Sanctuary bullish as turnover rockets... .It's time to get in

I posted this earlier on i i i, but I thought I would post here as well for info / any comments:

'Stan,

no I didn't buy SGP as a singles label either, but then they are still number one (& two) so it can only be additional good news.

Shifting 250,000 copies of Mad World alone in the week running up to Xmas should defintitely have some impact on the bottom line though as there can't have been much promotional spend on it.

However there are bigger positives that I see from this which demonstrate that SGP is not a two-bit independent label but is now turning into a serious propostion (as both label and investment).

Firstly, it proves that SGP have the marketing and the distribution networks in place to cope with (and make) big sales. This should do them no end of good in helping to recruit / maintain a top quality roster of artists.

And secondly, it shows that SGP have an intelligent A&R operation with an eye for the big opportunity, and not necessary at the huge financial costs associated with the majors.

I noticed this speculation today in the Times concerning potential interest in SGP by Richard Branson/V2.

This might have some mileage in it because lets face it he isn't going to get the Virgin label back from EMI now that their takeover talks have broken down.

The fact that SGP may be seen now as a more credible propostion may also give this rumour some credibilty.

I would have thought as well that the business ethos of SGP sits well with that of the Virgin Group / Richard Branson (who certainly have the money for SGP), so perhaps not crazy at all.

Anyway:

"January 01, 2004

Branson wants to buy back Virgin Records
By Russell Hotten and Nic Hopkins

SIR RICHARD BRANSON has tried to buy back Virgin Records from EMI as part of a strategy to become a major force in the music industry once again.
The entrepreneur made an approach to EMI’s chairman, Eric Nicoli, in November and “would still be interested if some opportunity arose”, a Virgin source said.

The plan was to merge Virgin Records, which launched Sir Richard’s business empire in 1973, with his small music label V2, which boasts artists such as the White Stripes, Moby and Stereophonics.

There are no talks taking place with EMI, Virgin said, but the company looks to have other record businesses in its sights.

Sir Richard’s plan to bolster his music assets comes as the wider industry faces its biggest crisis in years, with rampant piracy and illegal file-swapping over the internet causing a drop in both album and single sales through 2003.

But some analysts argue that now is the time to buy into the industry. There are signs that the record business is finding some success in cracking down on piracy, while legitimate download services such as Apple’s iTunes and Britain’s On Demand Distribution are pioneering new revenue streams.

Sir Richard sold Virgin Records to EMI in 1992 for £650 million. It was one of his landmark deals, providing funds to invest in new projects under the Virgin brand.

His approach to Mr Nicoli to buy back the company was made during EMI’s bid battle with Edgar Bronfman for Time Warner’s recorded music business. A victory for EMI in this bid might have led to regulators demanding the UK company make disposals.

Last year V2 made an unsuccessful bid to sign Robbie Williams, arguably EMI’s biggest star. EMI has refused to comment, but a source suggested that it would only have considered selling one of its core assets if it had won the battle for Warner Music.

EMI, whose roster of artists includes Coldplay and Kylie Minogue, is nearing the end of an overhaul of its operations, which has involved focusing on core labels and reducing its stable.

“It’s extremely unlikely that the company would want to sell now, and possibly any sale would be very difficult considering how closely integrated its major labels are,” said the EMI source.

V2 is a respected independent record label, and is said to be marginally in profit. But Sir Richard wants to expand quickly, and that means via takeovers, the Virgin source said.

Few independent medium-sized record companies remain, but possible candidates could include Sanctuary, the music group behind Ozzy Osbourne and Led Zeppelin. Epitaph, the privately held punk and hard rock label, might be another takeover target, as might the recording business of Chrysalis.

Sir Richard has the cash to make acquisitions in the music business, having made an estimated £387 million from the disposal of stakes in his Virgin Blue airline in Australia.

Virgin had already said that it has a £300 million war chest for acquisitions and investments. Sir Richard hopes to launch a budget airline in America this year."

Mickey. '