendly labels with a visionary approach toward discovering and nurturing musical talent. In fact, Warner Bros. Records has become one of the most successful labels in history, and the Warner and Reprise catalogs are recognized among the richest and most diversified in the industry. Warner Bros. Records is also a partner in Maverick Records, which was launched as a joint venture with Madonna, Guy Oseary and Ronnie Dashev. Maverick has become one of the most successful artist-owned labels in history.
Elektra Records Elektra was one of the primary forces in folk music in the 1960s, virtually inventing the artist-driven environment that fueled the Southern California rock boom a decade later. Elektra was also one of the first Warner Music labels to "go global," contributing to the development of Warner Music International. In 1995, the company developed into the Elektra Entertainment Group, which comprises an array of imprints including the flagship Elektra label and Goldmind Inc., among others.
The Atlantic Group Over the past half-century, Atlantic artists have had a profound impact on the development of modern music, while entertaining and engaging listeners with songs that have rooted themselves in our collective consciousness. The Atlantic Group of today has been built on an enduring philosophy of developing career artists and nurturing top executive talent, spurring growth from within its own ranks. The company is now comprised of three main divisions: the flagship Atlantic label, Lava and Nonesuch. Together, they are releasing recordings by artists working in a wide spectrum of musical fields. At the same time, the company has been a pioneer in the marriage of music and new technology.
Word Entertainment Word Label Group is home to the Word Records and Squint Entertainment labels. Word Publishing has approximately 45 Christian songwriters under contract and administers a catalog of more than 40,000 copyrighted songs. Word Music is the industry's premier source for church hymnals, choral music, and associated instrumental music, vocal folios, and accompaniment tracks. Word Distribution provides sales, marketing, and distribution to Christian Booksellers Association (CBA) accounts for WMG product and that of distributed labels, including Curb Records, Integrity Music, Big Idea Productions, M2.0 Communications, INO Records, Ray Boltz Music, Spindust Records, Spring Hill Music, Praise Gathering Music Group, Metro One Music, Daywind, Floodgate Records, Crowne Music Group, Garden City Music, and Family Home Entertainment. An affiliate of Curb Records, Inc., a leading Nashville-based independent record company, is a 20% partner in Word Entertainment. Curb Records, Inc. and its affiliates are parties to long-term worldwide distribution agreements with WEA Corp., London Records and WEA International Inc.
Warner Music
International Alongside the artists signed to U.S. labels Warner Bros. Records Inc., Elektra Entertainment Group and The Atlantic Group, WMI distributes and markets repertoire from its own network of 47 affiliates and numerous licensees in more than 70 countries. With a roster of approximately 800 local artists performing in 25 languages, WMI has an ongoing commitment to developing domestic talent aimed at achieving national, regional, or international success. WMI has three regional offices covering Asia Pacific, Europe and Latin America, and its international operations also include Warner Music Canada, Warner Vision, Warner Strategic Marketing, Warner Classics and new media activities.
Warner Strategic
Marketing (U.S.)
Warner/Chappell
Music
WEA
Corp.
Alternative
Distribution Alliance
About Time Warner
Inc.
About Thomas H. Lee
Partners
About Edgar
Bronfman, Jr. From 1994-2000, Mr. Bronfman was President and Chief Executive Officer of Seagram Company Ltd. During his tenure as CEO of Seagram, he consummated $85 billion in transactions and transformed the company into one of the world's leading media and communications companies.
About Bain
Capital
About Providence
Equity Partners Inc. Significant investments include VoiceStream Wireless, AT&T Canada, eircom plc, Casema, Kabel Deutschland, Language Line, F&W Publications, ProSiebenSat.1, Continental Cable and Bresnan Broadband Holdings. The firm has offices in Providence, New York and London. Visit www.provequity.com for additional information. |
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