OVERNIGHT TECH: Senate set to examine music industry merger

The lead: The Senate Judiciary Committee’s subcommittee on Antitrust, Competition Policy and Consumer Rights will hold a hearing on Thursday afternoon to examine the planned merger of Universal Music Group and EMI.

Universal Music, a division of French conglomerate Vivendi, announced its intent to buy EMI last November. The $1.9 billion deal would reduce the number of major worldwide labels from four to three and would give Universal Music control over the catalogs of artists such as the Beatles, the Beach Boys, Coldplay and Katy Perry.

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The European Commission sent Universal a statement of objections to the deal earlier this week. The complaint does not necessarily mean the commission will block the deal, but it could force the companies to make concessions.

In the United States, the Federal Trade Commission is reviewing the deal.


Universal CEO Lucian Grainge and EMI CEO Roger Faxon will defend their deal before the senators. Irving Azoff, chairman of Live Nation Entertainment; Edgar Bronfman, director of Warner Music Group; Martin Mills, chairman of Beggars Group; and Gigi Sohn, president of advocacy group Public Knowledge, will also testify.

In a blog post previewing her testimony, Sohn argued the merger would create a "super-major" label that would "be able to dictate the future of new digital music services." She compared the deal to AT&T's failed bid to buy T-Mobile last year.

Warner Music's Bronfman is also expected to oppose the merger of his rivals.

"This proposed deal carries great anti-competitive risk — the obstruction or prevention of digital music innovation, which would reduce consumer choice and impede the development and growth of technology platforms and services," he will testify, according to a copy of his remarks. "This concern cannot be overemphasized." 

In an emailed statement earlier this month, a Universal spokesman said the deal's critics “vastly overstate market concentration.”

“The music industry is intensely competitive and barriers to entry have evaporated in today’s digital environment,” the spokesman said. “Labels cannot dictate the price in a marketplace where a handful of major retailers account for the majority of music sales. We welcome the opportunity to address the facts and do away with any myths.”

The spokesman also said Universal is “committed to reinvesting in EMI,” which has struggled financially in recent years.

House Dems reiterate call for Verizon-cable hearing: Top Democrats on the House Energy and Commerce Committee urged Republicans on Wednesday to hold a hearing to examine Verizon's deal with a coalition of cable companies.

In a letter to committee Chairman Fred Upton (R-Mich.) and telecom subcommittee Chairman Greg Walden (R-Ore.), committee ranking member Henry Waxman (D-Calif.) and subcommittee ranking member Anna Eshoo (D-Calif.) argued it is important for lawmakers to hear from key stakeholders on the deal.

Waxman and Eshoo first urged the Republicans to hold a hearing on April 26.

The deal will allow Verizon to buy a block of radio spectrum from the cable companies, which include Time Warner and Comcast. The deal will also allow the companies to cross-sell each other's services.

The Justice Department and the Federal Communications Commission (FCC) are reviewing the deal.

Free speech for machines?: In a New York Times op-ed, influential Columbia University law professor Tim Wu explores whether computers have a right to free speech. The issue has implications for whether antitrust regulators can force Google to change its search algorithm.

"As a nation we must hesitate before allowing the higher principles of the Bill of Rights to become little more than lowly tools of commercial advantage," Wu writes. "To give computers the rights intended for humans is to elevate our machines above ourselves." 


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