S&P affirms EMI ratings

Standard & Poor's said it affirmed its ratings on U.K.-based music producer and distributor EMI Group plc and related entities, including its BBB-/A-3 corporate credit ratings on the group, and removed the ratings from CreditWatch.

The outlook is negative.

S&P said the rating actions follow confirmation from EMI that it has withdrawn its offer to Time Warner Inc. (BBB+/negative/A-2) for the acquisition of Time Warner's recorded music business.

"The ratings have been removed from CreditWatch because the withdrawal of EMI's offer takes away uncertainty about how such a transaction might be financed," said S&P credit analyst Trevor Pritchard. "Furthermore, consolidation with another music major potentially might have lead to EMI being involved in lengthy regulatory review."

S&P said the ratings on EMI reflect the group's position as one of the top-five participants of the globally concentrated but declining recorded music market, its leading position in the relatively stable and high-margin music publishing market, and its broad artist diversification where no single artist accounts for more than 3% of recorded music sales.

The ratings are tempered by EMI's concentration on the mature and highly competitive music market and weaker-than-average credit ratios. At Sept. 30, EMI had gross debt of $1.8 billion.

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