This is the only deal that makes sense.  Because of the SYNERGIES!

You remember that overused word from the eighties and nineties, right?  It was whipped out to explain every merger, as if 1+1 always equaled 3, when oftentimes it was less than 2…can you say Sprint/Nextel?

The old record company model is dead.  You know, the one where tons of money is spent to yield hits at a one in ten success ratio.  You know why?  Because there’s just not that much money left in recorded music and a star isn’t what he or she used to be, ubiquity went out the window with videos on MTV.

Warner’s value is its catalog.  Of both recordings and songs.

Live Nation doesn’t want the songs.  Those make a good fit with EMI’s publishing assets, but do no good for a touring/management/ticketing company other than income, and at the multiple publishing companies go for, the price makes no sense.  Let KKR-Bertelsmann buy Warner/Chappell, they’re building a publishing business.  As for someone else buying the record company and reinventing it, give me a break.  You’re operating in a world where execs won’t even license Spotify while Amazon, a much bigger threat, launches a locker business that could forestall recorded music growth forever.  Yes, the only money is in subscriptions, getting everybody to pay a little for a lot. Whereas if you can listen to what you already own anywhere, why would you want a subscription?  Furthermore, modern subscription apps, from Spotify and its competitors, allow songs to live on the hand-held, so there are no bandwidth issues.  Let me make this simple.  Do cell phones still cost a grand and are calls a buck a minute?  No, the wireless companies brought down the price of phones to zero, making them disposable items, and lowered the price of calls to the point where prepubescents own hand-sets.  That’s smart, that’s a business.  Copyright holders in the music business are dumb.

But the Eagles don’t own their copyrights.

This is Irving Azoff’s ultimate coup.  To reunite Don Henley and Glenn Frey with their recordings.  So they can get all the revenue.  Especially in an era where labels withhold all royalty payments, requiring lawsuits to get the pittance you contractually deserve.

So Irving buys Warner Music.  And he gets it cheap.  Because despite all the hoopla, no one wants it.  What’s the value of recorded music today?  Especially in light of the stupidity evidenced by executives above.  They keep driving down the value of copyrights.  Have been for a decade.  And with Doug Morris taking over Sony and Lucian Grainge emigrating from the U.K., where the business is not quite as bad, do you think this is going to change?  Of course not!

So Warner Music, the recordings, goes for a fire sale price.  The cost to close it.

And once Live Nation owns Warner they shut down new music production.  It’s a cash drain.  A  vanity project for those still employed.  I’m not saying they’ll never put out the music of new artists, but it won’t cost much and there won’t be a big marketing campaign.

Suddenly, Front Line clients have a record company apparatus, a machine that they can sell their music through.  And get the lion’s share of the profits from.  This is attractive to anybody out of a deal.  And ownership of the recording rights allows you to innovate in the selling of tours.  Hell, you can give the music away, especially if you own your own publishing.  You can finally operate in the twenty first century.

And Madonna and the other Live Nation 360 artists now have an avenue for release of product.

It’s all about making the company lean and mean.  The assets are the copyrights, the recordings, NOT the employees. They’re expendable.

Look at it this way.  If Irving could sell millions of Eagles albums in Wal-Mart with less staff than he has fingers on one hand, why does he need all those layers of b.s?

Yes, it’s time to wipe the slate clean.

And you do this by bridging the gap between the old and the new.  Terry McBride was right, you want to unify your copyrights, so you can turn on a dime, you want to be in control, but his timing was bad.  You evolve into the future. Buying Warner Music will allow Live Nation and its acts to evolve.  And will help them in pitching tours to acts.

Please don’t be surprised.  Please don’t take all of this too seriously.  Getting caught up in the glamour of record companies is like getting nostalgic for the days of black and white TV, for the days of hula-hoops and no microwaves, never mind no Internet.  The whole model does not work.  Let me see, you want to overpay executives while you screw talent, tying them up for years, taking away their freedom, while odds are after spending all this money and time you’re gonna fail?

Better to give the artists all the freedom.  And almost all of the profits.  But very little upfront cash.  Do you really need that cash when Rebecca Black is the biggest artist in the country, despite radio refusing to play "Friday", showing how out of touch broadcasters are?  Making it today is about innovation, creative risk.  Not about banking deals where you shift tons of cash to unknown quantities and pray for a hit.

This is a requiem for the past.

But don’t cry too much, the recordings live on, it’s only the people who sold the records who are gone, hell, only a few overpaid self-satisfied people remain.

Eighteen months from now you’ll forget all about the past, just like we’ve already forgotten that Citi took ownership of EMI.  It’s about the future.  And the future is ever more about acts that can play live and earn their credibility and build their careers on the road and on YouTube as opposed to radio or TV, just like all those blue chips in the Warner catalog.  Neil  Young’s still touring.  So is Prince.  Mo did it right.  Irving’s just gonna skim the cream and wait for the good times to return, for these assets to be worth a ton, which they will be, when all the dead weight of the industry is gone.

As for whether Live Nation has the cash…

If you’re asking this question, you’ve got no idea who you’re dealing with, who’s backing Irving and Live Nation.  If someone bids more, they’ll get it.  But Live Nation should.