PolyGram Will Buy Island Records for About $300 Million
The Los Angeles Times by William K. Knoedelseder Jr. (1989-07-28)
Island Records, the small, independently owned company that records the Irish rock group U2, is being acquired by Polygram Records for about $300 million, The Times has learned.
Island founder Chris Blackwell said through a spokesman Thursday that “very positive talks” were going on, but knowledgeable sources said the deal is basically done and will be formally announced next week. Sources also said the buyout plan calls for Blackwell and the current Island management team to continue running the company. The deal includes the record company, its distribution operation and music publishing catalogue, sources said.
The acquisition by Polygram, a unit of Dutch electronics giant Philips NV, comes as no surprise to the record industry. The sale of Island, one of the few successful record companies not already owned by a conglomerate, had been predicted for months, with practically every major record distributor—CBS, BMG, Capitol-EMI, Warner Communications and Polygram—named as a suitor. And the sale continues two recent trends in the recording industry—rapid consolidation and wildly escalating prices.
In the past three years, at least six other prominent record labels have been acquired—at least partially—by other companies:
The West German publishing conglomerate Bertelsmann AG paid a reported $300 million in 1986 for the 75% of RCA Records that it did not already own. Sony Corp. bought CBS Records for $2 billion in 1987. MCA Records and the investor group Boston Ventures bought Motown Records for $61 million in 1988. This year, Capitol-EMI bought 50% stakes in London-based Chrysalis Records and El Segundo-based Enigma Records for $75 million and $22 million, respectively. And Fujisankei Communications of Japan just agreed to buy 25% of London-based Virgin Records for a reported $180 million.