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Now that Warner Music Group Corp. has agreed to be sold for $3.3 billion to Access Industries, is a duet in the works with EMI Group?


Warner’s all-cash sale to the London-based oil and media conglomerate, announced Friday, puts Access Industries founder Len Blavatnik in the pole position to bid for EMI, the world’s fourth-largest music company, numerous industry analysts said. EMI is widely expected to be put up for sale later this year by its owner, Citigroup Inc.


“I would think that the next step for Warner is to buy EMI,” said Ted Cohen, managing partner at TAG Strategic, a media consulting group based in Hollywood.


Cohen, who has held senior executive positions at both Warner and EMI, said a combination of the two companies “could be a very smart move. Where Warner is weak, EMI is strong. Where Warner is strong, EMI is weak. The two are very complementary.”


A spokesman for Access Industries declined to comment on Blavatnik’s plans for Warner once the deal, approved Thursday by Warner’s board, closes in late summer or early fall as expected.


“Now that he owns one, it puts him strategically to be the front-runner for EMI because he can pull out more costs by combining the two,” said Laura Martin, an analyst with Needham & Co.


Warner, whose artist roster includes Metallica, Bruno Mars, Muse and Zac Brown Band, has a healthy slice of acts in the U.S., where EMI is relatively weak. But EMI is solidly entrenched in Europe, particularly in the United Kingdom, where the company is based.


Combining the two companies would create a tight, three-way race among the world’s largest music companies, said David Bakula, senior vice president for entertainment analytics at Nielsen Co., a media research firm.


Within the U.S., Warner had a 19.7 percent share of the music market, in terms of the number of albums sold from Jan. 1 to May 1, according to Nielsen. Together with EMI’s 9.2 percent share, the combined companies would be neck-and-neck with Universal Music Group’s 27.9 percent share and Sony Music Entertainment’s 30.5 percent.


Warner’s sale deal comes at a challenging time for the record industry, whose revenue has been ravaged in the last decade by piracy and a proliferation of legal but free alternatives, including online radio services such as Pandora and Slacker.


Music sales in North America, not including royalties paid to publishers and songwriters, declined 44 percent in the last five years, to $7.35 billion in 2010 from $13.05 billion in 2005, according to PricewaterhouseCoopers.


Nielsen this week provided a glimmer of hope for the music industry, announcing that U.S. music sales from Jan. 1 to May 1 rose 1.4 percent to 145.7 million albums, up from 143.7 million last year, after years of steady decline.


Blavatnik, who sat on the board of Warner Music from 2004 to 2008 and continues to have a 2 percent share in Warner, is said to be intimately familiar with the industry’s travails, as well as Warner’s challenges.


The New York company posted a 6.7 percent decline in revenue to just under $3 billion in its fiscal year that ended Sept. 30, down from $3.2 billion a year earlier. Its net loss widened to $143 million last year, up from $100 million.


“Blavatnik’s not an idiot,” Bakula said. “If he’s willing to invest $3.3 billion, it says that the music business still has value.”


Blavatnik, 53, was ranked the world’s 80th-richest individual by Forbes magazine in 2011, with an estimated fortune of $10.1 billion, made primarily from trading oil and natural resources.


His company, Access Industries, also has holdings in a handful of media companies, including Icon U.K., spun off from Icon Group, a Los Angeles-based movie company partly owned by Mel Gibson. Access also has stakes in Amedia, Russia’s largest producer of television shows, and R.G.E. Group, an Israeli TV firm, among other companies.


With his winning bid for Warner Music, Blavatnik edged out more than a dozen other suitors, including brothers Tom Gores and Alec Gores, Sony Music Entertainment, supermarket magnate Ron Burkle, Live Nation Entertainment and investment firm Kohlberg Kravis & Roberts, whose unsolicited offer late last year in partnership with German music company Bertelsmann kicked off the auction process.


The deal calls for Warner to receive $8.25 per share, a 34 percent premium over the company’s average stock price over the last six weeks, the company said. It’s also 75 percent higher than Warner’s closing price on Jan. 20, the day before news of the sale leaked out.

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