Apple Computer Inc. may have some competition if it plans to purchase Universal Music Group from Vivendi Universal. Microsoft Corp. is apparently interested in buying the music giant, but its interest at this point is said to be at the level of “poking around, kicking the tires,” according to the New York Post .
Some in the music industry view a Microsoft or Apple bid to become involved with Universal Music as an affirmation that digital downloading can be a profitable business. Organizations like the Recording Industry Association of America (RIAA) have blamed digital pirates for the steady decline in CD sales over the last couple of years.
Among its victories to curb Internet pirates, the RIAA was instrumental in closing down the Napster file sharing service.
“It’s wonderful when someone like Steve Jobs — who is generally viewed as a visionary and a futurist — has a genuine interest in music as an investment at a time when everyone is running scared from the music business,” one music industry veteran told the NY Post.
Meanwhile, the New York Times is reporting that a deal between Apple and Vivendi for Universal is unlikely. “The talks between Apple and Vivendi covered the concept of buying as much as a third of the music unit, according to people close to the discussions. But the talks appear to have been just exploratory discussions that did not go far.”
First reported yesterday, Apple is said to be in talks with Vivendi and is expected to make a $5-$6 billion bid for the music business by the end of April. Analysts did not respond positively to the news yesterday and Apple’s share price dropped on the news.
“While it can be argued that Apple could make some incremental revenue from the online sale of music, the company would not need to own a music company in order to do so,” Merrill Lynch analyst Michael Hillmeyer wrote in a note to clients. “In fact, there do not appear to be any synergies between a music company and a PC company, even one as innovative as Apple.”
Vivendi Universal is shopping its properties to raise up to $7 billion this year. Billionaire Marvin Davis, who has made a $15 billion bid for Vivendi Universal Entertainment, would not pursue his bid if Vivendi sold its music division or pulled it off the market, sources confirmed on Friday.
Shares of Apple Computer Inc. fell more than 8 percent on Friday after investors learned of talks the company could be in to acquire Universal Music Group from Vivendi Universal. Apple’s stock closed at $13.20, down $1.17 or 8.14 percent.
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