Sony Corp (6758.T) said on Tuesday it would pay about $2.3 billion to gain control of EMI, becoming the world’s biggest music publisher in an industry that has found new life in streaming services.
The acquisition, which gives Sony a catalogue of more than 2 million songs from artists such as Kanye West, Sam Smith and Sia, is the biggest so far by new CEO Kenichiro Yoshida.
EMI currently commands 15 percent of the music publishing industry which with the current Sony ATV business would make the Japanese entertainment and electronics giant the industry leader with market share of 26 percent, a company spokesman said.
Other major players include Universal Music Group and Warner Music Group although their market share figures were not immediately available.
Under the deal, Sony, which already runs EMI Music Publishing, will lift its ownership to roughly 90 percent from 30 percent currently by buying Mubadala Investment Company’s holding.
“The rise in digital streaming is also expanding songwriter royalty revenues, with Sony capturing value as manager of the copyrights backed by direct deals with the likes of Spotify, Apple Music, Google Play, SoundCloud and YouTube,” Macquarie analyst Damian Thong said in a report.
Yoshida, who took the helm in April, said his strategy was to prioritize stable cash flow while minimizing the impact of volatile sales cycles of game consoles and other electronics gadgets.
In line with the strategy, Sony gave no operating profit target for the group in a new three-year business plan that the company announced on Tuesday.
Instead, the company said it aims to generate a total of 2 trillion yen ($18 billion) or more in cash flow over the next three years, up by 500 billion yen from the last three years.
Gaming and image sensors are set to remain the biggest profit contributors.
Extending the sensors’ applications beyond smartphones into automotive areas would be key, Yoshida said.
But operating profit at its video games unit is expected to fall to between 130 billion yen and 170 billion yen, down from the 190 billion yen forecast for this financial year. At that time, its PlayStation 4 would be nearing the end of a game console’s typical life cycle.
Sony’s shares finished 2 percent lower, hurt in part by the weaker outlook for its gaming business.