Business

Warner Music, EMI racing to the auction block

(
)

Warner Music Group is pushing ahead with a sale in a bid to beat rival EMI to the punch, The Post has learned.

Warner, hoping to get its sale in place before the recorded music and music publishing assets of rival EMI are formally put on the block, is asking bidders to submit first-round bids for all or part of its business by the end of the month.

So far, Warner has attracted more than 20 interested parties, sources said.

Citigroup, which seized control of EMI from British financier Guy Hands this month, doesn’t appear to be willing to play second fiddle. It is also moving quickly to sell off all or parts of the music company.

Citi, sources said, is poring over EMI’s books to ready it for a sale in short order.

The timing matters as the two music majors will weigh on each others’ prospects if they hit the market at the same time. For instance, Warner will have a tougher time selling its publishing arm, Warner/Chappell, if it has to compete with EMI’s larger publishing business.

“The challenge is they are both heading towards a situation where they’re going to compete for buyers,” said one high level music industry source.

In the bidding mix for Warner are several names, include Zomba founder Clive Calder and Russian investor, Leonard Blavatnik. Others include Universal Music; Sony Music; private-equity giants KKR, Apollo and Providence Equity, and Netherlands-based music publishing giant Imagem.

Some of those names are also considered potential buyers of EMI, which Citi took control of after Hands’ private-equity firm, Terra Firma, struggled to meet the terms of its loan agreements.

Warner’s private-equity backers — Thomas H. Lee Partners, Bain Capital and Providence Equity Partners — have to decide whether to totally cash out of the music business or just sell the publishing arm.

Warner CEO Edgar Bronfman Jr. seems far from cashing out of the music business and is talking about buying EMI’s recorded music business even if a bid for EMI’s publishing arm doesn’t pan out.

Bronfman’s ambitions to dive deeper into the recorded music business comes as one Wall Street firm is predicting that sales of digital tracks may fall in the second or third quarter — for the first time ever.

BTIG analyst Richard Greenfield, in a report, said year-to-date physical sales are down 22 percent. “We suspect that calendar Q2 or Q3 will see digital music units fall for the first time ever,” he said.

Warner yesterday showed the continued weakness of the music sector, reporting fourth-quarter recorded music revenue was off 14 percent, while music publishing revenue was down 15 percent. Digital revenue rose just 2 percent year over year.

catkinson@nypost.com