Who’s in the house?

Donagh O’Malley barely has his feet under the desk at Music Choice Europe; he is less than a month into his job as the company’s first head of legal and business affairs. It was O’Malley’s former firm Olswang that advised Music Choice on its flotation on the main list of the London Stock Exchange at the end of last year, when it raised £50m and saw the company valued at £196m. But it was not just O’Malley – he was a member of the firm’s-commerce group and the responsibility fell to partner Stephen Hermer to run the initial public offering.

Music Choice claims to be the leading digital audio broadcaster in Europe and the Middle East, operating 47 different music channels going out to 10 million homes across 18 countries. Its biggest issue, then, and the reason for O’Malley’s appointment, is copyright licensing and media regulation.

Chief executive officer (CEO) Simon Bazalgette says: “Although I’m CEO here, the only area of responsibility that I’d retained up to now was responsibility for copyright negotiations – it’s been such a key area that I’ve been doing it for the last eight years.
“We took the decision to recruit someone in-house a long time ago – about a year ago – but it takes time to recruit the right people. When we floated the company last year, we decided we needed to have somebody who would spend the whole time looking at the legal issues in the company.”

Music Choice is the product of a joint venture between some of the industry’s biggest names – Time Warner, Sony, EMI and Motorola. BSkyB became an investor in 1998, and as none of the original backers sold shares in the flotation, it emerged from the initial public offering (IPO) as the largest shareholder, with 36.4 per cent. At the time, Time Warner and Sony had 24.6 per cent between them.

O’Malley trained at Clifford Chance and then spent a year post-qualification in the firm’s intellectual property (IP) department handling copyright and trademark work. Two years ago he moved to Olswang’s-commerce group.

At Music Choice, his primary responsibility will be copyright licensing – looking after all the tracks added to the company’s current database of 500,000 records. The company has to make sure each tune is approved by all of the necessary industry bodies and deal with IP rights.

Bazalgette says: “There’s a lot of copyright work. Copyright is one of the most important things in terms of managing business risk, which is really what underpins the need for an internal appointment.

“We think we can manage that risk better in-house, and that will be the majority of Donagh’s work. Commercial contracts are a big area as well – we’re signing an increasing number of distribution contracts with cable companies. And then there’ll be strong regulatory and public affairs issues.”

It will not just be old friends at Olswang that O’Malley will be instructing. The company uses Davenport Lyons music industry partner James Ware for copyright work as well as a raft of firms across Europe.

At Olswang, the client’s closest contact is partner David Zeffman, who guides on corporate issues, and partner John Enser on regulatory work.

Bazalgette says that a large part of O’Malley’s work will be coordinating those firms used by the media company across Europe for copyright work. “One of the major roles is one of coordination,” he says. “We’ve retained a local copyright firm in every country in Europe and those lawyers will need support, and hopefully, with Donagh, we’ll be able to coordinate and get the best out of them.”

O’Malley will not be faced with too many changing faces, though, as Bazalgette says the firms that the company instructs have stayed fairly stable. “We review them regularly, but there are no plans to shake up what we’ve done in the past,” he says. “There have been times when we have changed law firm – firms are always changing, with people always leaving and joining and firms merging. That’s in constant review, but in general we’re very happy with the firms we use.”

Olswang has picked up the vast majority of the corporate work. In May, partner Paul Lewis advised the company when it bought iCrunch for £370,000 cash and an issue of 1.11 million ordinary shares. iCrunch was advised by Dorsey & Whitney.

So far that is the company’s only major acquisition, but it has set up a number of link-ups with similar companies across Europe.

O’Malley says he was attracted to moving in-house because of the variety of work on offer. “At Clifford Chance I was doing IP work, and at Olswang I joined the online team and got more commercial experience,” he says. “This position is an opportunity to bring that together with the pure IP.
“There’s the distribution side of the business as well as making sure that whatever contracts need to be in place are in place. Then there’s the advisory side, the branding side, the regulatory side and the lobbying side.”

O’Malley will be responsible for driving Music Choice’s government lobbying strategy, as the company is one of the founders of the European Digital Media Association (EDiMA). Because the industry is changing so rapidly and is subject to increasing regulation, it is important for the company to be involved in this area.

With Music Choice being home to 100 employees, there are no plans to add to O’Malley in the fledgling legal department, although Bazalgette insists that there will be plenty to keep him busy. The company has doubled in size over the last year and only this month announced that its turnover for the first half-year of 2001 had risen by 68 per cent to £3.8m. It has just launched interactive television services in the UK and Sweden, with rollouts planned across other major markets, starting with Spain.

And against a background of economic downturn, Music Choice has moved into profitability, now claiming to have £34m in the bank.

You get the feeling that O’Malley will not have too long to find his feet.
Donagh O’MAlley
Head of legal
Music Choice Europe

Statistics
Organisation Music Choice Europe
Sector Media
Employees 100
Legal Capability One
Head of legal Donagh O’Malley
Reporting to Chief executive officer Simon Bazalgette
Location London
Main law firms Olswang and Davenport Lyons