U2 Sign $50M Archive Deal
Financial Times by Alice Rawsthorn (1998-09-05)
U2, one of the world’s most successful rock groups, has reached one of the most lucrative deals in the music industry, with PolyGram, its record company, which is expected to earn the band more than $50m in advances.
The three-album deal, scheduled to be signed early next week, will allow PolyGram’s Island Records subsidiary to release three Best Of U2 albums. The first, including recordings from 1980 to 1990, goes on sale in November.
Other superstars, such as Madonna and Janet Jackson, have clinched $50m-plus contracts but they have covered new material, rather than back catalogue.
Paul McGuinness, U2’s manager, clinched the deal for the four-member band against the backdrop of the $10.4bn takeover bid for PolyGram by Seagram, the Canadian drinks and entertainment group.
Seagram agreed the takeover with Philips, the Dutch consumer electronics company that owns 75 per cent of PolyGram, in May.
However, it has had to postpone completion until it has secured clearance from the European Commission, now expected in late October.
PolyGram’s trading performance has deteriorated because of the unsettled state of its executives and recording artists since Seagram unveiled its surprise bid.
Seagram is anxious to prevent PolyGram’s condition worsening before it takes control. Philips needs to stabilise it to avert a further reduction in the bid price. It has already had to accept a $200m cut in Seagram’s original offer.
The November release of an album by U2, which has already sold more than 87m albums, is guaranteed to bolster PolyGram’s performance during the vital pre-Christmas sales period.
The U2 deal is well-timed for Seagram. A large part of the $50m advance is payable to the band on signing the contract next week, when PolyGram will be under Philips’ control.
However, the first of the three albums goes on sale in November, after Seagram expects to have assumed ownership.