Billboard: Apple-Beats deal delayed due to valuation, role uncertainties

By , May 24, 2014

Billboard is out with a new report this weekend, claiming that it’s learned why the Apple-Beats acquisition has not been announced yet. Citing sources familiar with the matter, the outlet says that there are at least 5 things holding up the deal.

First, the buyout is ‘complicated.’ With this being Apple’s largest purchase ever, the folks in Cupertino want to make sure they cross every and dot every i. And second, the iPad-maker was nowhere near ready for details of the negotiations to leak…

Here’s more from Billboard’s Yinka Adegoke:

Another person who’s been in and around the discussions tells Billboard Apple was nowhere near ready to have this news break as it tries to work out what exactly it’s getting for $3.2 billion. […]

Apparently, the Apple family near imploded with outrage when that video went up on Facebook of an ‘excited’ Dr. Dre with R&B singer/former Coca Cola pin-up Tyrese. In the video they share, in language perhaps unsuitable for a family blog, how Dre will be hip-hop’s first billionaire and other nice things about Compton. 

Yika says that video, which you can read more about here, is the third big factor in why the acquisition has been delayed. People forget how secretive Apple is, and the company has gone through great lengths in the past to punish media chatterboxes.

Beats_DrDre_LeBron

The fourth reason has to do with what the roles of Beats co-founders Jimmy Iovine and Dr. Dre would be following the buyout. The two have been rumored to take on executive roles, but some wonder if they would fit in better as permanent consultants.

The fifth and final major sticking point is valuation:

The point of all this is that Beats Music was structured separately as a partly-owned unit of Beats Electronics with backing from Len Blavatnik, the billionaire owner of Warner Music Group and other investors. Sources say there is still some discussion around figuring out the valuation of Beats Music. Given it has less than 200,000 subscribers, doesn’t yet have much market traction and is built on a white label service, what is it worth to Apple? 

Billboard adds a disclaimer to the entire article, noting that it has been wrong more than once in its reporting on the Beats deal. But the consensus from everyone is that an announcement confirming the acquisition is taking a lot longer than anyone expected.

It’s been more than two weeks since the Financial Times first reported that Apple was going to be buying the popular headphone-maker, and virtually every subsequent report since then indicated it was already a done deal. But that obviously wasn’t the case.

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  • Ara Rezaee

    A lesson to kids, being rude is not cool. Some adults might need to learn that too

  • http://jltech.com.nu Jonathan Liu

    So if this deal goes ahead, what would happen to HTC’S beats audio in their phones? I’d assume they would be removed.

    • Jon20

      And what about HP? They have beats in their laptop line. Will they remove it from them too? Will we see them in the Mac line ups or even the iPhone/iPad devices? Hmmmmm

    • Maxim∑

      HTC already removed beats last year and sold all there shares

    • Your Mother

      sales of this magnitude almost always includes a provision for other companies who have contracts before a sale took place. we are talking billions of dollars for the sale and untold millions for licenses to HTC and HP–those things don’t just go away because apple might be the new owner.

    • AnArcticMonkey

      HTC ended their partnership with Beats Audio. Does not really make a difference, the whole “beats audio” portion of the phone was just an equalizer to go along with the speakers HTC made.

  • ✪ aidan harris ✪

    “what is it worth to Apple?”

    It’s worth their employess more than anything. Since the music deals are non-transferable I bet there’s a lot of talented individuals working there that Apple could use…

  • El Matador

    So is Dr. Dre going to release a video saying “my bad”?

  • dan bacon

    Lmao. I said this deal would crash and burn the moment I saw that video. Maybe if they didn’t boast to the world, they might actually be the first billionaires in hip-hop. There’s no excuse for posting a video like that.

  • oralarts

    Do you ever do any original reporting, Cody? This is yesterday’s news.

  • n0ahcruz3

    3.2b is a lot considering their product portfolio.